The “gap” in gap funding refers to a vast shortage of capital and other commercialization support to identify, to evaluate, and to deliver research institution technology and start-ups to the marketplace. Defining this “gap” too broadly (e.g. “Valley of Death” or “between basic research and the market”) oversimplifies the complexities of the situation and clouds the path to resolution. Using mixed terminology to describe the function and intent of gap funding programs just leads to confusion from the support community; therefore, we propose the adoption of a shared set of descriptors for gap funding programs that is based on the tracking
of these funds over the past decade and the realities of the early stage capital landscape.
Gap funding approaches to the larger “gap” can be broken down into four primary gap fund types, each with individual characteristics, structures, and commercialization priorities that are functional as standalone funds or as contributors to a larger systematic approach depending on the needs of the operation
Gap Fund Types
- Translational Research gap funds: Support applied development of research to a point where it can be assessed for commercial potential. These gap funds further the development of promising research projects after more traditional public funding subsides
- Proof of Concept (POC) gap funds: Evaluate commercial potential, demonstrate the value, and generally de-risk (or perception of risk) the project to commercial partners or investors. Achievements like proto- types and commercial assessment help to identify and secure a route to commercialization, if one exists. POC funds also identify weakness in the technology for further development, or help avoid costs by deciding not pursue the technology
- Start-up Formation gap funds: Assist in the formational steps of spin-outs — even prior to becoming a legal entity. This gap fund type could be seen as a start-up-focused extension of proof of concept funding that further develops the business application of the technology through market research, product development, business development, management, space, and equipment to attract third party interest and capital
- Start-up Growth gap funds: Invest in scaling and growing established spin- outs. Research institutions have creat- ed, spun out, or partnered with seed funds and accelerators, both public and private, to fill this void in early stage start-up capital and to directly invest in their own start-ups