In the June 13, 2005 Issue:

Copyright State Science & Technology Institute 2005. 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.

Subscription to the SSTI Weekly Digest is free. If you are reading a forwarded copy of this issue and would like to receive your own copy each week directly, please subscribe at http://www.ssti.org/Digest/digform.htm. Requests to unsubscribe also may be completed at http://www.ssti.org/Digest/digform.htm.

Iowa Recommits $500M for Values Fund
After being struck down by the Iowa Supreme Court in 2004, the state legislature recently passed legislation re-creating a $500 million version of its Grow Iowa Values Fund. The bills commit $500 million over 10 years to support tech-based economic development and other economic development initiatives. Gov. Tom Vilsack signed the measures on June 10.

Passed late last month, House Files 809 and HF 868 authorize and allocate $50 million per year over the next 10 years to the newly resurrected Grow Iowa Values Fund, which was first proposed by Gov. Vilsack in 2003 (see the Jan. 17, 2003 issue of the Digest). The legislation allocates $35 million per year to the Iowa Department of Economic Development (IDED) for business start-ups, expansions, attraction and retention.

Universities will receive $5 million per year for capacity-building infrastructure in areas related to technology commercialization, entrepreneurship and business growth, and $7 million will support community college training and retraining programs.

In addition, HF 868 expands the state's R&D tax credit to allow up to $1 million in total credits for renewable energy generation, and allows for a 20 percent tax credit for contributions toward revolving funds to be established by new economic development regions. In lieu of tax credits, nonprofits contributing to the funds may receive state grants.

To help improve the state's ability to assist tech firms, the Economic Development Board must establish a Technology Commercialization Committee to be staffed by a new Technology Commercialization Specialist to be hired within IDED.

Included in the allocation is a requirement to support a business accelerator program at an undetermined level. IDED already supports several incubators, most recently announcing a $175,000 grant to the new Northeast Iowa Business Accelerator. The new incubator will be housed on the campus of Northeast Iowa Community College and draw on the college's staff and the staff of Clarke College, the University of Dubuque and Loras College, according to the Telegraph Herald.

On again/Off again/On again
New TBED initiatives with large price tags tend to draw unwanted attention in state legislatures, particularly when the governor and the House leadership belong to different political parties. The original Values Fund fell victim to that: A popular idea that everyone liked got bogged down with items only one side wanted.

During the 2003 regular legislative session, Democrat Gov. Vilsack and Republican leaders of the General Assembly were at odds over the original legislation of the Grow Iowa Values Fund bill and ultimately were unable to reach a compromise. The governor called a special session during which two separate bills were passed relating to the Values Fund. One of the bills, HF 692, created the fund and contained unrelated regulatory and tax policy favored by the General Assembly but opposed by the governor. In response, Gov. Vilsack vetoed many of the unrelated provisions, extending his line item veto authority into uncharted waters. The legal counsel for the legislature challenged the governor's move as unconstitutional.

The District Court ruled in favor of the governor stating that HF 692 was, indeed, an appropriations bill and therefore the line item vetoes were constitutional. However, the Supreme Court overrode the decision and the entire bill did not become law.

This time around, efforts to re-establish the Values Fund were led in partnership with key Republican members of the legislature, particularly Representative Clarence Hoffman, chairman of the House Economic Growth Committee.

More information about the Grow Iowa Values Fund is available at: http://www.iowalifechanging.com/ivfboards.html

return to the top of the page

Texas Legislature Approves Funding for Emerging Technology Fund
The Texas Legislature recently approved $100 million of the original $300 million requested by Gov. Rick Perry for the Emerging Technologies Fund (ETF). Another $100 million is expected to be available from the state's rainy day fund if revenues exceed forecasts.

The ETF aims to foster emerging technologies, enhance university-industry collaboration, and promote technology commercialization (see the Dec. 20, 2004 issue of the Digest). Much of the fund activity will be distributed through regional economic development efforts.

In addition to the $100 million for ETF, the legislature also approved $180 million to replenish the governor's Enterprise Fund, which has been criticized for its lack of accountability and structure. In 2003, the legislature appropriated an initial $295 million for the fund to be used at the governor's discretion in luring jobs to the state. Opponents voiced concern that it was not feasible to project specific numbers of jobs created because grants can be used for employee bonuses and equipment not related directly to job creation, according to the Austin Review.

The nonpartisan Center for Public Policy Priorities states that if deployed correctly, the Enterprise Fund has the potential to enhance job quality and suggests that more stringent accountability and meaningful disclosure would promote public trust and bolster program integrity. Gov. Perry, however, touts the program as a success. In an October 2004 press release, the governor said the fund has attracted employers that have committed to the creation of more than 14,000 new jobs and $6 billion in direct economic investment for the state.

As a component of the Enterprise Fund, the new ETF is under scrutiny. House Democratic Leader Jim Dunnam of Waco criticized the fund, calling it the "governor's slush fund" during a House budget debate, the Associated Press reports. While management of the fund may continue to spark controversy, the following structure is required:

The governor may reallocate money from one component of the fund to another with approval of the lieutenant governor and speaker of the House. Industries that are eligible for grants under the ETF are those that lead to immediate or long-term creation of high quality new jobs or lead to medical or scientific breakthroughs, according to the governor's office. Gov. Perry is expected to appoint a 17-member committee comprised of industry leaders and nationally recognized researchers by July 1.

