In the August 13, 2008 Issue:

Copyright State Science & Technology Institute 2008. 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.

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Texas Council Recommends Reorganizing Economic Development Efforts
Texas Gov. Rick Perry's Competitiveness Council has released its recommendations following a year-long study of the state challenges in the global economy. The study found that Texas lacks the institutional organization to execute transformational economic programs and will require greater collaboration between state agencies to remain competitive in high-tech industries.

Part of this collaboration would be the creation of a standard enterprise model for economic development in the state. Since Texas' economic developments efforts have been characterized by disparate regional programs and narrowly-focused state programs, the state lacks a unifying model of how companies are created and prosper, the council felt. This has adversely impacted economic development initiatives, which have been plagued by a lack of standard performance metrics, redundancy and a single statewide strategy that could guide decisions made within organizations. By designing such a model and implementing a joint-operations approach between economic development organizations and agencies, Texas could improve its ability to successfully implement change.

The report's lengthy list of recommendations includes a few suggestions that directly apply to technology-based economic development. These include:

Read the Council's Report to the Governor at: http://www.governor.state.tx.us/gcc

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David Wilhelm to Keynote SSTI's 12th Annual Conference
Most Digest readers know access to equity capital serves a critical role in encouraging regional innovation. But the stats on venture capital (VC) deals demonstrates all too well that money isn't flowing freely everywhere. The economy also is presenting challenges for equity deals, making exits more scarce. How can underserved areas attract early-, seed and late-stage capital?

Keeping with the underlying theme of "Where Does TBED Go from Here?" for SSTI's 12th annual conference, we are quite excited to announce David Wilhelm, founder and President of Woodland Venture Management, will provide the keynote address on the topic of making successful VC investments anywhere.

Woodland Venture Management is a company dedicated to the proposition that entrepreneurial vision and managerial talent may be found anywhere, including the hills of central Appalachia and the prairies of the Midwest. To this end, Mr. Wilhelm launched Adena Ventures and Hopewell Ventures, with a combined $140 million under management, bringing investment capital to high-growth companies situated in these underserved regions of the country. Today, these VC funds have invested millions of dollars in companies located in communities such as Marquette, Mich.; Nelsonville, Ohio; Charleston, W.Va.; and Lansing, Ill., creating hundreds of jobs for the people who live there and the prospect of strong returns for the investors that backed the basic Woodland premise: The flip side of a capital gap is a market opportunity!

SSTI's 12th Annual Conference, Encouraging Regional Innovation, will take place Oct. 14-16 at the Intercontinental Hotel Cleveland in Northeast Ohio. We had to turn people away from last year's sold-out conference - don't let it happen to you in 2008. Registration forms and more information are available at http://www.ssticonference.org/.

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Arkansas Two-year Colleges Offering Entrepreneurship Degrees
Entrepreneurship education courses continue to appear across the country. A large-scale commitment was announced recently, as eight Arkansas two-year colleges will offer degrees and certificates in entrepreneurship this fall. The broad availability is expected to help create a culture of entrepreneurship that extends from regions capitalizing in the emerging fields of bioscience and nanotechnology research to the rural pockets of the state in need of high-paying jobs.
 
Last month, the curriculum was approved by the Arkansas Higher Education Coordinating Board, prompting eight of the state’s 22 community and technical colleges to join a consortium with two additional schools seeking approval in October to begin implementing the curriculum. The degree option is for an Applied Associates Degree in Business Management or a stand-alone certificate in Entrepreneurship.
 
While some areas of the state are home to large Fortune 500 companies, including Wal-Mart in Bentonville and Tyson Foods in Springdale, other regions are unlikely to attract big corporations that provide jobs, said Donna Wood, associate vice president of global business development for NorthWest Arkansas Community College (NWACC). The curriculum is critical for the state’s rural areas where it is difficult to provide educational services to students who want to learn more about developing a business.

Developed by the NWACC Division of Business and Computer Information, the entrepreneurship curriculum is based on input from 20 institutions providing a national perspective. Courses include opportunity and feasibility analysis, funding acquisition for entrepreneurs, and business organization and management. The curriculum also prepares students for entrepreneurial thinking within a corporate setting, according to a NWACC press release.
 
