On January 13^th, Google announced that they had purchased the smart thermostat company NEST for $3.2 billion. Some people look at that news story as part of a battle between tech companies for an edge in “smart home” devices. I look at that story as the modern American success story: a tech startup realizing its market potential.

The world is becoming more entrepreneurial all the time. The most recent Global Entrepreneurship Monitor report found that a greater percentage of Americans were involved in a startup or new business in 2012 than at any time since the study began in 1999.  Entrepreneurship is key to innovation and is critical to America’s future economic success, especially when it comes to new energy technologies.  So how can the federal government do a better job of fostering entrepreneurship, especially when it comes to developing new technologies that can reduce our dependence on foreign oil, clean up our environment, and bring high-paying high-tech manufacturing jobs to the US?

ARPA-E is part of the answer, because there are many important technological innovations with large commercial potential that just need a small boost to de-risk the technology for the private sector.

But there is more the federal government can do, and I’m going to focus on three ideas.  First, Proof-of-Concept Funding.  We need to give scientists and engineers who are budding entrepreneurs some of the tools they'll need to be able to commercialize their ideas.  Some of that is funding through programs like SBIR.  But we know that most researchers have a hard time getting to that point.  Many professors, post-docs, and grad students are not be willing to put their careers on hold to start a company unless they have a pretty good idea that they can finish what they started.

The federal government can help with proof-of-concept funding at universities and national labs to allow researchers to test their ideas out before making the leap to entrepreneurship.  I put language for a proof-of-concept pilot program at NIH into the SBIR reauthorization bill in 2011; it’s great to see that the NIH has used this to create the Centers for Accelerated Innovations.  In this Congress, I helped introduce a bill called the TRANSFER Act that would set aside a portion of STTR funds for proof-of-concept programs at universities.  I am very hopeful we will be able to get this enacted this Congress, and the Science Committee may very possibly move on it soon.

The next area I want to focus on is teaching potential entrepreneurs how to be entrepreneurial. Unlike Fadell and Rogers, many brilliant researchers don't have the first idea about how to start a company.  I know; I was a university professor before I was elected to Congress.  Given that 3/4 of startups fail, we need to teach how to fail, how to adapt, and how to eventually succeed.

I've long been a supporter of the National Science Foundation's Innovation Corps program which does exactly that.  I-Corps is based on the "Lean Launchpad" model of entrepreneurship developed in Silicon Valley by serial entrepreneur Steve Blank. One of the most critical components of the program is getting the research teams out of the lab to talk to potential customers, thus getting feedback on their product ideas before a prototype.  I’m pleased that ARPA-E has partnered with NSF's I-Corps program, and a few ARPA-E funded teams have already gone through the program.  I also think more can be done here.  Researchers at our national labs could certainly benefit, and I would like to see all DOE-funded researchers eligible for a program like I-Corps.

The third area is funding through the “valley of death.”All of the education and training in the world won't do enough if there isn't the money available to develop new ideas.  Venture capital is good at funding risky projects with low capital requirements, but due to their scope, many energy projects are capital intensive or require development times longer than many VC's are comfortable with.  When researchers need to secure patents or do market research, VC's often get nervous and money dries up.  In cases like this, I believe the Federal Government needs to step.

In the Energy Policy Act of 2005, Congress set up a Technology Commercialization Fund that took a small percentage of the applied energy budget and dedicated it to accelerating the commercialization of research at national labs.  At the time, this fund provided technology maturation funds for the national labs, which most people I’ve spoken with have found extremely helpful.  I think we need to provide that kind of support to our national labs again, and I’ll be looking for ways to work with Congress and DOE to make that happen.

Before I conclude I want to briefly talk about a way to incentivize entrepreneurship in a different manner.  Innovation prizes offer a way to engage the private sector, non-profits, citizen scientists, as well as traditional researchers to find solutions to vexing problems.  I authored legislation setting up the H-Prize for Hydrogen fuel cells back in 2007, and I wrote language in the last NSF authorization bill to promote the use of prizes there. Innovation prizes will never be replacements for traditional research grants, but they can supplement the work of researchers and find solutions to problems in areas never before considered.  We can make changes to innovation prize authority in law that will give agencies the clarity they need to conduct more of these competitions.

Congress is now looking to reauthorize the America COMPETES Act, and I'll be working to make progress on a number of these issues I mentioned as the Science Committee works on this.  In the House, that will take the form of the FIRST Act which will reauthorize NSF and the EINSTEIN America Act which will reauthorize DOE's Office of Science.  I hope we can also advance a bill in the House to reauthorize the great work that ARPA-E is doing as well.  Please don't hesitate to reach out to me or my staff about ways that we can make energy research and innovation work better.  I want to thank ARPA-E for inviting me, and I hope you all have a wonderful conference.