Uncle Sam's Secret Goldmine

Date:   Friday , June 01, 2001

Her latest move is into the realm of venture capital, as a venture partner with US Venture Partners, but it's a tough time to enter the VC business. Even with a billion-dollar fund, USVP will have a tough time cracking a market that is hopelessly crowded with private companies struggling for success. Where can Prabhakar put the capital she now partially controls?
A former director of the National Institute of Standards and Technology (NIST), the government body that promotes technology development, Prabhakar is in a prime position to tap the world of government-funded research. Given that federally-funded R&D tops $90 billion annually, the field is a potential goldmine for solid technology venture opportunities.

“People don't know it when the technology has blossomed into products and a business,” she explains. “But when you pull back the layers, the research, and almost always the people, trace back to some of those pools.”

In other words, though not its most glamorous component, federally-funded research is inextricably tied to technology business.

The question is how to get technology out of a lab and onto the Nasdaq. Prabhakar explains, “It's clear that there is a lot of good research going on. The question is how you look at it with what I call 'market-colored glasses' and find the things that will be successful venture opportunities.”

Clearly, some entrepreneurs are well accustomed to commercializing research. “If you go to Stanford for example, you will find a bunch of people who know about the business world and are excited about new opportunities, and they go digging around in this research,” she explains.

In fact, according to Prabhakar, the vast majority of research, even for military purposes, is funded with the expectation that it will be commercialized and stimulate American economic growth. These are, in the final analysis, free dollars for the tech industry. Prabhakar will look to exploit Uncle Sam's generous habits.