In the January 31, 2003 Issue:

Copyright State Science & Technology Institute 2003. 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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Tech Talkin' Govs IV
As more states settle into their 2003 legislative sessions, fewer Governors are giving Inaugural or State-of-the-State addresses. During the past 10 days, the Governors of Alaska, Delaware, Georgia, Maryland, Massachusetts, Vermont and Wisconsin offered outlines of their priorities for the coming year(s). The following excerpts are directly relevant to building a technology-based economy.

Georgia
Governor Sonny Perdue, State of the State Remarks, January 27, 2003

"Knowledge is the new economic fuel, not physical labor. It is the essential ingredient for success in this information age. Providing all our citizens with the knowledge, skills and training they need to compete in the information economy is the best economic development plan we can have. Education and workforce training will prepare our people for the jobs.

"We will continue to welcome outside companies relocating to Georgia. However, to achieve real leadership we have to grow our own companies and develop our own industries, based on our own innovations. I see our state developing homegrown industries with global reach... Whether in communications, medical sciences, logistics or agricultural technology, let's raise our aim—not just to be a player, but a winner.

"I want the world to beat a path to Georgia's door. I want companies from around the world bidding to license the best innovations and latest technological breakthroughs from Georgia universities, companies and research centers.

"To make that happen, I'm undertaking a comprehensive review of our tax policies and our state regulations with an eye toward reforming them to encourage, not frustrate, entrepreneurship in our state. Georgia's reputation should be of a place where the government gets out of the way and lets the natural genius of our people create, build and grow our state.

Vermont
Governor James H. Douglas, State of the Budget Address, January 23, 2003
"Today, I am announcing a $106.8 million job creation and economic security package. My jobs program is the most significant investment in the entrepreneurial spirit of Vermonters in recent history. At full implementation, this initiative will create thousands of new jobs and save thousands more...

"My jobs program includes several new proposals that will make more money available to entrepreneurs through the Vermont Economic Development Authority so they can begin new businesses and grow existing ones. I propose a major expansion of the Vermont Jobs Fund, to allow the financing of $60 million in low-interest loans to entrepreneurs.

"I also propose the creation of the Vermont Opportunity Fund that will provide $25 million in mezzanine level financing for established small businesses that require new capital to take their next step.

Wisconsin
Governor Jim Doyle, State of the State Address, January 30, 2003

"... the best jobs program [is] creating an environment hospitable to innovation. I believe it's creating the best educated work force in America. I believe it's helping small businesses with the crippling cost of health care.

"We can't run Wisconsin's economy from this room, and we shouldn't try. Our job is to unleash the innovative spirit of our people. Today, I am announcing that I will bring government, labor and business together to craft and implement a single, focused strategic plan to grow Wisconsin's economy.

"Here in Madison, the University has always been an engine for economic growth. For example, the cutting edge research in biotechnology at the University will provide not only dramatic medical breakthroughs, but also millions of dollars in new investment, new jobs and new opportunities for our people. But we also must take advantage of the resources and expertise of our other university and technical college campuses to foster economic growth throughout the state."

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EDA Invites Nominations for 2003 Economic Development Awards
The Economic Development Administration (EDA) has announced it is accepting nominations for the Excellence in Economic Development Awards 2003. The awards will be presented in Washington, D.C. at EDA's National Conference Engines of Economic Growth for the 21st Century May 7-9, 2003.

Nominations for the awards will be accepted across seven categories:

The awards are designed to showcase best practices and highlight outstanding results. Nominated investments may be specific projects of national importance or the cumulative activities of the nominee.

The competition is open to nonprofit organizations, local, state and regional government entities, and colleges and universities. The top three nominees in each category advance as finalists. Award recipients will receive a commemorative award and will be invited to highlight their successful strategies at EDA's national conference.

Nominations are due February 28, 2003. The program brochure, which includes an application form, is available for download at: http://www.osec.doc.gov/eda/

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NRC Finds Public-Private Partnerships Crucial for Tech Development
Public-private partnerships involving cooperative research and development activities among industry, universities and government laboratories can play a key role in speeding new technology from the concept stage to the marketplace, argues a new report conducted by the National Research Council (NRC). The Council's Board on Science, Technology, and Economic Policy analyzed two major innovation and award programs, the Advanced Technology Program (ATP) and the Small Business and Innovation Research (SBIR) program, in preparing the NRC report.

