In the October 10, 2007 Issue:

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No Walk-in Registration at SSTI's Annual Conference Next Week; Digest Resumes Publication Oct. 31
Thank you! Interest in SSTI's 11th annual conference has been extremely high since the agenda was released during the summer, and, as we expected and warned, SSTI will not be able to accommodate walk-in registrations on the day of the event. We apologize for the inconvenience and the missed opportunity this creates for a number of Digest readers.

The 375 TBED practitioners that will be in attendance next week are in for a great professional development experience. More than 240 different TBED-related organizations from across the continent are represented among the lucky participants - not unlike the six golden ticket winners for the tour of Willy Wonka's Chocolate Factory (the nice Willy Wonka from the 1970s, not the darker one in the more recent Tim Burton remake). The conference has its own cast of stars with more than 60 presenters, panelists and discussion leaders to lead the 19 breakout workshops and plenary sessions.

Among the stars presenting next week will be key staff representing the six recipients of the Inaugural winners for SSTI's Excellence in TBED Awards. All six categories of TBED strategies and programs identified by SSTI for the award program will be highlighted during two dedicated breakout sessions as the recipient organizations provide conference participants with insights into how they achieved their lofty status as inaugural winners. Participants will have the chance to schmooze with them, question them, challenge them, and, if sterile lab space is available nearby, even clone them.

For those of you wanting to see what else you'll be missing, visit www.ssticonference.org. Those of you wanting to be on a waiting list to replace last-minute cancellations should call SSTI at 614.901.1690. Snoozers are losers so act quickly. Call now. Operators aren't standing by but if we hear the phone ring, someone will try to pick up. Have your credit cards handy.

The Digest writing team is busy preparing for the conference and will be in Baltimore next week. The SSTI Weekly Digest and its companion Funding Supplement - distributed only to SSTI members - will resume publication the week of Oct. 29.

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Five Zones Share $4.3M to Promote and Develop Regional Economies in Washington
Washington State is attempting to replicate the success of North Carolina’s Research Triangle in promoting regionalism and industry clusters through a new Innovation Partnership Zones initiative.
 
Gov. Christine Gregoire announced last week the designation of 11 Innovation Partnership Zones throughout the state -- five of which were also awarded state grants totaling $4.3 million allocated in the fiscal year 2007-09 capital budget (see the April 30, 2007 issue of the Digest).
 
To qualify for the designation, applicants must bring research, workforce training and a globally competitive company together in close geographic proximity for a cooperative, research-based effort that will lead to new commercially viable products and jobs, according to the governor’s press office. The idea is to form industry clusters around universities and research parks, utilizing resources from higher education institutions to grow companies in emerging fields. The five applicants awarded grants include:

Grants can be used for expenses including shared infrastructure, telecommunications, equipment or construction and up to 10 percent for administration. The following applicants are designated as Innovation Partnership Zones and receive special access to state funding and resources:

More information is available from the governor’s office at: http://www.governor.wa.gov/

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U.S. Angel Investment Declines 6% in First Half of 2007
The angel market may be showing the first signs of leveling off following four years of moderate sustained growth. Angel investment in U.S. companies fell 6 percent in the first two quarters of 2007, according to the University of New Hampshire's Center for Venture Research (CVR). The decline itself is modest but is also the first indication that the angel market, which is a valuable capital source for many early-stage companies, may not be able to continue its pattern of steady post-tech bust growth.
 
The CVR report also finds that the average deal size fell by 4 percent during the first half of the year, and the number of deals declined marginally at 2 percent. At the same time, however, the number of investors per deal increased by 10 percent, signaling the increasing importance of angel networks in the industry.

The new numbers also reflect greater industry diversification in angel investments. The industrial distribution of angel capital is important because of the angel industry's role in creating the next wave of expanding companies and prospective future investments for venture capital funds. Last year, the top three industries (Healthcare/Medical Devices/Medical Equipment, Software, and Biotech) accounted for 57 percent of all deals. Thus far this year, those industries have only received 46 percent of angel deals.
 
Several industries, such as IT services and retail, which have not been among the top targets for angel investment in recent years, posted significant gains over the first half of last year. The industrial/energy sector, which includes clean energy and environmental technology companies, did even better, doubling its funding during that period. This increase mirrors trends in the venture capital industry where investment in the industry/energy sector grew by more than 125 percent last year.