More information is available from the governor's website at: http://www.governor.state.tx.us/

return to the top of the page

Regional Partnership to Boost University Tech Commercialization in Michigan
Catering to high-tech companies built on innovation, the nonprofit regional collaboration dubbed SPARK, hopes to transform Ann Arbor, Mich., into more of an entrepreneurial hub and triple the number of technology jobs within five years.

University, business, government and community leaders are partnering to provide services to new and emerging high-tech businesses and organizations within biotechnology, information technology, energy, advanced manufacturing, and security. Five primary services to be offered include business acceleration, business outreach, talent development, early-stage funding, and regional marketing and events.

The idea for SPARK grew out of a discussion last year with University of Michigan (UM) president Mary Sue Coleman. The university's Tech Transfer National Advisory Board maintained that, in order for the university's tech transfer efforts to reach full potential, the region needed to be a more fertile ground for innovation and business creation with the ability to attract talent and resources.

SPARK already has raised $2 million toward a $3 million, three-year operating goal with the largest commitment coming from UM. The university pledged $600,000 over the next three years with an additional $400,000 to follow if the program is successful.

More information is available at http://www.annarborspark.org/.

return to the top of the page

Nanotech Aim of New Mid-Atlantic Collaboration
While the U.S. wrests its way to remain the global leader in nanotechnology (see the May 30 issue of the Digest), some states and regions are wasting no time to secure their own world-class cluster in the field. Officials in Maryland, Virginia and the District of Columbia agreed earlier this month to form the Chesapeake Nanotechnology Initiative (CNI), a collaborative effort to strengthen the region’s capabilities in nanotech research, development and commercialization.

Maryland Gov. Robert Ehrlich Jr., Virginia Gov. Mark Warner and District of Columbia Mayor Anthony Williams each pledged to sign a memorandum of agreement to launch CNI. A 12-member steering committee will direct CNI activities in 2006 and beyond, recommending ways to accelerate business development and scientific advancement in nanotechology.

Nanotech involves the development of devices at scales of less than 100 nanometers. Research on the nano-scale requires a cross-disciplinary approach, utilizing knowledge of physics, chemistry, biology, computer science and engineering. Its breakthroughs have included metal rubber for artificial muscles; lighter, stronger vehicle bodies; self-repairing parts; microscopic sensors; super-hard cutting tools and improved fibers, films and coatings. Extensive advances are anticipated for the field of medicine.

Collaborating across scientific fields, let alone with researchers in labs at different institutions and corporations, presents sizable challenges to encourage nanotech-based innovation. The goal of CNI is to help address those communication challenges.

To build a nanotech business cluster for the Mid-Atlantic region, CNI will encourage closer working relationships among science, technology and business leaders from private industry, academia, and federal, state, and local governments. The initiative hopes to build off of the many existing academic, industrial and federal research strengths in the region.

CNI is sponsored by the Maryland Department of Business and Economic Development and Virginia's Center for Innovative Technology. For more information, visit http://www.chesapeakenanotech.org/.

return to the top of the page

Recent Research
Can California Keep Its BioTech Edge?
California leads the world in biotech research today and likely will continue to dominate in the years to come according to The Dynamics of California's Biotechnology Industry, a new report from the Public Policy Institute of California. The report concludes that California retains a sharp biotech edge, despite reports of firms leaving the state or establishing plants elsewhere.

Authors Junfu Zhang and Nikesh Patel note that the state generates more than half of U.S. biotech revenues and accounts for nearly half of national R&D spending. California biotech garnered 46 percent of the venture capital invested in biotech between 1992 and 2001 and accounts for 40 percent of the nation’s biotech jobs, according to the authors.

Nonetheless, Zhang and Patel warn against assuming biotech will produce the same economic boom for California and the U.S. as produced by information technology during the last decade. Zhang and Patel point to the longer time for biotech start-ups to reach profitability, the lack of network effects driving exponential growth, and no foundation technology promoting growth in other sectors.

The lengthy report provides policymakers with an in-depth review of the California environment that nurtured the industry. Zhang and Patel examine the role of venture capital in the formation of new firms, the founders of these firms, and the flow of existing firms into and out of the state. Their findings include:

Zhang and Patel extol California’s strong research capacity, exceptional venture capital investment, and high quality labor pool as elements that will keep a razor-sharp edge to the state’s biotech industry. The authors point to these strengths as shoring up the advantage for companies to remain in California and encourage them to establish production facilities near their headquarters. Zhang and Patel suggest industry leaders and policymakers in California nurture local biotech manufacturing clusters, noting that it takes roughly five years to build new biotech production facilities.

The Dynamics of California's Biotechnology Industry is available at: http://www.ppic.org/content/pubs/R_405JZR.pdf

return to the top of the page

Recent Research
Did Policies Alter French BioTech Landscape?
A study suggests policies enacted in 1999 to encourage cooperative research, establish tech transfer structures and provide venture capital contributed to a dramatic shift in the biotech topography in France. In “Start-ups, firm growth and the consolidation of the French biotech industry,” authors Eric Avenel, Frederic Corolleur, Caroline Gauthier, and Carole Rieu compiled an original dataset on biotech firms to test several growth models on the French landscape.