Government-Industry Partnerships for the Development of New Technologies considers how partnerships, representing a way to improve innovation output in the U.S., can lead to benefits such as new products, new processes and new knowledge. The report states, "Partnerships facilitate the transfer of scientific knowledge to real products... (They) help by bringing innovations to the point where private actors can introduce them to the market."

Successful partnerships such as ATP and the SBIR program, NRC notes, are characterized by a variety of factors: industry initiation and leadership, public commitments that are limited and defined, clear objectives, cost sharing, and learning through sustained evaluations of measurable outcomes. Partnerships like these, being diverse in structure, mechanisms and goals, also demonstrate a proficiency to apply the lessons learned to program operations.

Not all partnerships bearing these characteristics will be successful, however. The Council cautions, "Indeed, the high risk–high payoff nature of innovation research and development assures some disappointment."

The NRC report also includes analysis of the SEMATECH consortium and science and technology parks associated with the NASA Ames Research Center and Sandia National Laboratories.

The study offers four key policy recommendations:

The Council is a part of The National Academies as one of several private, nonprofit institutions that provides science, technology and health policy advice under a congressional charter. The summary report is available to read online at: http://www.nap.edu/catalog/10584.html

Alternately, copies of the 150+ page Government-Industry Partnerships for the Development of New Technologies can be ordered from SSTI for $26.95 plus shipping and handling.

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Report Analyzes Entrepreneurship in Maine, Nevada and Pennysylvania
State and local governments are starting to develop entrepreneurship programs, but the past decade's progress could be threatened by the looming fiscal crisis facing the states, according to a new study released by the National Commission on Entrepreneurship (NCOE) and the Center for Regional Economic Competitiveness (CREC).

Understanding Entrepreneurship Promotion as an Economic Development Strategy: A Three-State Survey is part of preliminary research dedicated to understanding the growth of entrepreneurial development programs and the effect of these investments on new economic activity.

Economic development leaders in Maine, Nevada, and Pennsylvania, surveyed for the study, were asked to detail the nature of their entrepreneurial development programs, as well as efforts to measure their impact. Several results emerged from these initial surveys, which will be used to help refine a larger study of entrepreneurship investments across the U.S. The results include:

If entrepreneurial development programs are to survive, the report suggests, they should draw funding from a wider range of range of sources and include fees for their services. Smaller communities often are unable to support the necessary resources and participants to make these services available at a reasonable cost, so regional programs should be emphasized, the study argues. The report finds, "The average budget available is about $1.5-$1.6 million for regional and state entrepreneurial development initiatives as opposed to the average single-jurisdiction initiative, which has only $248,000 available."

Funded by the Ewing Marion Kauffman Foundation, NCOE is a nonpartisan, nonprofit organization that focuses public policy on entrepreneurship. The CREC is affiliated with ACCRA, a nonprofit membership organization, and with George Mason University's School of Public Policy. The NCOE/CREC report is available at: http://www.ncoe.org/research/3statesurveyfin.doc

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Dallas-Fort Worth Adds Building Blocks for TBED
During the past two years, efforts have been launched in the Dallas-Fort Worth metroplex to boost its capacity for building a technology-based economy. The efforts have been directed toward increasing public-private cooperation, especially across organizations and jurisdictions that traditionally have thought of themselves as competitors, and conducting a critical review of the area's strengths and weaknesses.

Egos can get bruised in the critical assessment phase for any community or state, so outside experts may be used for an objective and independent review. For example, the Dallas Citizens Council (DCC) sponsored a study last year identifying the strengths and weaknesses of six public universities in the Dallas-Fort Worth Metroplex area. The goal: raise the universities to the level of the University of Texas at Austin and Texas A&M. At the same time, the BiotechnologyDallas Coalition released an update of its initial 1998 assessment of the region as a potential biotech center. The Dallas advocacy group set forth its study to stimulate economic development focusing on biotechnology and the life sciences. Both studies outline key initiatives the Dallas-Fort Worth region must undertake if it and the region's six universities are to compete for future economic growth.

Strengthening the Higher Education Research Enterprise
The Dallas Citizens Council study, Metroplex Higher Education Benchmarking Study and Enhancement Strategy, considers the area's largest universities – the University of North Texas, University of Texas at Arlington, University of Texas at Dallas, University of Texas Southwestern Medical Center, Texas Woman's University, and the University of North Texas Health Science Center – and discusses the role of each. The universities are compared with those in similar metropolitan areas such as Atlanta, Chicago, Houston, Research Triangle and Silicon Valley.

