In the June 20, 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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Ohio Invests Nearly $74 Million in Wright Centers of Innovation, Biotech
With the state's current fiscal year winding down and a $1 billion deficit looming for the next one, Ohio has re-emphasized its commitment to building a stronger economic future through research and technology with a series of multi-million grant announcement over the past three weeks.

Part of Governor Bob Taft's Third Frontier Project, the state has competitively awarded nearly $20 million to each of the first three Wright Centers of Innovation. The centers program represents a $500 million, 10-year capital fund to support the construction and furbishing of an unspecified number of research and commercialization facilities associated with the state's academic research community.

In addition, the state announced seven awards totaling $17 million for smaller projects in areas such as neurostimulation and neuromodulation, nanocomposites, photoinstrumentation and photopolymerization, and flexible optical and electronics.

More information on the Wright Centers of Innovation, the Biomedical Research and Technology Transfer Fund and Ohio's overall Third Frontier Strategy is available at: http://www.connectohio.com/3rdfrontier

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Washington Technology Center Addresses Lack of Seed Capital
The Washington Technology Center (WTC) has created a new program that will make obtaining access to early-stage seed capital easier for companies outside the Puget Sound. WTC is Washington's statewide science and technology organization.

Under a $250,000 award from the federal Economic Development Administration that was matched by WTC, investors and companies in communities such as Yakima, Spokane, Tri-Cities, Bellingham, Port Angeles, Wenatchee and Vancouver will benefit from the two-year program.

Two activities will be at the core of the program. Modeled on an approach developed by the Oklahoma Center for the Advancement of Science and Technology (OCAST), WTC will work with local community development officials to create and connect area investor groups, thus maximizing and enhancing a deal flow across the state. WTC also will provide hands-on aid in developing business plans and preparing investor presentations to strengthen companies' chances for securing investment.

Findings from WTC-led statewide focus groups and the organization's 2003 Index of Innovation and Technology for Washington State (see http://www.watechcenter.org/techindex/) have indicated that early-stage financing is lacking outside Seattle. Several organizations in Seattle help entrepreneurs gain access to angel investors, but no single organization in Washington serves to bring smaller communities together to meet this need.

More information on WTC is available at http://www.watechcenter.org.

Note: The Washington Technology Center is the host sponsor for SSTI's upcoming annual conference, Building Tech-based Economies: From Policy to Practice, which will be held in Seattle on October 21-22. In addition to 25 great breakout sessions, the conference will provide a great opportunity to learn more about WTC. Information is available at: http://www.ssti.org/conference03.htm [expired]

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Texas Abolishes TDED, Governor's Office Takes Over
For Texas, the appropriate role for the state to serve in fostering economic development continues to evolve. With the passage of Senate Bill 275 earlier this month, the third organization in seven years will take the lead to encourage economic growth — this time with a strong focus on clusters and technology-based economic development.

The act abolishes the Texas Department of Economic Development (TDED) and creates an Economic Development and Tourism Office within the Governor's Office. Accompanying the transfer of duties will be just over 100 of the 127 TDED employees.

S.B. 275 requires the new office to identify and work to advance economic growth in key regional and statewide industry clusters. Advanced technology sectors identified for particular business development attention include semiconductors, information and computer technology, microelectromechanical systems, manufactured energy systems, nanotechnology, and biotechnology.

The new office will be responsible for:

In addition, the act authorizes the creation of several new tools and programs to encourage local technology-based economic development. For example, a Product Development Fund will be created to support the development production and commercialization of new or improved products. The fund is to be capitalized initially by the sale of bonds but then continued through loan repayments, fees, royalties and dividend income.

A Small Business Incubator Fund, to be capitalized and regenerated in a similar manner, will "provide financing to foster and stimulate the development of small businesses" in Texas. Preference in providing financing is to be given to biotech firms, SBIR award recipients, start-ups created to commercialize research funded in part by state funds, and designated SBDC clients.

The responsibilities for the Texas Aerospace Commission are transferred to a new Aerospace and Aviation unit within the Governor's Economic Development and Tourism Office.

