Could DARPA have a positive return?

Spoiler alert - I suspect the answer is no, given any currently existing value capture mechanism

Profit is important for both practical and ideological reasons. A big reason that it’s important is that it allows institutions to be self-sustaining. In steady state, could an organization riffing off of DARPA sustain itself or would it constantly need external money?

It’s not an unreasonable question - technology eventually needs to be commercialized and diffused in order to actually impact people’s lives, which means that eventually it will end up as products on the market. However, it’s entirely possible that the product is so many steps removed from the people who created the original technology that you can barely see the connection, let along propagate value backwards.

Figuring out which assumptions to use is tricky because DARPA doesn’t do any research in house, so all research they fund was ultimately done by another organization and there isn’t a clear value capture mechanism. Additionally There is a significant class of innovations that would create drastically less value for the world if their value had been captured by their creators. On top of all of that, valuable things that can be traced back to DARPA-funded work are usually combined with a lot of other work. This research admixture is important because it means that a fixed % capture is not a good assumption because it would surely have a damping effect, while trying to figure out what % you can attribute to DARPA sponsored research might be near impossible. We stand on the shoulders of too many giants to give them all credit.

Given these hurdles, it seems important to first ask “how much monetary value has DARPA spent and created?” And then to ask “given different scenarios, how much of that could have been fed back and what would have been the effects?”

Even answering the former question is hard because DARPA is rarely the first or last organization to touch a project and it’s unclear how much their help contributed. For the sake of accounting, I’ll also only pay attention to inventions that did capture value and are directly traceable to DARPA. This approach will put the estimate on the extreme low-end. If an organization could be

There are several different scenarios for figuring out how much money DARPA could have captured.

  1. Fixed % of any related patent (ie licensing)
  2. Fixed fee on any company that could be traced back
  3. Some kind of tithing mechanism
  4. Has an option to invest in priced rounds for technology that came out

Based on the amount of money that universities are able to pull in through licensing fees, #1 is probably untenable. Licensing is a bad primary income strategy for PARPA.

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