The entrepreneurship track is in line with Gov. Mike Beebe’s economic development agenda for the state, addressing key components of entrepreneurship and small business development, Wood said. In 2007, the General Assembly enacted a $140 million TBED package based on initiatives outlined by Accelerate Arkansas, which include investments in entrepreneurship and workforce development (see the April 9, 2007 issue of the Digest).
 
Additional efforts to promote business ownership are also underway in the state through a partnership between Arkansas State University and the Arkansas Delta Training and Education Consortium. Students can begin earning college credits while in high school through a new career pathway in entrepreneurship to be delivered in 12 counties across eastern Arkansas. The pathway also will include multiple entry and exit points at the high school, community college and university levels, and the program can be replicated in all secondary technical centers across the state.
 
More information is outlined in a press release issued by NWACC, which is available at: http://www.nwacc.edu/presidentsoffice/072408-NWACCoffersEntrepreneurshipDegree.php
 
More on Creating a Culture of Entrepreneurship…
Not all entrepreneurship is created equal – as many Digest readers are aware – since science and tech-related firms typically pay above average salaries and, as they grow, tend to attract and spin off more entrepreneurial companies. Rates of high-quality entrepreneurship vary dramatically across the country and even within states. So how can tech-based economic development organizations help create a climate conducive to and supportive of tech entrepreneurs? The issue is so important to encouraging regional innovation that SSTI's 12th annual conference includes an entire afternoon in a pre-conference workshop and a breakout session during the main conference dedicated to entrepreneurship issues.
 
Effective Entrepreneurship Assistance: Advice from the Experts
Tuesday, Oct. 14, 2008 • 1:00 p.m. – 4:30 p.m.
Although entrepreneurship is recognized as a necessary ingredient in building a sustainable innovation economy, there is no single "right" way to provide entrepreneurship assistance. But those initiatives that have demonstrated a history of success are beginning to attract global attention for their achievements. Now, rather than traveling the country to learn firsthand about the programs, we've gathered some of the nation's most respected leaders to share their experience and lessons learned.
 
This half-day pre-conference session will provide a behind-the-scenes look at some of the country's most effective entrepreneurship programs and the strategies that have helped them succeed. Presenters from internationally recognized regional and state initiatives will provide insight into building an entrepreneurial culture, identifying potential entrepreneurs, connecting new business owners to the resources they need and helping to build high-growth firms. The session will include examples from both metropolitan and rural regions.
 
Richard Bendis of Bendis Investment Group LLC will lead the discussion, which will feature an in-depth exploration of successful programs and give you the opportunity to ask the experts about shaping and executing an effective entrepreneurship strategy that's best suited for your region.
 
Presenters include:
• Ray Leach, CEO, JumpStart Inc.
• Tom Walker, President & CEO, i2E
 
Registration for "Effective Entrepreneurship Assistance: Advice from the Experts" is separate from the main conference registration. Attendance in the full conference is not required to participate in the pre-conference workshop. More information is available at http://www.ssticonference.org.
 
Fostering a Culture of Entrepreneurship
Wednesday, Oct. 15, 2008 • 2:00 p.m. – 3:15 p.m.
TBED initiatives provide valuable support to the innovation community, but without a culture that motivates people to start new businesses, no high-tech economy can sustain itself. This discussion will explore the motivations behind entrepreneurship and how TBED organizations can contribute to an environment that encourages and rewards new venture creation. Panelists also will discuss how organizations can catalyze new business starts through networking, matchmaking and creative use of innovative spaces.
 
Panelists:
• Ernie Dianastasis, Managing Director, CAI and Chairman, First State Innovation
• Tony Redpath, Vice President, Partner Programs, MaRS Discovery District

Moderator:
• Richard Bendis, President & CEO, Bendis Investment Group LLC
 
Registration for SSTI’s 12th Annual Conference is required to participate in the session. More information is available at: http://www.ssticonference.org

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Recent Research
Older Firms Necessary for Job Growth
Gazelles, a small subset of firms that grow rapidly over a period of years, are believed by many to have a disproportionate impact on the U.S. economy. Though the precise definition of gazelle firms differs between studies, these businesses are recognized as a dominant force in economic and employment growth. A recent paper by Zoltan Acs, Wiliam Parsons and Spencer Tracy, published by the Small Business Administration's (SBA's) Office of Advocacy, confirms this belief by finding that a very small percentage of firms are responsible for almost all revenue employment growth in the U.S. These high-growth firms can exist in any industry, but on average, they are younger than the average business. Still, the average age for a high-growth firm is 25 years, older than the nascent businesses that are the focus of much TBED activity and regional growth strategies. The study suggests that regional and state policymakers should follow a balanced approach that supports both new and expanding businesses.