The text of S.B. 275 is available at: http://www.capitol.state.tx.us

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Commerce Report Benchmarks Technology Incubator Performance, Practices
Citing inadequate information available to those who oversee technology incubators, yet emphasizing the incubators' significant and measurable impact on communities, the U.S. Department of Commerce's Technology Administration has released a study that highlights 17 of the nation's top incubators. A National Benchmarking Analysis of Technology Business Incubator Performance and Practices details the role business incubators have in technology development strategies.

Working with the National Business Incubation Association (NBIA), Commerce's Office of Technology Policy (OTP) sought to identify factors that contribute to business incubator performance. OTP collaborated with NBIA and the Southern Technology Application Center at the University of Florida to produce the study, ultimately to allow economic development officials to gauge their efforts and increase the return on investment in business incubation.

To determine the 17 "best-in-class" incubators out of a field of 79, NBIA researchers gathered data on employment and sales revenue growth from incubator managers. The 17 are said to constitute the top 10 programs nationally in either revenue or employment growth. These top programs offered a full array of incubator services and had a strong relationship with either a research-intensive university or medical research institution, or were located in a metropolitan area with a high concentration of technology-based companies and associated business support firms, according to the study.

Additional findings, as outlined by NBIA researchers, include:

The report concludes that "the strength and pervasiveness of ties to community technology generators, as well as the individual skills of the incubator manager, are greater predictors of performance than whether the incubator provides mentoring relationships or loaned executives for use by client firms."

A National Benchmarking Analysis of Technology Business Incubator Performance and Practices is available at: http://www.technology.gov/Reports.htm

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Fed Gov't Must Lead S&E Workforce Development, Says NSB
"The Federal Government has primary responsibility to lead the Nation in developing and implementing a coordinated, effective response to our long-term needs for science and engineering skills in the U.S. workforce in ways unlikely to be addressed by market mechanisms or interventions at the state and local levels," concludes the National Science Board (NSB) in the draft final report of its Task Force on National Workforce Policies for Science and Engineering. The NSB is the governing board for the National Science Foundation.

Global competition for science and engineering talent is intensifying, the NSB finds, at the same time that the number of U.S. citizens entering the fields is likely to decline unless more is done to attract students in demographic groups traditionally underrepresented in science and engineering (S&E) disciplines.

Five major policy recommendations are presented:

The public is invited to provide comments on the draft report until July 1. The report is available at: http://www.nsf.gov/nsb/.

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Useful Stats 2001: S&E Graduate Students by State
The National Science Foundation has released Graduate Students and Postdoctorates in Science and Engineering: Fall 2001, a collection of 54 statistical tables present the distribution of graduate students in science and engineering (S&E) across population segments, fields of science or engineering and by college and state. Overall long-term trends for S&E graduate students from 1975 to 2001 and short-term trends from 1994 to 2001 by detailed fields are presented.

Nationally, there were 426,342 graduate S&E students in 2001, up 2.8 percent from 2000. The tables report California, New York, Texas and Illinois had the most graduate S&E students in 2001; these same states represented the top four in the previous year as well.

To standardize the data for comparison across states, SSTI has prepared the accompanying table <http://www.ssti.org/Digest/Tables/062003t.htm> presenting the amount of academic R&D spending in each state per graduate S&E student. The results show Maryland, at $178,119, has the most R&D expenditures per student, followed closely by Alaska at $178,021. New Hampshire ranks third with an expenditure per student of $147,326 with Vermont fourth at $126,628. The national average academic spending per graduate S&E student in 2001 was $75,558, up 4.2 percent from 2000. The top 10 is rounded out with Washington, South Carolina, Hawaii, North Carolina, Missouri, and Maine.

Graduate Students and Postdoctorates in Science and Engineering: Fall 2001 is available at http://www.nsf.gov/sbe/srs/nsf03320/htmstart.htm

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Fireworks on the Fourth for NJCS&T?
The Fourth of July might just be a paid holiday for New Jersey's tech-based economic development agency after all. Since Governor James McGreevey released his FY 2004 budget request six months ago, the New Jersey Commission on Science and Technology has been living under a June 30 death sentence. Facing a deficit forecast in excess of $4 billion, the governor had called for the elimination of the $15 million program.