One potentially troubling finding in the CVR report is that, at least for the first half of the year, post-seed-stage deals have finally overtaken seed- and start-up-stage deals as the primary target for angel investment. While the angel market is typically regarded as a provider of early-stage funding, the number of later-stage deals has been growing for years. Jeffrey Sohl, director of CVR, believes that market conditions and the emergence of large formal angel alliances have contributed to the rise of later-stage investments.
 
Since many companies rely on the availability of angel capital to survive the earliest stages of business formation, the shift to post-start-up-stage deals could exacerbate the capital gap for seed-stage firms, according to Sohl.

Read the latest update on the U.S. angel market from the UNH Center for Venture Research at: http://www.unh.edu/news/cj_nr/2007/sep/em19angel.cfm

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Clusters Garner More Attention from NGA, Researchers
The National Governors Association (NGA) Center for Best Practices has selected seven states to participate in a year-long policy academy named State Strategies for Promoting Innovative Clusters and Regional Economies. Teams from the seven states – Georgia, Illinois, Iowa, Kentucky, Maryland, Oregon and West Virginia – will collaborate with staff from the NGA to create action plans for improving each state’s competitiveness and economy through cluster development. Additionally, during the next year, the selected states will learn about research on clusters and best practices for cluster improvement, perform an analysis to gain insight on their existing state clusters, and plan strategies to orient state investments, workforce development, and education initiatives around potential clusters.
 
But what are the main factors that influence the growth of successful clusters within regions? Andreas Eisingerlich and Leslie Boehm peer into this question in a recent article in Business Insight, a series produced this year by the Wall Street Journal in cooperation with M.I.T. Sloan Management Review. After looking at different clusters on three continents, the authors identified four key factors determining the growth potential and competitiveness of a cluster. They found the most successful clusters:

However, successful clusters do not just appear overnight. Practitioners who want to establish clusters in their states and regions may need to understand the varied dynamics of cluster development as they attempt to create technology-based clusters.
 
The continually changing aspect of clusters is the subject of some recent research by Anne L. J. ter Wal and Ron Boschman. In their paper, Co-Evolution of Firms, Industries, and Networks in Space, the authors contend existing cluster literature suffers from a handful of shortcomings. Their first assertion is that most cluster studies do not incorporate the large diversity of firms’ actions, capabilities and strategies within a cluster. Each firm is different and performs differently in the economy. Treating all firms similarly within a cluster located in a certain region ignores the specific features of individual firms that may account for their performance.
 
Wal and Boschman identify a second shortcoming in that most studies overestimate the importance of geographical proximity and underestimate the importance of networks. The performance of firms may be strongly related to the networks to which they belong, and these networks may not have a spatial component. Finally, they feel the active development of clusters does not receive much attention in the literature. The authors claim the origins and evolution of cluster development deserves more attention.
 
With these shortcomings in mind, the authors present a theoretical framework designed to enrich the literature by combining existing cluster research with other concepts from the fields of network dynamics and evolutionary economics. Their analysis connects the evolution of clusters with the evolution of individual firms, their industry, and their networks of interaction. For example, as new technologies are introduced, there are a low number of firms in an industry based on this technology, and there are a large variety of firms. At this introductory stage, the network is unstable and clustering does not really exist. As the technology progresses, the number of firms and the diversity of firms increase and clusters begin to form. By time the technology reaches maturity, the clusters are firmly established and the variety of firms decreases. With maturation, a number of firms begin to compete on terms of price and cost reduction, instead of product innovation.
 
What can this research tell us? That without continuing innovation and new technologies, even clustered industries will begin to decline. Clusters have life cycles, as do technologies and industries. Besides attempting to co-locate similar firms to a state or region by growth or attraction, practitioners might attempt to ensure that individual firms within a cluster are flourishing if they want to have a vibrant local cluster that drives innovation.
 
Co-Evolution of Firms, Industries, and Networks in Space by Anne L. J. ter Wal and Ron Boschman can be downloaded at http://ideas.repec.org/p/egu/wpaper/0707.html
 
Eisingerlich and Boehm’s article in Business Insight can be accessed here: http://online.wsj.com/public/article/SB118841858437012520.html
 
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Community Colleges Growing Providers of TBED Programs and Services
Announced last week, Ivy Tech Community College will receive a $3.18 million grant for training individuals from a 14-county region in North Central Indiana in science, technology, engineering, and math (STEM) fields. The grant, a component of the $15 million Indiana Workforce Innovation in Regional Economic Development (WIRED) initiative funded by the U.S. Department of Labor, will establish the New Pathways to STEM-based Careers program. The New Pathways program will be concentrated into three distinct areas:

New Pathways to STEM-based Careers is expected to train 44,000 people in the region over the next five years. The statewide Ivy Tech Community College network intends to use this program as a pilot to be extended to other regions across the state, if successful.
 
