Innovation Ecosystems Will Play a Crucial Role in the Third Era of American Infrastructure.

Accelerate Impact: A OneValley blog series dedicated to sustainability and social responsibility in the acceleration industry. This is the third article in a four-part series. Read part two here.

The next decade of the American economy will be defined by the ambitious agenda laid out in the Chips Plus Act and the Inflation Reduction Act(IRA). Both bills invest heavily in sustainability and innovation-related infrastructure essential for economic growth. In the same way that the New Deal in the 30s and DARPA’s creation of the IP protocol in the 60s and 70s shaped decades of ensuing economic growth, investments from Chips Plus and IRA will influence the nature of our economy for years to come.


Looking back at inflection points in the US economy, we find a recurring theme- when the government makes a meaningful investment in infrastructure, the US economy tends to experience years, if not decades, of economic growth. The types of companies that thrive following these periods of government investment tend to be well-positioned to take advantage of the newly created infrastructure.


The first era of American Infrastructure occurred during the New Deal when the US built 650,000 miles of highways and roads and 125,000 public buildings, bridges, reservoirs, irrigation systems, and parks. This investment enabled the movement of raw materials, people, food, water, and consumer goods. General Motors emerged as one of the largest companies during this period, as American households took advantage of the newly created network of highways.


The second era of American infrastructure arose when the Defense Advanced Research Projects Agency(DARPA) created the Internet Protocol(IP) standard. This government’s development of the Internet protocol created Silicon Valley as we know it today. Companies such as IBM, Xerox, Apple, Facebook, and Google all exist today thanks to DARPA’s development of the IP standard.


The passage of Chips Plus and IRA puts us on the precipice of the third era of American infrastructure, where investment will result in the creation of hundreds of new companies and a transformed economy. Here’s what it will look like:


  • ‘First era’ infrastructure will be reinvented to be sustainable-This means that resources like energy and water must be managed prudently so they can be reused in perpetuity. We will rethink food, consumption, and mobility in a way that will enable prolonged periods of economic growth that come at the expense of our environment.

  • US semiconductor Infrastructure will be increased-Microchip manufacturing capacity will be onshored and scaled within the US. Computer chips will be treated like natural resources critical to economic competitiveness and national security.

  • Innovation Infrastructure will be further developed-Government labs and Innovation Centers will become essential centers of R&D and commercialization. Chips plus and IRA commit over $32 Billion will go towards technology transfer and commercialization. We will likely see hundreds, if not thousands, of new American companies created from this investment.

Companies will come under immense pressure to understand how they can adapt to survive and thrive in this new era. Those who learn how to innovate for a more sustainable economy will be the next Microsoft or Apple; those who fail will ultimately go the way of Xerox Parc.


In our next installment, we’ll discuss how players involved in startup funding must adapt to capitalize on this Third Era of Infrastructure investment.

 

About Alex:


Alex Fang serves as the Director of Social Impact at OneValley, where he helps sustainability-minded founders grow their startups.

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