State of Government Funding for Tough Tech

This primer is a practical guide for tough tech founders, investors, and university technology transfer offices navigating federal funding under the current administration.

The U.S. federal government is the world's largest de-risker of capital-intensive, long-horizon technology. For tough tech ventures like advanced manufacturing, clean energy, biotechnology, and advanced materials, the extended development cycles and capital requirements of 7-15 years structurally exceed what private venture capital can sustain alone. Government has helped bridge this gap and support basic science that has led to major technological breakthroughs. The government’s role has not fundamentally changed, but there have been shifts in which technologies count as a national bet, who administers the programs that fund them, and how reliably announced dollars become available.
The primer documents four core findings for the startup ecosystem.

First, budgetary literacy is a strategic edge. Federal money moves through six distinct stages from Presidential request to cash disbursed, and it’s easy to conflate them. But they are distinct, and the gap between obligated and deployed capital reached historic proportions under the Biden-era energy programs with over $34 billion in obligated but undeployed funds. That backlog is now being actively exploited through rescissions targeting unobligated balances.

Second, defense is the durable pathway. Defense and dual-use technology pathways are the clearest near-term funding channels. They are growing in scale and increasingly accessible to non-traditional vendors. Following the One Big Beautiful Bill Act (OBBBA) of 2025, the enacted FY2026 budget brought combined defense resources to approximately $995 billion, a nearly 20% increase from FY2025.

Third, mandatory incentives anchor sector stability. Mandatory spending provisions lead to more stability because they remain structurally insulated from annual appropriation cycles. The mandatory spending provisions of the Inflation Reduction Act, i.e., tax credits for carbon capture, clean hydrogen, and advanced manufacturing, survived the current administration intact and represent the most structurally durable form of clean tech support available, while the discretionary grant programs built around the same legislation did not. They cannot be eliminated through annual appropriations. The discretionary grant programs built around the same legislation did not survive.

Fourth, human relationships facilitate funding outcomes. Navigating this landscape is ultimately a human system problem as much as a policy one. The program officer relationship, the timing of the appropriations calendar, and the ability to translate a technology's value proposition across shifting political vocabularies are as determinative of funding outcomes as the underlying technology itself.

This analysis draws on actual spending data account balances through FY2025, the President’s stated priorities, and enacted appropriation records. It is a snapshot in time, and FY2025 figures should be interpreted with caution given turbulence from executive funding freezes and court-ordered reinstatements. The full picture of the current administration's spending priorities will sharpen as additional data is published later in 2026, but this primer is designed to be actionable now, before that clarity arrives.