How to spur uncertain innovation - funding the most "promising" projects even though the output are uncertain? For startups, the financial constraints can shape their exploration. Optimal financing of high-potential startups by equity ventures (which might be influenced by the swing of the financial market) is different from blanket financial support to startups by public institutions including educational ones.
Some investors may think that high-risk Research and Development (R&D) is not worth investing. Startups have been competing for funds to finance their exploration and experiments. In the face of dynamic learning between the willing supply side and the earnest demand side, what should be the appropriate funding model to enable startups to survive against the odds?
Funding support from the public sector tends to have a slant on exploration while those private sector ones on exploitation. Managing financial risk by limiting support or expecting early return on investment may impact on the degree of innovative exploration and experiments. In any event, clustering of available financial sources here and there is a necessary condition to spur innovation in a place.
It may be that different creative funding models to support startups in a protective environment are not mutually exclusive. If so, the simplest one is almost always the best due to design efficiency and ease of administration. In the final analysis, a right balance has to be struck among the options so that good governance including due diligence and prudent financial management would not be compromised!