• Governor Proposes $20.5M in Lottery Funds for Continuing Oregon Innovation Efforts
• SSTI's TBED Hall of Success goes LIVE!
• U.S. Cap-and-Trade Legislation Could Bankroll Economic Development Initiatives
• Are States Measuring Up? The National Report Card on Higher Ed
• Annual Economic Impact of Biotechnology Exceeds $45 Billion in North Carolina
• Incubator Round Up Emphasis Grows Toward Creating Clusters within Walls
  

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• $5.7 million for the Oregon Nanoscience and Microtechnologies Institute (ONAMI), the state’s first signature research center that conducts R&D in micro- and nanotechnology;
• $3.5 million for wave energy research;
• $3.2 million to continue renewable energy investments through the Bio-Economy and Sustainable Technologies signature research center;
• $2.8 million for the Oregon Translational Research and Drug Discovery Institute, which focuses on R&D and commercialization in controlling infectious disease;
• $2.3 million for the Forestry Cluster Initiative to increase technology development and commercialization efforts; and
• $1 million for R&D in Oregon’s manufacturing sector to ensure future competitiveness.

• A targeted increase in the Business Energy Tax Credit from 35 to 50 percent of project costs for industrial-scale investments in energy efficiency;
• $2.8 million for the Oregon Solutions Program to continue facilitation of sustainability and renewable energy projects across the state;
• $2 million in a renewable energy fund for development of community-scale demonstration projects;
• $2.5 million in tax credits for full electric and plug-in hybrid vehicles; and
• $695,000 to expand research on the impacts of global warming through the Oregon Climate Change Research Institute.

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U.S. Cap-and-Trade Legislation Could Bankroll Economic Development Initiatives
Throughout the presidential campaign President-elect Barack Obama continually emphasized the need for new policies to spur the development of clean and renewable energy technologies. Despite the economic downturn, President-elect Obama has maintained that these new programs will remain a priority for his administration. A key plank of his energy plan is the implementation of a national cap-and-trade program to reduce greenhouse gas emissions by 80 percent by 2050. 

Under a cap-and-trade system, the U.S. would place a legal limit on annual emissions, a cap which would be lowered each year until the goal for reducing emissions is met.  Within that limit, companies would purchase and trade for allowances to release pollutants. The cap-and-trade system internalizes the cost of a negative externality, a cost that would otherwise be paid by society through environmental destruction and clean-up. Such a system would create an increased demand for cleaner technologies and technologies that reduce emissions.

Though the idea of a federal cap-and-trade for carbon emissions program has been around for decades, one underreported aspect of such a program is its implication for technology-based economic development. Under the Lieberman-Warner Climate Security Act of 2007, which was considered earlier this year,  the federal government would have auctioned off some of these allowances through a new Climate Change Credit Corporation. While some of the proceeds would have been used for deficit reduction, most of the new revenue would be used help support programs to develop renewable energy technologies, provide workforce training and fund energy assistance for low-income households. Other allowances would have been distributed to states, which could then be given away or auctioned off to generate revenue for their own initiatives. 

Although the threat of a veto by President Bush caused the initiative to stall in the Senate, the Lieberman-Warner bill provides some perspective on what may happen once President-elect Obama and Congress are able to address greenhouse gas emissions. 

In April a Congressional Budget Office (CBO) report found that the Act as it existed could have generated $1.2 trillion in new federal revenues between 2009 and 2018. An estimated $284.5 billion of that total would have been available for government activities, including TBED-related initiatives. The report is available at: http://www.cbo.gov/ftpdocs/91xx/doc9121/s2191_EPW_Amendment.pdf.

Philip Singerman, Senior Vice President of B&D Consulting, an SSTI Board Member, and former U.S. Assistant Secretary of Commerce for Economic Development, addressed this new potential funding source at SSTI’s 12th Annual Conference in October.  Using estimates based on the CBO report, he said that the Climate Security Act, if it had passed and if allowances were set at a price of $28, could generate $161.1 billion in 2012. These funds would have been divided amongst a number of federal programs aimed at preventing economic hardship, creating partnerships with states, localities and tribes and conducting energy-related research.

Progress on cap-and-trade will now have to wait until the next administration takes office, but President-elect Obama has advocated even more ambitious goals for greenhouse gas reduction. This could mean even higher revenues from cap-and-trade auctions and more funding for TBED initiatives.