The Commission, which has been the state's lead S&T organization since 1985, administers an array of programs that support academic research, technology incubators, business financing, SBIR proposal assistance, and the state's affiliate network for the Manufacturing Extension Partnership. The latest independent analysis, assessing the long-term impact of Commission activities as of 2002, revealed an economic impact of $120 million annually and job creation figures averaging approximately 750 each year.

A June 18 article in the Bergen County Record reports the Democratic legislative leaders and the governor have reached a compromise restoring $8 million to the popular Commission. Democrats control the State House and the General Assembly. The Senate is split evenly between the Republicans and Democrats. While New Jersey's investments in building a stronger technology-based economy have shared strong bipartisan support in the past, a Republican reaction was not available before the Record article went to press.

More information on the New Jersey Commission on Science and Technology, including the 2002 impact assessment, is available at: http://www.state.nj.us/scitech/home.htm

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University Tech Transfer: Do the Good Die Young?
One of the greatest challenges for university technology transfer offices (TTOs) trying to maximize commercialization of university technologies is convincing faculty researchers to disclose their inventions, according to a new working paper from the National Bureau of Economic Research. Richard Jensen (Notre Dame), Jerry Thursby (Emory University) and Marie Thursby (Georgia Institute of Technology) – the authors of The Disclosure and Licensing of University Inventions – state the "higher quality" or "most productive" faculty are most often the least likely to be bothered with the distraction of pursuing commercialization.

The paper presents, as one plausible explanation, the fact 71 percent of university inventions require further research and development in a more applied direction than the original scientist or engineer may wish to expend time and resources. The disclosure process itself is time-consuming and takes many researchers away from their work.

As a result, many TTO directors believe the best technologies or hottest prospects remain on the floor or shelves of research labs. Many TTOs suggested substantially less than half of their university's technologies are disclosed for potential commercialization. In addition, the survey results suggest much of what is presented for commercialization is of low quality.

The timing for when an invention is disclosed – if very early at proof-of-concept or later with a lab-scale prototype – also varies by the "quality" of the faculty researcher and the particular field, the study finds.

Applying a game-theoretic model, the authors find that most TTOs, now numbering more than 200 across the U.S. almost have built into their structure a flaw preventing maximization regarding technology commercialization. They suggest the problem pervades the academic environment more generally as well. Only 34 percent of TTOs see additional sponsored research funding as an important licensing outcome — while 48 percent of central administrators at universities and 75 percent of academic inventors did. Conversely, 71 percent of TTOs and 69 percent of administrators saw royalty streams as extremely important while only 41 percent of the inventors did.

The fact that TTOs more closely reflect the interests of the administrators than the faculty may not be too surprising. TTOs report to the central administration, not the faculty or individual departments, and the performance measures for TTOs are often geared toward directly quantifiable items such as royalty and licensing income. The findings may raise the question for readers: can TTOs be designed in such a way to more effectively balance the interests of the administration and faculty? If so, would they achieve greater success in technology commercialization?

The paper also reports "universities with higher academic rankings for their faculty have a higher proportion of disclosures licensed in the proof of concept stage." Alternately, "we also find that universities with greater net income have a smaller proportion of disclosures in the proof of concept stage." The authors suggest that TTOs are focusing on those inventions that require the least amount of time to get to market, most often those at lab-scale prototype, to yield royalty and licensing income (their main motivating factors). As a result, "successful" TTOs as measured by short-term monetary return may discourage disclosure in inventions at the proof-of-concept stage, which occurs when the "higher quality" researchers in fields such as medicine, nursing and engineering are more likely to report.

The Disclosure and Licensing of University Inventions is available for purchase from NBER at: http://papers.nber.org/papers/W9734

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People & Organizations

Kenneth Alfred will become the first executive director for the new Ohio Fuel Cell Coalition.

Diane Duff is the new director for the National Governors' Association economic development and commerce committee. Duff formerly was executive director of the Alliance for Rail Competition.

Robin Schabes, Chicago Mayor Richard Daley's special assistant for technology, has announced her resignation. Schabes staffed the Mayor's Council on Technology Advisors.

Mass Ecomm has changed its name to the New England Business & Technology Association to better reflect its regional nature and broader mission.

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