The SBA paper builds on research done by David Birch, who developed the concept of gazelle firms in the 1980s and 1990s. Birch defined gazelles as businesses that grow their revenues at least 20 percent each year in the preceding four years, starting from a base of at least $100,000. His research found that these firms are responsible for almost all job creation. Though these businesses are not necessarily young or old or small or large, they tend to be smaller and younger than other businesses. By Birch’s estimate, only one out of every 16 companies qualified as gazelles in any given time period. Birch contrasted gazelles with elephants, which have a large employment share but do not generate many new jobs, and mice, which start and remain small.

Acs et al. examine businesses in the mold of Birch’s gazelles, which they call “high-impact firms” -- enterprises that have doubled their sales over the previous four years and have an employment growth qualifier of two or more for the same period. This qualifier is equal to the product of the firm’s absolute change and its percent change in employment. The researchers examine three four-year periods, 1994-1998, 1998-2002 and 2002-2006. They take 1998-2002 as the primary focus of study and use the surrounding four-year periods to analyze what high-impact firms look like in the years before and after they attain high-impact status. Firms are divided into small, medium and large by number of employees to find out if Birch was correct in proposing that smaller, younger firms dominate job growth.

High-impact companies made up only 3.8 percent of all businesses during the time frame of the study. For the entire 1994-2006 period, small businesses represented a vast majority of high-impact firms. Firms with fewer than 20 employees made up almost 94 percent of this group. However, these firms were only responsible for 33.5 percent of job growth by high-impact firms. Businesses with 20 to 499 employees represented 24.1 percent of new jobs by this group and 500-plus businesses accounted for 42.4 percent. Somewhat counter to Birch’s findings, companies that were 10 years old or younger made up only 2.8 percent of high-impact firms. The average age was 25, and only 3 percent were created in the previous four-year period. High-impact firms were present in all categories and were fairly even across regions and metropolitan areas.

The researchers suggest that, in light of this data, local economic development organizations should put more effort into cultivating high-growth firms, rather than focusing exclusively on entrepreneurship. While high-tech start-ups can represent a future generation of high-impact firms and tend to create jobs outside the company itself through a multiplier effect, they are not producers of jobs in the short-term. By providing services to businesses on the cusp of a period of high-growth, TBED professionals can help firms take the next step to becoming a source of new jobs.

Read the study, High-Impact Firms: Gazelles Revisited, at: http://www.sba.gov/advo/research/rs328tot.pdf

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Useful Stats
Five-year Change in Per Capita Income by U.S. Metro Area
According to statistics released last week by the Bureau of Economic Analysis (BEA), per capita personal income in the U.S. was $38,632 in 2007, a 22.6 percent increase since 2003. Over this same five-year period, 118 of the country’s 363 metropolitan statistical areas experienced an increase in per capita income greater than the U.S. rate of growth. SSTI has prepared a table for all 363 U.S. metro areas, showing the change in per capita income from 2003 to 2007.

By the numbers, the New Orleans metro area saw the largest increase in per capita income, growing 57.8 percent from $29,274 in 2003 before Hurricane Katrina, to $46,188 in 2007. Rounding out the top 10 were the metro areas centered around:

According to the BEA press release announcing the data, federal payments to rebuild residences destroyed or damaged by severe weather in the Gulf Coast region greatly increased personal income in those metro areas. Additionally, gains from the oil and gas extraction industry pushed income growth in many of the fastest-growing metro areas.

Of the 10 metro areas with the smallest increases in per capita income from 2003 to 2007 (ranging from 9.4 percent to 1.8 percent growth), three each were located in Illinois and Michigan, two were in Indiana, and one was in each of Ohio and Wisconsin. It should be noted BEA estimates on per capita income for metro areas are aligned with that year’s definition of each metropolitan statistical area, whose geographic area may change over time, as defined every year by the Office of Management and Budget (OMB).

Personal income is defined as the sum of net earnings by place of residence, rental income, personal dividends, personal interest income, and current transfer receipts. The BEA calculates per capita personal income by dividing the total personal income of a given geographical area by the Census Bureau’s mid-year annual population estimates.

