When Science Funding Gets Stuck in Bureaucracy
A piece arguing that government and philanthropy should behave more like venture capitalists lands at an uncomfortable moment — just as the United States debates the role of the National Institutes of Health in funding basic research. Aishwarya Khanduja and Stuart Buck don't just diagnose the problem. They propose a structural overhaul that most institutional funders would find deeply threatening.
The Grant Application as a Five-Year Prison
Khanduja opens with a familiar frustration for any academic researcher: the grant proposal that demands you predict the next five years in minute detail, including preliminary data you need the grant money itself to generate. The irony is almost cruel. She writes, "Imagine if entrepreneurs — from laundromat owners to startups — had to go to the Federal Reserve to get financing for their business. Our economy would be at a standstill if that was the process. But that is how we treat science."
The comparison stings because it is accurate. A venture capitalist bets on a founder's ability to navigate uncertainty. A grant committee demands a Soviet-style five-year plan and then punishes deviations from it.
Khanduja continues: "As is well-documented, review committees tend to favor safe, incremental projects over truly new ideas that might fail. By the time you get the funding (if at all) and execute the research plan, you might learn that your first idea wasn't quite right and that an even better approach might work."
But amend the grant, and you face the bureaucracy all over again.
Imagine that you need the grant money to generate preliminary data proving your idea works — yet you must provide that preliminary data to get the grant money. The catch-22 is structural, not accidental.
The Incentive Problem Nobody Wants to Fix
Program officers at federal agencies face an asymmetric risk profile. If a funded project fails spectacularly, Congress holds a hearing. If a project succeeds brilliantly, the program officer receives the same salary as before. No bonus. No recognition. No upside.
Khanduja points to the mRNA vaccine story as evidence. "Scientists like Katalin Karikó spent decades struggling to get NIH funding for mRNA research. Grant reviewers thought it was too risky. Karikó's university demoted her more than once, ultimately driving her to move to BioNTech, where she had the freedom to pursue the work that ultimately enabled the COVID vaccines."
The Department of Defense's Defense Advanced Research Projects Agency did fund mRNA work in the early 2010s. But when its then-director discussed the research with NIH colleagues, she was told the approach was crazy. History vindicated the risk-takers and embarrassed the cautious.
The Coordination Tax
One of the sharpest passages in the piece describes what happens when a researcher pieces together funding from multiple sources: "You get a 100K grant from Foundation A, 100K from Foundation B, and 100K from Foundation C, and the rest of the money from NIH. Now you have to spend a huge amount of time managing four different sets of reporting requirements in which you pretend to have spent each pot of (completely fungible!) money on a very specific list of tasks."
The analogy that follows is devastating: demanding to see a receipt proving your laptop purchase allocated exactly the right amount to the letters A through M on the keyboard. Funders care about compliance theater instead of outcomes.
Khanduja's conclusion on this point: "Traditional funders should start caring about the ultimate results (and only that) from their grants, and stop requiring such nonsensical intermediate reporting from their grantees."
The Asymmetry That Makes Venture Capital Work
Here the argument shifts to why the venture model tolerates failure differently. A single massive success compensates for dozens of total losses. Khanduja writes, "VCs expect 70 percent of investments to return nothing, 20 percent to return modest multiples, and 10 percent to return enough to make the fund profitable."
Government cannot operate this way. When a solar company backed by the Department of Energy collapsed, it became a political scandal — even though the department's overall clean energy portfolio returned a profit to taxpayers. The public narrative fixated on one visible failure.
Khanduja's prescription is politically almost impossible: "Members of Congress should stop highlighting individual scientific grants that they think are ridiculous or that failed. To the contrary, they should start demanding that half of all NIH projects 'fail'! After all, if successful outcomes can be predicted in advance for all NIH projects, then why bother to do the research in the first place?"
A one hundred percent success rate, she argues, means the government is funding only marginal projects or exaggerating results. Or both.
Scientists Are Not Natural Funders
The piece makes a distinction that gets almost no airtime in academic circles: being a good scientist and being a good science funder are different skill sets. Khanduja compares it to athletics — the best players do not always become the best coaches, and some of the best coaches were never superstar athletes.
"Traditional science funding almost universally puts scientists in charge of distributing funding, whether through peer review panels or program officer stints. We do almost nothing to identify, promote, or celebrate the skills and careers of science funders."
In venture capital, investors and entrepreneurs occupy distinct roles with separate incentives and career trajectories. Journalists, former operators, and people from unrelated backgrounds thrive as investors. The science funding world remains a closed loop of researchers funding other researchers.
Critics Might Note
Critics might note that venture capital's tolerance for failure is enabled by a profit motive that does not translate neatly to public health research. A failed startup costs limited partners money; a failed cancer research initiative costs patients time they may not have. The asymmetry works for returns on investment, but the social cost of scientific failure is not distributed the same way.
Critics might also observe that DARPA — often held up as the exception that proves the rule — operates with a tiny budget relative to the National Institutes of Health and benefits from a mission-driven culture that is hard to replicate at scale. The Defense Advanced Research Projects Agency model works precisely because it is small, temporary, and insulated from the political pressures that govern larger agencies.
Bottom Line
Khanduja's argument is structurally sound and politically naive in equal measure. The venture capital model does solve real problems — speed, flexibility, risk tolerance — that plague government and philanthropic science funding. But asking Congress to celebrate failure and demanding that agency bureaucrats operate like venture capitalists ignores the democratic accountability that makes public funding legitimate in the first place. The tension between those two values is not a bug. It is the system working as designed.