Greenbiz on ARPA-E

In talking about ARPA-E, Greenbiz raises an interesting cause/effect issue:


Finally, there is one caveat in using private funding as a metric of success. Any ARPA-E funding is going to be considered by the market as a validator of that technology, meaning that a VC/PE investor is more likely to fund an ARPA-E project, believing that the government due diligence, especially on the science side, is a "stamp of approval". Given this, "ARPA-E companies" are more likely to get follow-on private funding that they would have without that ARPA-E validation, and therefore, ARPA-E could have a sizable artificial impact on VC/PE investment. From an innovation perspective, this ability to drive private capital in certain directions will add to the pressure to fund good ideas. But provided it continues to allocate smartly, doesn't crowd out private sector capital, and instead accelerates the deployment of riskier, potentially breakthrough clean energy technologies, ARPA-E should continue to receive strong, bi-partisan support.



from an article that originally was on the NRDC's Switchboard blog.