The study from the Grenoble Applied Economics Laboratory examines the biotech landscape from three location types: administrative regions, science genopoles, and clusters with more than 10 biotech firms within 20 kilometers. Administrative regions are comparable to states, while genopoles would be comparable to Metropolitan Statistical Areas in the U.S. with government established science parks.

Based on regression analysis, the authors found that firm size made a difference in growth, with smaller firms experiencing less growth than larger firms during both time periods. They also found location has a significant impact on growth – and that these locations varied greatly for time periods before and after the new 1999 legislation was enacted.

From 1999–2002, the authors identified the best soil for biotech growth was in Marseille and its surrounding region and Nonterre within the Ile de France region. These two cities may have benefited from new structures and relationships resulting from the 1999 Allegre Act. This law provided incentives to those participating in new firm creation and encouraged structures for technology transfer and valorization. At the same time, France established mechanisms for venture capital dedicated to biotechnology, created bio-incubators, and genopole science parks.

Before France passed the Allegre Act, the biotech terrain from 1996–1999 favored Strasbourg within the Alsace area and the Rhone-Alpes region with growth in both Lyon and Grenoble. The authors note that the Alsace region may have benefited from German funding offered biotech companies before 1999.

The authors note several limitations of their study. The data set examines firms, not establishments, crediting areas with headquarters' locations with all of the growth of that company. Due to this limitation, the authors cannot test the potential reasons for higher growth in some regions over others. The authors also found that size accounted for a larger part of firm growth before 1999 with smaller firms likely to have even slower growth. However, the study results offer limited explanations for this difference based on the model used.

Start-ups, Firm Growth and the Consolidation of the French Biotech Industry is available at: http://www.toulouse.inra.fr/centre/esr/wpRePEcGael/gael2005-03.pdf

return to the top of the page

ARC Conference to Focus on Incubation, Innovation and Entrepreneurship
As rural America undergoes economic restructuring and communities strive to make the transition from traditional to knowledge-based economies, nurturing innovation is an important strategy that is helping rural areas create an environment for business growth and job creation. On July 17–19, 2005, the Appalachian Regional Commission will hold Incubating Innovation and Entrepreneurship: Supporting Business Incubation and Knowledge-Based Enterprise in Appalachia to help tech-based economic development professionals in the region to better address the issue.

The conference will provide an in-depth look at business incubation, best-practice technology commercialization efforts, and entrepreneurial support initiatives that have proven effective in rural communities.

Cosponsored by the Charleston Area Alliance and the West Virginia Experimental Program to Stimulate Competitive Research (WV-EPSCoR), the event will be held at the Embassy Suites Hotel in Charleston, W.Va. Conference agenda and registration information is available on the conference website: www.wvincubation.org/Welcome.aspx

return to the top of the page

Publisher's Note
Kevin Carr to Leave MEP
Last week, Kevin Carr, the director of the Manufacturing Extension Partnership, announced that he would be leaving his position and NIST effective June 30. Kevin has led the program since 1994, and under his leadership, MEP became the exemplary federal program for working in partnership with the states. Since Kevin became director, MEP has worked closely with the states, actively seeking their input on program design and operation. While SSTI is the product of the work of many, Kevin's support and encouragement were critical to our start-up and continued existence. As an advocate for state-federal partnership and as a friend, he will be sorely missed.

return to the top of the page

ITDA Seeks Venture Development Director
The Illinois Technology Development Alliance (ITDA) is looking for a Venture Development Director for its Chicago office. Duties include management/operations consulting; client’s screening/selection; coordination entrepreneurship mentoring; consulting/technical assistance; technical review of commercial potential of technologies. Qualified applicants must posses an MBA/B.S. in Engineering with at least five years of experience in the fields of business development/consulting. Resumes may be sent to info@itda.biz.

return to the top of the page

People

MdBio, Inc., a nonprofit organization servicing Maryland's bioscience industry, announced it will be renamed the MdBio Foundation under restructuring and expansion efforts. The 501(c)3 organization will be overseen by a new 501(c)6 nonprofit membership trade association, MdBio, Inc.

Elyse Golob is the new director of the University of Arizona Office of Economic and Policy Analysis. Beginning July 1, Leslie Tolbert will be the university's vice president for research, graduate studies and economic development, replacing Richard Powell upon his June 30 retirement.

John Hanak is the new director of the Purdue Technology Center of Northwest Indiana.

President Bush has nominated Dr. William Jeffrey as director of the National Institute of Standards and Technology (NIST). The nomination is subject to Senate confirmation.

Bob Shriver recently resigned as director of the Nevada Commission on Economic Development. Tim Rubald, the commission's director of business development, has been named interim director.

return to the top of the page

State Science & Technology Institute
5015 Pine Creek Drive
Westerville, OH  43081
(614) 901-1690

© 2005 State Science and Technology Institute. All rights reserved.