New Report: Bayh-Dole Is an American Innovation and Entrepreneurship Success Story

By SBE Council at 5 October, 2026, 3:19 pm

By Karen Kerrigan -

A new report recently unveiled on Capitol Hill provides powerful data about the extraordinary economic impact of the Bayh-Dole Act and why protecting the framework that has helped turn American discoveries into startups, products, jobs and entire industries remains essential to U.S. competitiveness.

I was pleased to participate in a special briefing on Capitol Hill marking the release of The Economic Impact of the Bayh-Dole Act: How University and Nonprofit Inventions that Benefit from Federal Funding Drive American Innovation, Jobs, and Economic Growth, 1996-2025. The report, commissioned by the Bayh-Dole Coalition and prepared by Vital Transformation, quantifies the vast contribution that university and nonprofit technology transfer has made to the U.S. economy.

As I observed during the discussion:

"The report wraps extraordinary numbers around one of America's great innovation success stories, and also tells us why it works. Bayh-Dole created an ecosystem that connects taxpayer-supported dollars and seeded research with entrepreneurs, private capital and markets. The model has generated enormous returns for the American public and our economy."

The headline numbers are remarkable. Between 1996 and 2025, Bayh-Dole-enabled technology transfer associated with research benefiting from federal funding generated:

● An estimated $3.3 trillion in U.S. gross economic output

● A contribution of an estimated $1.7 trillion to GDP

● The support of 7.6 million job-years

From 2021 through 2025 alone, this technology-transfer ecosystem generated an estimated $212 billion to $288 billion in GDP, $419 billion to $577 billion in gross economic output, and supported between 797,000 and 1.08 million job-years.

Moreover, from SBE Council's perspective, another finding deserves equal attention.

Bayh-Dole Is an Entrepreneurship Story

From 2001 through 2025, Bayh-Dole-enabled technology transfer at academic institutions helped launch 19,027 startups and introduce 17,252 new products. As I noted during the panel discussion:

"The more than 19,000 startups attributed to Bayh-Dole jump off the page. These are not abstract measures of innovation. These are entrepreneurs who saw an opportunity and took a risk on a discovery and built a company around it."

I noted that this is not simply a Silicon Valley or Boston success story. It is an American success story. The report conveys the broad reach of Bayh-Dole's impact as measured by the many startups that launched in diverse regions across the United States. For example, the South and Puerto Rico account for almost 5500 startups and 4800 new products, while the Midwest accounts for 3800 startups and 6,500 products.

In addition, approximately 70% of academic licensing agreements are with small companies. Many are businesses spun out of universities that remain in the communities and states where the underlying research originated, creating jobs, attracting investment and contributing to regional innovation ecosystems.

That is why Bayh-Dole needs to be understood as entrepreneurship policy, in addition to intellectual property, innovation and research policy.

A scientific discovery - even an extraordinary one - does not automatically become a commercially successful product. Someone must see its potential. Someone must license it. Someone must raise capital, build a team, conduct additional research and development, navigate regulatory requirements where applicable, manufacture or produce the technology, find customers and ultimately take it to market.

All of this work cannot possibly be made by government officials in Washington. That "someone" is closest to the discovery who understand its potential, can identify the right commercial partner, works through countless decisions, and is the best position to turn an invention into something useful. That is the genius of Bayh-Dole: it aligned ownership, incentives and expertise.

In many cases, an entrepreneur or small business team is the "someone" behind the work. The risks they take can be substantial. As the report points out, only a portion of active university and nonprofit licenses generate income, and fewer still generate running royalties. A licensed discovery can require extensive additional R&D, investment, testing, regulatory work, and other resources before it ever becomes commercially viable.

A patent is not a product, and a license is not a successful company. Bayh-Dole creates the bridge between discovery and commercialization, but entrepreneurs and investors still have to cross it.

Why Decentralization Worked

That helps explain why the institutional change created by Bayh-Dole was so consequential. Before its enactment in 1980, the federal government took ownership of most inventions arising from federally supported research. It held patents on roughly 28,000 discoveries, yet fewer than 5% were licensed for commercialization.

Bayh-Dole changed the incentive structure by allowing universities, nonprofit research institutions and small businesses to retain and manage patent rights to inventions arising from federally supported research.

Rather than attempting to manage thousands of inventions centrally from Washington, the law placed responsibility much closer to the researchers, institutions, entrepreneurs and commercial partners with the knowledge and incentive to determine how those discoveries might best reach the marketplace.

The results have been dramatic. Since 1980, the annual number of patents on inventions supported by government funding has increased more than 70-fold.

In 1975, before Bayh-Dole, the federal government owned 58% of the patents benefiting from federal funding examined in the report. By 2025, academic institutions owned approximately 60% of such patents issued that year, while the federal government's share was about 9%.

The result is a decentralized system in which thousands of people and institutions can experiment, invest and pursue opportunities rather than depending on Washington to determine which discoveries have commercial potential.

A Model for the Next Era of American Innovation

The timing of these findings is particularly important. America is engaged in intense global competition for leadership in artificial intelligence, biotechnology, quantum computing, advanced manufacturing, energy, defense technologies and other emerging fields. That has prompted renewed discussion about the appropriate role of government in supporting strategically important technologies.

Bayh-Dole offers an important lesson from America's own experience. The choice does not have to be between government investment and private-sector innovation. Bayh-Dole has shown how the two can complement one another.

Indeed, the federal government plays an important role in supporting foundational research. Between 2000 and 2024, federal agencies invested nearly $1.8 trillion in research that generated more than 155,000 patents on inventions benefiting from federally funded research.

But discovery is only the beginning. America's great strength is what happens next: researchers and institutions identify opportunities; intellectual property protections provide certainty; entrepreneurs build companies; investors put private capital at risk; and businesses compete to turn promising discoveries into useful products and services.

That division of labor has produced extraordinary results.

As policymakers consider how America should compete in the next era of global innovation, the lesson of Bayh-Dole is worth remembering: we should strengthen the elements of the American innovation system that have worked - a business-friendly policy environment, world-class research, strong intellectual property protections, entrepreneurship, access to private capital, and decentralized experimentation.

The report clearly demonstrates that Bayh-Doleis a policy innovation that is working. America's elected leaders should not try to out-centralize the Chinese, or upend models that have proven their value for our economy and competitiveness. Our leaders need to simply focus on policy improvements that support investment and entrepreneurship. The focus should be on supporting the entrepreneurs and investors that help to generate and fund new ideas, breakthroughs, and economic growth and vibrancy across our nation.

Watch the briefing: Measuring the Impact of American Innovation.

Karen Kerrigan is President & CEO of the Small Business & Entrepreneurship Council and a member of the board of directors of the Bayh-Dole Coalition.