While many community colleges are taking an active role in workforce training and technical education, they also are taking on additional TBED roles for the community they serve including business incubation, equity financing, cluster development and distance learning.
 
On Tuesday of this week, for example, the Lorain County Community College (LCCC) hosted a rollout of the TechLift program, a new initiative led by NorTech in collaboration with the state-sponsored business incubators in Northeast Ohio and a handful of equity investment funds. TechLift is focused on “supporting, coaching, and nurturing” technology-based entrepreneurial companies by providing services that include capital formation and fundraising, business coaching, grant funding assistance, and staffing assistance.
 
Additionally, TechLift will provide funds to support an Entrepreneurial Expert to assist the Great Lakes Innovation and Development Enterprise, a technology incubator located on the campus of Lorain County Community College. Funding for the TechLift program was also provided by the LCCC Foundation Innovation Fund, which in addition to supporting entrepreneurial education initiatives, provides grants to support technology firms in the region. Besides yesterday’s rollout, TechLift has held or will hold similar sessions in Youngstown, Cleveland, Akron and Mansfield in Northeast Ohio.
 
More information about the LCCC Foundation Innovation Fund can be accessed at:
http://www.lorainccc.edu/About+Us/LCCC+Foundation/Innovation+Fund.htm
 
Details about the TechLift initiative are available at www.techlift.org/.
 
The website for the North Central Indiana WIRED program is www.indiana-wired.net/.
 
Participants at SSTI’s 11th Annual Conference will get to explore the emerging roles of Community Colleges in TBED more closely in a dedicated breakout session on this very topic. The presenters include:

More information on the conference is available at www.ssticonference.org.

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People & TBED Organizations

Mark Allen was named the new senior vice provost for research and innovation at Georgia Tech. Allen replaces Charlie Liotta, who has returned to the school's faculty.

Gov. Linda Lingle announced 18 appointments to the Hawaii Innovation Council, which will work with groups statewide to increase the economic impact of Hawaii's innovation resources. Co-chairmen include Mark Benioff, Ron Higgins and Jay Shidler.

George Burrell resigned as president and CEO of Innovation Philadelphia. Kelly Lee, the organization's executive vice president, is running day-to-day operations until Burrell's successor is named.

Jim Cookinham, founder of the Northeast Ohio Software Association and vice president of networks and education for COSE (Council for Smaller Enterprises), said he will retire at the end of 2007.

Eric Cromwell is the new president of Tennessee Technology Development Corp., an organization designed to leverage state, federal and private sector investments in science and technology infrastructure for economic value.

Michael Dailey was elected president of the Maryland Business Incubation Association.

Martin Donnelly has been named the regional director of the South Central Indiana Small Business Development Corp. Former Region Director Brian Kleber resigned earlier this year to take a job in the private sector.

Christopher Hansen will succeed William Archey as AeA's next president and CEO. Hansen will start on Nov. 15, overlapping with Archey until February 2008 to ensure a smooth transition.

The Colorado Renewable Energy Collaboratory selected David Hiller as its first executive director.

Heinz Endowments in Pittsburgh tapped Bomani Howze to help run its two-person Innovation Economy program.

Dr. Daryush Ila was chosen to serve as executive director of the Alabama EPSCoR Steering Committee. Ila heads the Alabama A&M University Research Institute.

Ryne Johnson was named the new director of the Center for Entrepreneurship at Chico State University.

The Colorado Governor's Energy Office added to its staff three regional representatives: Bob Mailander, Joani Matranga and Mona Newton.

Gov. Rick Perry appointed Bill Morrow as the new chairman of the Texas Emerging Technology Advisory Committee. Morrow replaces David Spencer, who remains a member on the committee.

Thomas Rainey was named the new president and CEO of the Northern Arizona Center for Emerging Technologies.

The Rhode Island Manufacturers Association and the Rhode Island Manufacturing Summit have joined forces to serve as one voice for manufacturing in the state.

The Pittsburgh Technology Council appointed Audrey Russo as president and CEO.

The Idaho communities of Greenleaf, Homedale, Grand View, Marsing, Melba, Parma and Wilder have formed the Western Alliance for Economic Development.

The North Carolina Biotechnology Center selected Rick Williams to lead its Business Acceleration and Technology Out-licensing Network, a new technology transfer program.

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