• Preparation for college: How well are high school students prepared to enroll in higher education and succeed in college-level courses?
• Participation: Do young people and working age adults have access to opportunities for education and training beyond high school?
• Affordability: How difficult is it to pay for college when family income, the cost of attending college, and student financial aid are taken into account?
• Completion: Do students persist in and complete certificate and degree programs in college?
• Benefits: How do college-educated and trained residents contribute to the economic and civic well-being of each state?
• Learning: How do college-educated residents perform on a variety of measures of knowledge and skills?

Annual Economic Impact of Biotechnology Exceeds $45 Billion in North Carolina
North Carolina's $1.2 billion dollar investment in bioscience over the past decade has helped to build a $45 billion dollar a year industry in the state, according to a new study released by the North Carolina Biotechnology Center. The report finds that North Carolina’s bioscience employment numbers have grown 18.5 percent since 2001, the fastest in the nation. Much of this growth has been fueled by increased activity in research, testing and medical labs and in the agricultural feedstock and chemicals subsector. 

North Carolina is now home to more than 500 bioscience companies employing over 54,000 people. The report estimates that this sector generates an additional 127,000 jobs outside the industry, and more than $9.4 billion in wages and salaries. Biotechnology companies also are responsible for $1.44 billion in state and local taxes each year.

Between 1999 and 2008, North Carolina funded a multitude of biotechnology initiatives to help stimulate the growth of the sector. This funding includes:

• $857 million in research and facilities including the NC Research Campus in Kannapolis and UNC Cancer Research;
• $135 million in workforce training at North Carolina State University, North Carolina Central University and at community colleges across the state;
• $114 million to build partnerships via the North Carolina Biotechnology Center; and
• $102 million in direct company incentives, including $95 million in Job Development Investment Grants and $7 million in One North Carolina funding.

At the center of North Carolina’s biotech initiatives is the North Carolina Biotechnology Center, which is responsible for coordinating the state’s efforts and creating new partnerships between private firms and government and academic institutions. The state created the Center in 1984 to strengthen its bioscience research capabilities. Since that time, the Center has created a suite of programs that includes commercialization of technologies, recruitment and retention of businesses, and workforce training. Companies in the Center’s portfolio have created 3,734 jobs and have attracted $99 for every dollar contributed by the Center, according to the report.

An executive summary of the findings from Evidence and Opportunity: Biotechnology Impacts in North Carolina can be downloaded at: http://www.ncbiotech.org/biotechnology_in_nc/battelle/BattelleReportHighlights.pdf.

The full report is available at: http://www.ncbiotech.org/biotechnology_in_nc/battelle/battelleReport111708.pdf.

Incubator Round Up
Emphasis Grows Toward Creating Clusters within Walls
Incubators may take on magnified importance in regional innovation strategies for the coming years given the continued decline in seed and venture capital available to early-stage companies, the need for startups to reduce costs, and the increased opportunities presented for innovation through collaboration and sharing of knowledge.

So it isn’t too surprising to see the wave of incubator launches increase during this financial slowdown.

A new incubator can take several tacks toward filling its walls. Often the strategy toward defining target tenants depends on the assets of the community. A generalized incubator could be well suited to an area short on affordable space for start-ups in need of shared general business services.

Unfortunately, those facilities, and even many incubators tailored to tech start-ups, are not well suited for the specialized technical needs or energy-intensity of some industry sectors, like aerospace, energy, nanotech and biotech. If the university and industrial research base in a region is strong enough, in addition to generalized tech incubators, there may exist an opportunity to develop a critical mass of these hard-to-serve emerging tech sectors through a specialized incubator.

An unscientific survey of recent incubator-related headlines suggests specialized incubators are growing in popularity. For entrepreneurs, working with sector-specific incubators can provide easier opportunities for collaboration with their peers in the field, access to resources unique to the geographic area, and a focal point to attract the attention of industry experts, specialized financial sources and marketing linkages around the world.

For the incubator financiers and management, however, specialized incubators present greater challenges and risks. They often fill up slower than other incubators because of the limited market being served. As a result, these incubators may often require sustained financial support at higher levels for longer periods than less-specialized incubators. Lacking that funding, the specialized mission can be diluted and go unmet as the incubator takes all comers to meet its budget. As a result, the initiation of specialized facilities should be based on strong market analysis of the opportunity and a solid, long-term commitment of funding, and not just wanting to catch a piece of the next big thing.

Following is an overview of specialized incubators that have emerged over the past several months in the areas of national security technology, space-derived technologies, clean tech, biotechnology and entertainment. Recent generalized tech incubator announcements, because of their continued importance to most regions, also are included at the end.

