In the September 10, 1999 Issue:

Copyright State Science & Technology Institute 2002. Information in this issue of the SSTI Weekly Digest was prepared under a cooperative agreement with the U.S. Department of Commerce, Economic Development Administration. Redistribution to all others interested in tech-based economic development is strongly encouraged — please cite the State Science & Technology Institute whenever portions are reproduced or redirected. Any opinions expressed in the Digest do not necessarily reflect the official position of the U.S. Department of Commerce.

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Venture Capital Explodes During 2nd Quarter of `99

Buoyed by a strong national economy, venture capital firms have invested at an all-time during the 2nd quarter of 1999, according to the latest quarterly survey by PricewaterhouseCoopers. At $7.61 billion for the quarter, venture capital investments were more than double the total reported only one year ago. The current survey reflects the investment activity of 684 venture capital firms.

Three of the last four surveys have revealed record levels of investment. The previous high, set in the first quarter of 1999, was $4.31 billion -- 41 percent over the earlier record of $3.77 billion set during the third quarter of 1998.

James Atwell, Managing Partner of the Venture Capital Practice of PricewaterhouseCoopers, predicts the current record will reign longer than previous highs. "All the stars were aligned in the second quarter: a solid economy, a favorable IPO market and a strong stock market. That combination resulted in a level of investment that is not likely to be eclipsed in the near future."

Average funding per company rose 57 percent during the second quarter to $7.4 million versus $4.9 million a year ago. The number of companies receiving venture capital investments climbed to 992, 30 percent higher than the same period in 1998.

Technology-related companies accounted for 90 percent of all investments for the second quarter of 1999. Compared to the second quarter of 1998, the number of Internet-based companies receiving investments more than doubled to 412 in the second quarter of 1999. These same firms received $3.8 billion -- four times the amount Internet companies received twelve months ago, and greater than all of 1998's Internet-based VC investments combined.

Most regions of the country also set new records for venture capital investment, according to the survey. Silicon Valley held its leadership position, accounting for 34.8 percent of all venture capital investments reported. The New England region, anchored by the Boston metro area, saw investments top $1 billion for the first time.

Reviewing investments on a state by state level, however, reveals a wide disparity of venture capital activity geographically (see accompanying table).

Details of the PricewaterhouseCoopers Money TreeJ survey of Venture Capital Investments for the 2nd quarter of 1999 and four previous quarters can be viewed at http://204.198.129.80/highlights.asp

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$50 Million Research & Technology Fund Underway In Indiana

Last week, Indiana Governor Frank O'Bannon named the Board of Directors to oversee the design and administration of the new 21st Century Research & Technology Fund. By law, the Lieutenant Governor serves as chairman for the board.

Earlier this summer, the Indiana General Assembly approved a budget for the initiative of $50 million for the next two years for the initiative. This level of funding, coupled with the existing programs of the Indiana Business Modernization Technology Corp. (BMT), moves Indiana into the top tier of states investing in technology-based economic development.

The 21st Century Research and Technology Fund is to provide grants and loans that support economic development by addressing one or more of the following goals:

The nine-member board consists of: the Lieutenant Governor; three directors representing higher education, including two public and one private research institution of higher education; three directors representing business interests, including a high technology business, a company investing in R&D in the state, and a venture or growth capital firm; one director with expertise in economic development; and, the final board member is to have expertise in academic research, technology transfer, or collaborative research between the public and private sectors.

During the first board meeting, scheduled to be held this week, members were to begin mapping out the fund's objectives. The format for funding proposals is to be available by the end of September. Parties interested in applying are asked to submit letters of intent by September 23. Full proposals for the first round of funding are due November 1, 1999.

The enabling legislation for the 21st Century Research and Technology Fund currently expires on January 1, 2001.

Governor O'Bannon appointed Kathy Davis to spearhead the start-up of the fund. She can be reached at (317) 635-3058 or by email at kdavis@21stcentury-research.org. For more information, see http://www.21stcentury-research.org.

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EPA Makes 48 SBIR Phase I Awards

Small companies' interests in developing environmental technologies appear to growing. Between 1998 and 1999, the Environmental Protection Agency (EPA) saw a 64 percent increase in the number of SBIR Phase I proposals submitted. The number of awards made by the agency was unable to keep pace, growing by only 30 percent. As a result, EPA was able to fund less than 9 percent of the 535 SBIR Phase I proposals received in 1999. In 1998, more than 11 percent of the proposals were funded.

The accompanying table presents the distribution of EPA awards and proposals by state.

Abstracts of EPA awards for the 1999 SBIR Phase I solicitation have not been posted on their website currently but should be soon. The web address is: http://es.epa.gov/ncerqa/sbir/

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Taratec Corp. To Prepare National S&T Indicators

Taratec Corporation of Columbus, Ohio has been awarded a $44,500 contract from the Department of Commerce's Office of Technology Policy (OTP) to prepare a report of science & technology indicators for all 50 states. The indicators are intended to assist Commerce in evaluating the impact and outcome of projects funded by the Experimental Program to Stimulate Competitive Technology (EPSCoT) as well as other OTP programmatic improvements.

The solicitation, released in early July says the report will be completed for Commerce in 18 weeks (refer to the 7/2/99 SSTI Weekly Digest Addendum for more details). Commerce will be responsible for any further publication and distribution.

For more information, contact Anita Balachandra with the EPSCoT program at 202/482-8004 or by email at Anita_Balachandra@ta.doc.gov

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Correction

The September 3, 1999 issue of the SSTI Weekly Digest contained some errors in the SBIR tables. The correct information is below. Revised tables are available for review on our website at:  http://www.ssti.org/Digest/Tables/090399t.htm

In the Department of Education's SBIR Phase II awards, the totals for Michigan and Minnesota were inadvertently switched. There were no Phase II proposals received nor awards made to Michigan firms this year. Minnesota firms submitted two proposals, both of which were selected for Phase II funding.

The Department of Education awarded one award out of three proposals received from firms located in Wisconsin. In the table, we accidently relocated these businesses to Wyoming. No Education Phase I SBIR proposals were received from Wyoming firms this year.

In the table presenting NASA SBIR Phase II awards, the correct statistics for Michigan are 0 awards from four proposals. The correct figures for Mississippi are two awards to two different firms from three proposals submitted.

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