Formation of national innovation system in the Russian Federation is impossible without active participation of business in R&D projects. Public funding for such projects will stimulate business participation, provided that it is based on criteria that are consistent with the driving forces behind the development of the innovation process. The impact of public funding of R&D projects on the behavior and performance of private sector companies is examined in the context of the concept of additionality. To identify the criteria for public funding, international experience is analyzed, and the features of the application of the criteria in the Russian Federation are also considered. The conditions necessary for the optimal application of each of the criteria are determined. It is stated that application of the proper criteria of public funding of R&D projects with business participation will facilitate achieving balance of interests among the participants of the national innovation system.