National Security
Capitalizing on the advantage of a high concentration of intelligence and classified work in the San Antonio area, the University of Texas at San Antonio (UTSA) announced last month the launch of the UTSA Institute for Cyber Security, an Internet security incubator for companies developing technologies that address major cyber security and privacy issues. The incubator is structured to work with both innovations developed at UTSA and entrepreneurs interested in working with UTSA researchers. Participants must agree to significant collaboration with the institute in exchange for access to seed capital, intellectual property support and access to UTSA labs and researchers.

Earlier this year, a national security technology incubator was launched at New Mexico State University (NMSU) to boost technology transfer under federal agencies. Located in proximity to Los Alamos National Laboratory and Sandia National Laboratory, the NMSU incubator is part of the Technology Acceleration for National Security network, a group of incubators focused on security issues.

Aerospace Technology
Serving as a virtual home to companies developing space-derived technologies, the 8th Continent Aerospace Business Incubator opened at the Colorado School of Mines last month. The incubator provides resources such as access to capital and management advisory services for companies working directly on commercialization efforts from the Space Program.

Renewable Energy
To diversify local economies built on traditional industries, incubators are increasingly seeking entrepreneurs developing innovations in renewable energy and biotechnology. In Arizona, a new 10,000-square-foot incubator recently opened with a focus on clean and renewable energy technology. The Northern Arizona Center for Emerging Technologies will also house Northern Arizona University’s tech-transfer office.

Biotechnology
A Duke University business incubator located at the North Carolina Research Campus is in the planning stages, according to the Charlotte Observer. The Biomarker Factory will attract scientists in molecular, clinical, genomic, and epidemiological fields. The structure of the incubator includes a nonprofit institute, a for-profit contract research organization and commercial partners, the article states.

Plans are underway in Oklahoma for a mobile incubator to attract biotech companies. Tax increment finance funds would be used to buy space from the Presbyterian Health Foundation’s research park, which would then be leased back to the foundation for $1 a year, according to an article in The Oklahoman. The foundation will use the space as a mobile incubator, allowing start-ups to stay in place and grow once they reach profitability.

Following voter approval of a sales tax increase supporting the Johnson County Education Research Triangle in November (see the Nov. 5, 2008 issue of the Digest), Kansas State University officials announced plans to move forward with the Olathe Innovation Campus, which include Kansas Bioscience Authority sponsored biotechnology incubators and space for start-up and established biotech companies.

Information, Entertainment and Communications Technologies
State officials in New York recently announced a $2 million state grant to Polytechnic Institute to fund the Center of Innovation for Technology and Entertainment (CITE). The incubator will house technologists, filmmakers, TV producers, videogame designers and entrepreneurs and is envisioned as a hub for student, faculty, and professional creativity and research.

Not all new incubators are supported by public funds. For example, a newly launched technology incubator in Phoenix, called Gangplank, offers workspace, product consulting and financial support to early-stage software companies in exchange for equity in the firms. The private company encourages collaboration in the form of a co-working environment.

Other Generalized Tech Incubators
Plans for two new incubators expected to open next year in Tulsa were announced last month. The North Tulsa Economic Development Initiative will build and operate a 20,000-square-foot incubator with executive coaching and mentoring services and educational options, reports The Journal Record. Entrepreneurs will also have the option to seek incubator services in downtown Tulsa at a building being donated by a local property developer. The Collaboratorium will house approximately 17 to 28 start-up companies.

Last month, Indiana University broke ground on its $10 million Bloomington Incubator, an initiative under the new Innovate Indiana program. The 40,000-square-foot facility is designed for life sciences and Internet technology start-up companies and will complement the university’s existing 67,500-square-foot incubator located on the Central Canal in downtown Indianapolis, according to a university press release.

Innovate St. Louis recently launched a virtual incubator that provides assistance in the form of resources in business planning and training, government procurement, research, life sciences, technology and information on entrepreneurial courses by local educational institutions.

The Santa Cruz, California-based company, NextSpace, recently launched as a co-working space for entrepreneurs and investors of early-stage companies in creative fields. Providing 10,000 sq. ft. of office and workstation space, the physical and virtual community also provides membership services including business formation consulting and capital investment.

Tech Ranch Austin is a newly-launched for-profit incubator that takes equity in pre-seed and seed stage technology companies in exchange for consulting and long-term planning and marketing strategies. Entrepreneurs sign up for office time with Tech Ranch executives to learn processes for funding and growth initiatives. Collaborative work spaces are also available.

For more information
For more information regarding the incubator industry, from its evolution, its nuances and its day-to-day management, visit the National Business Incubator Association’s website: www.nbia.org

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