Creating a top tier research university in the Metroplex, the study argues, would overcome two concerns perpetuated by the region — a minimal output of degrees in engineering, science and business information systems and an inability to produce the research capacity necessary for sparking advances in biotechnology.

A "tier one" university in the Metroplex could have a ripple effect on the entire region, the study suggests. Such an institution with top research capacity may draw top academic researchers who, in turn, attract academically elite students and "businesses looking for synergy between their needs and the academicians' research agenda." The researchers help bring federal research dollars to the local economy, and the students offer a talented science and engineering workforce, thus providing a base for entrepreneurial leadership.

In conclusion, the report recommended creating a strategic research alliance between the DCC designated universities and Metroplex businesses to focus their resources on research and to bring more research money to the region. As a result, the Texas Research Alliance was formed in December 2002 to serve those purposes.

Encouraging the Biotech Industry
Building on its 1998 groundwork, the 2002 update to BiotechnologyDallas centers on the industry's health care segment and related industries such as medical devices and telemedicine. It also considers how new studies and efforts released since 1998 have worked toward attracting biotechnology to the Metroplex.

Dallas already has some important resources for developing the biotech industry, the report states, and Dallas leads other Texas cities in venture capital investments. In 2001, $1.5 billion was spent on venture deals in Dallas with $51 million directed into Dallas-based biotech companies — a figure representing more than the combined total of Austin and Houston.

In the study's action plan, numerous goals are set with a target date of 2005. At least one of these goals is underway. In November 2002, the Dallas Morning News reported that 13 acres near the UT Southwestern Medical Center were sold for $4.15 million to build a biotechnology incubator there. The action plan proposed building the incubator as part of a BiotechnologyDallas Corridor near the UT Southwestern Medical Center. Other action steps include:

Copies of the DCC study may be obtained by e-mailing Donna Halstead, president of the Dallas Citizens Council, at dhalstead.dcc@sbcglobal.net. BiotechnologyDallas is available at: http://www.biotechnologydallas.org/

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Useful Stats: 4th Quarter VC Data by State
The steady decline of venture capital abated in the fourth quarter of 2002 with total investments of $4.2 billion, essentially flat from the prior quarter of $4.5 billion, according to the PricewaterhouseCoopers/Venture Economics/National Venture Capital Association MoneyTree Survey. A total of 692 companies received funding in the fourth quarter compared to 671 companies in the third quarter.

Venture capital investing has continued to decline since the run-up that peaked in 2000. For all of 2002, venture investing totaled $21.2 billion, approximately half of 2001's $41.3 billion. Investment levels in 2002 were similar to 1998, when $21.6 billion went to entrepreneurs.

As it was for all of 2002, the life sciences sector remained the bright spot for the fourth quarter, increasing 15 percent over the prior quarter with $960 million in investments. Life sciences totaled $4.7 billion for all of 2002, accounting for 22 percent of all venture capital investing. The biotechnology and medical devices industries attracted $2.8 billion and $1.9 billion, respectively, in 2002.

All other major industries experienced declines for the quarter and the year. Software, perennially the leading industry category, maintained its ranking in 2002 with 799 deals attracting $4.3 billion, or 20 percent of all venture investing. Telecommunications followed with 335 deals accounting for $2.9 billion, or 14 percent of the annual total.

SSTI has prepared a state-by-state table <http://www.ssti.org/Digest/Tables/013103t.htm> to present the MoneyTree™ results for 2002. Data for the number of deals and the total amount invested per quarter, as well as aggregate totals, are included in the table.

Thanks go to Cindy Cieluch of Porter Novelli Austin for supplying SSTI with the data found in the table. The fourth quarter MoneyTree™ survey results will be available on February 14, 2003 at three websites:
http://www.pwcmoneytree.com, http://www.nvca.org, and http://www.ventureeconomics.com.

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People

W. Glenn Cornell has been named commissioner of the Georgia Department of Industry, Trade and Tourism.

Illinois Governor Rod Blagojevich has appointed Julie Curry as deputy chief of staff for economic development and labor.

Andrew Kim is the new policy director for Tennessee Governor Phil Bredesen.

Dr. Donald Smith has been named interim chief executive officer of the Pittsburgh Life Sciences Greenhouse.

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