New York Times Misleads Success of ARPA-E
Matthew Wald of The New York Times recently reported on the success of a new Department of Energy program Advanced Research Projects Agency-Energy, better known as ARPA-E, because the government grants were not receiving private sector support. The ARPA-E program is designed to fund high-risk, high-reward projects that the private sector would not embark upon on its own. Specifically ARPA-E is “responsible for funding specific high-risk, high-payoff, game-changing research and development projects to meet the nation’s long-term energy challenges.”
One example Wald points to is FloDesign. He writes, “FloDesign, which is working on a more efficient wind turbine based on the design of jet engines and used its $8.3 million grant to eventually raise another $27 million.”
Under the project announcement’s “Why ARPA-E Funding and Not Private Capital?” it says, “ARPA-E permits an accelerated introduction of advanced materials and aerodynamics that would not be possible with private capital alone. In addition, ARPA-E’s commitment, support and technical diligence greatly assisted FloDesign Wind to raise $34.5M in private capital to compliment the award. This partnership between public and private sectors significantly reduces risk and enhances the chance for successful commercial deployment of this critical renewable technology.”
But the reality is FloDesign received private capital before receiving its ARPA-E grant. Venture Capital firm Kleiner Perkins Caufield & Byers invested $6 million in FloDesign through FloDesign’s sale of Series A stock. Venture capitalists could have undoubtedly funded FloDesign’s new wind technology without the ARPA-E grant and this was clearly not the purpose of ARPA-E. Several other recipients of ARPA-E awards received money from the government program after receiving funds from venture capitalists.