SSTI's table is available at: http://www.ssti.org/Digest/Tables/081308t.htm

The BEA press release is available at: http://www.bea.gov/newsreleases/regional/mpi/mpi_newsrelease.htm

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Research Park RoundUp
The following overview is a synopsis of select recent announcements from research parks across the world, including groundbreakings and development plans to support vibrant regional economies based on science, technology and innovation. 
 
The Armenian government recently allocated 80 million drams (est. $266,000 USD) from this year’s state budget to build a technopark in Gyumri, reports the ArmInfo News Agency. Armenian Minister of Trade and Economic Development Nerses Yeritsyan said that all main higher education institutes of Gyumri, as well as several international organizations and donors, are involved in the project, which is slated for completion by the end of the year.
 
New York Gov. David Paterson announced plans earlier this year for the creation of the Central New York Biotechnology Research Center, as part of a redevelopment plan in downtown Syracuse. Officials estimate the research complex will cost $30 million to $40 million and will support biotechnology educational and research programs, with collaboration from SUNY Upstate Medical University and SUNY College of Environmental Science and Forestry. Preliminary plans for the complex include a biotechnical research center, classrooms and research space. SUNY Upstate Medical University also will seek proposals from developers to create commercial projects and student residences.
 
Planning is underway for an Embry-Riddle Aeronautical University technology and business park in Prescott, Ariz. The development will span 250 acres adjacent to the aeronautical university and include a recreational complex and space for light industrial, campus living and commercial and retail development, according to an article in the Phoenix Business Journal. The park will be powered by a 50-acre solar power plant, making it the first LEED-certified business park in the nation, the article states. Construction on the first phase, a technology building that received $2 million from the Economic Development Authority in Northern Arizona, is expected to begin in 2009. The total cost of the technology park is estimated between $8 million and $12 million.
 
Developers broke ground in June on the 105-acre Harmony Technology Park located in Fort Collins, Colo. The development was previously part of the Hewlett-Packard campus and received approval for up to 1.3 million sq. ft. of office space. The mixed-use facility includes sites ranging from 2-30 acres for office, flex R&D, light manufacturing and retail space. 
 
The High Desert University Foundation recently announced plans for the new High Desert University in California, which includes an R&D park to be built on land owned by the university with tenants making lease payments to the school, according to an article in the Daily Press. The research center also will provide students with built-in opportunities for mentors, internships and future careers, the article states. Early plans released by the foundation include 24 buildings with about 5 million square feet of space. The research park is expected to generate approximately $50 million annually toward the university’s operating expenses.
 
Liverpool City Region officials are hoping to expand the digital and pharmaceutical sectors with the recent launch of Liverpool Innovation Park. The park encompasses nearly 1 million sq. ft. for office, R&D and light industrial space with units ranging from 500 sq. ft. to 80,000 sq. ft. The development is reserved for businesses in the science, information, communications and knowledge-based sectors. 
 
Officials at Louisiana Tech University announced last month a location for the newly renamed Enterprise Campus, a $25 million research park expected to break ground in July 2009, according to an article in The News-Star. The university allocated property across from Bogard Hall, which officials hope to extend into downtown Ruston, encompassing 50 acres, the article states. The technology park will house companies affiliated with the university’s expanded research in cyberspace and nanotechnology, biomedical engineering and micromanufacturing.
 
A new 55-acre business and technology park was recently built in Kalispell, Mont. The Old School Station business park is a public-private partnership offering two Tax Increment Financing designations – light industrial and high technology.
 
Site work for the 12-acre Oak Ridge Science and Technology Park located next to Oak Ridge National Laboratory (ORNL) was recently completed. Located in the Knoxville-Oak Ridge Innovation Valley on land provided by the Department of Energy, the technology park will be available for private sector companies collaborating with scientists at ORNL. Construction on the park’s anchor tenant is expected to begin soon.
 
Last month, the Pellissippi Research Centre received $2 million in federal grants, which officials say will help the project move forward with infrastructure, reports the Knoxville News-Sentinel. When completed, the technology park will span 450 acres on the Oak Ridge Corridor – 230 of which will be dedicated to R&D and corporate office space. The Blount County Economic Development Board estimates the park will generate more than $1 billion in economic impact over the course of the 20- to 30-year project.
 
Sanford Health broke ground in June on a new 185-acre research park in Sioux Falls, S.D. – one of two new technology parks to be constructed in the region over the last several months. The first phase of the Sanford Research Park is slated for completion in 2011 and includes more than 2 million sq. ft. for office, research and light manufacturing buildings. Located near the campus of Southeast Technical Institute, the South Dakota Business Technology Park is a 190-acre private park that will house businesses developed by graduates of nearby South Dakota Technology Business Center, according to an article in the Argus Leader. 
 
Construction will begin this fall in St. Cloud, Fla., on a 100,000-square-foot medical and technology center designed to attract biotech firms, reports the Orlando Business Journal. The St. Cloud Medical Arts and Technology Park will include a 10,000-square-foot imaging center, a 10,000-square-foot surgical center, 30,000 sq. ft. of technology incubator space and 50,000 sq. ft. of medical office space for lease. Additionally, the tech park may house the University of Central Florida’s sixth technology incubator facility, according to the Orlando Business Journal article.
 
Earlier this year, the University of Miami (UM) released details of its plan for a life sciences research park that will offer office and laboratory space for companies collaborating with UM researchers. The 1.4 million-square-foot facility also will house UM sensory research institutes and focus on translation of research into the marketplace. University officials planned to break ground during the summer of 2009; however, legislation that was vetoed by Gov. Charlie Crist in June may disrupt the progress, according to a Miami Herald article. The bill would have enabled the university to speed up approval of the project by allowing a bypass of lengthy state and regional reviews, the article states.
 
A Colorado-based developer is partnering with the Lee County Port Authority to build a research park on land near the old Southwest Florida International Airport in close proximity to the Florida Gulf Coast University. The location is ideal for attracting medical researchers, pharmaceutical companies and biotech industries, according to media reports. The Madden Research Loop will include 275,000 sq. ft. of Class A office space within four buildings on a total of 25 acres of land.

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SSTI Appoints Four Distinguished Leaders to Board
Four leading members of the technology-based economic development community were elected to the State Science and Technology Institute (SSTI) board of trustees today, each bringing fresh perspective and unique insight on issues affecting SSTI’s nationwide network of policymakers and practitioners working to improve state and regional economies through science, technology and innovation.
 
The four will join SSTI’s existing nine trustees in providing strategic guidance and oversight for the organization’s 39 state sponsors and 148 affiliates and supporters. Representing government, higher education and industry sectors, the new appointees are:

“This is an impressive group of accomplished leaders, each knowledgeable in both policy and practice” said John Engler, former Michigan governor and chair of the SSTI Board. “Their combined expertise is a welcome addition to the board and their contributions will enable SSTI to further its mission.”

Existing board members include former Michigan governor and SSTI Board Chairman John Engler, former Massachusetts governor and Vice Chairman Michael Dukakis, Richard Bendis, Michael Cassidy, Michael Finney, Angeline Goodwin, Bruce Mehlman, Luis Proenza and Phillip Singerman.

SSTI also recognizes the following departing board members for their outstanding contributions and leadership: John Ahlen, president of Arkansas Science and Technology Authority and Don Almquist, retired chairman, president and CEO of Delco Electronics Corporation.
 
All board member biographies are available at http://www.ssti.org/board.htm.

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SSTI Job Corner
Complete descriptions of these opportunities and others are available at http://www.ssti.org/posting.htm.

The Michigan Economic Development Corporation (MEDC) is seeking someone to serve as its manager of business and community services. This position is responsible for oversight of staff that administers several state and federal incentive programs to assist in the growth of Michigan companies and the creation of jobs, including Economic Development Job Training, Renaissance Zone and Community Development Block Grant Programs. A bachelor’s degree in any major is required. In addition, candidates should have two years of experience as a professional manager or program/staff specialist, or equivalent experience.

The Oregon Economic and Community Development Department (OECDD) is recruiting to fill the position of innovation policy analyst in its Innovation and Economic Strategies Division. The primary purpose of this position is to support the development and execution of an Oregon Innovation Plan that identifies economic development recommendations to grow the state’s knowledge-based economy. A bachelor's degree in business or public administration, behavioral or social sciences, finance, political science or any degree demonstrating the capacity for the knowledge and skills and five years of professional-level evaluative, analytical and planning work is required. Alternately, candidates may possess any combination of experience and education equivalent to eight years of experience that typically supports the knowledge and skills for the classification.

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