In the September 23, 2009 Issue:

• SSTI Conference Registration Discounts End in Seven Days. Register Today!
• Recession Aftermath: States Unveil Long-Term Plans to Boost Economy
• President Obama Outlines National Innovation Strategy
• Report Says Growth of Venture-Backed Companies Outpaces Overall Economy
• Brookings: “Stark” Differences in Performance for Largest 100 U.S. Metros by Mid-2009
• Nominations Are Now Open For Southern Growth’s Innovator Awards
• Useful Stats: Is the U.S. Becoming Less Innovative? Patents per Employee Drop
• SSTI Job Corner

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SSTI Conference Registration Discounts End in Seven Days. Register Today!
Registration fees for SSTI’s 13th Annual Conference, Seize the Moment: Tech-based Economic Development for the Next Economy, will increase after Sep 29. The conference hotel room block also will close next Tuesday. In these times, every dollar counts so we strongly encourage everyone to register in the next few days before registration increases $100 on Sep 30.

The conference will take place Oct 21-23 at the Sheraton Overland Park, KS. More information, including full details on the conference program, accommodations and a conference registration form, is available at: http://ssticonference.org.

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Recession Aftermath: States Unveil Long-Term Plans to Boost Economy
The national recession that began at the end of 2007 is “very likely over,” according to Federal Reserve Chairman Ben Bernanke. Recovery, however, may be a long way off. Because states were affected differently by the economic downturn in both timing and impact, recovery for state and local economies is likely to occur at different times. Moody’s Economy.com predicts, according to an MSNBC article, that job growth will return first in five states: Colorado, Idaho, Oregon, Texas, and Washington. Four of those states benefit from high-tech industries, and the fifth, Texas, has a strong base of energy industries, the article notes.

Re-examining policy and priorities in the early aftermath of the national recession, governors and business leaders in three states that are likely to be at the tail end of the recovery recently unveiled long-term economic development plans to position their respective states for sustained growth in the new economy. Following is an overview of strategic plans and recommendations unveiled in Connecticut, Michigan and Wisconsin.

Connecticut
Gov. Jodi Rell outlined last week a comprehensive strategic plan for Connecticut encompassing more than 60 strategies and initiatives intended to grow jobs, streamline government, and create a more business-friendly environment. The 550-page report spans several TBED areas important to growing the state’s economy, including access to capital, technology transfer, workforce development, and support for higher education.

Pointing to the tremendous success and impact of Connecticut Innovations (CI), the state’s 20-year-old public venture capital program, the authors describe an immense need for continued support of technology companies to ensure Connecticut’s leadership in the new economy. To accomplish this goal, the strategy calls for the state to implement the following initiatives:

• Create a new public/private venture capital CTech Fund for the 21st Century to accelerate growth of the technology sector and position the state as a high-technology center. The fund would be a subsidiary of CI, with board members composed of those members who contribute to the fund, and seeded with $20 million in public funds with the goal of leveraging an additional $40 million to $80 million in private funds.
• Implement an angel investor tax credit of 25 percent to individuals, corporations and institutions investing in qualified, early-stage enterprises in targeted core competency areas of biotechnology, IT, digital media, and green technology. To encourage investors to make investments in high-risk, startup companies, a tax credit to cover a percentage of the loss over a three-year period for investments made in qualified enterprises also should be provided.
• Create a $20 million Technology Working Capital Fund Program to extend working capital loans and lines of credit to technology companies in Connecticut. With CI’s experience in evaluating these types of companies, the fund would be self-sufficient after 10 years, the report notes.
• Expand the SBIR mission to build collaborative connections for tech-based businesses with universities, large, mid-tier, and small business. Dedicate $5 million to SBIR for matching grants to SBIR recipients and provide seed-funding to startups in the targeted sectors. Expand SBIR’s matching engineers program to include digital media, IT, and green technology.

Additional recommendations for maintaining a competitive, world-class workforce focusing on the science, technology, engineering, and mathematics fields also are included in the report, which is available at: http://www.ct.gov/ecd/lib/ecd/connecticut_esp-final.pdf.

Michigan
Formerly known as Detroit Renaissance, a group of executive-level business leaders in Michigan have renamed the organization and unveiled an ambitious five-step turnaround plan to transform the state’s economy based on long-term investments in innovation, entrepreneurship, higher education and state government reform.

The new organization, Business Leaders for Michigan, will continue to be led by Doug Rothwell, who previously served as CEO of Detroit Renaissance. Part of the re-organization includes adding another 25 members comprised of top-ranking CEOs from across the state, reports Crain’s Detroit Business. The group plans to use its increased membership – and the potential for fundraising its leaders represent – to gain legislative support for its plan, the article states.

In making a case for change, the group says the state has been getting relatively poorer, smaller and less competitive since about the year 2000 and points to chronic budget shortfalls and the highest unemployment rate in the nation as a result. The turnaround plan, the group says, includes actions needed to help Michigan become a top ten state for job and economic growth.

While the report lacks some specificity on how the recommendations would be achieved, it outlines long-term ideas to achieve the group’s goals, such as:

• Supporting collaborative regional growth strategies by prioritizing incentives and grants in those areas;
• Accelerating growth by supporting innovation and entrepreneurship across all sectors. Recommendations include increasing entrepreneurial education, creating a distinctive university-business partnership focusing on attracting businesses, growing sectors and retaining talent, growing the pool of venture capital in Michigan, and expanding business incubation and acceleration services;
• Rationalize the number of colleges and universities to a number the state can support long-term and increase funding to remaining community colleges and universities to achieve top ten status; and,
• Change the law to require the adoption of a two-year budget to more accurately project the ongoing costs of programs.

The Michigan Turnaround Plan is available at: http://businessleadersformichigan.com/files/MichiganTurnaroundPlanFINAL9-9-09.pdf.

Wisconsin
Charged with developing recommendations on creating jobs through University of Wisconsin (UW)-led research and increasing technology transfer to Wisconsin companies, the Research to Jobs Task Force put forth a plan that involves creating seven or more Emerging Technology Centers.

Administered by individual campuses to focus on specific technology areas, the centers would help companies develop technologies or products. Two such centers already exist within the system: UW-River Falls Tissue and Cellular Engineering Center and the UW-Platteville Nanotechnology Center for Collaborative Research.

The task force, which was formed by UW System President Kevin Reilly in February, estimates a cost to the UW System of $7.7 million. This is based on projected costs of $450,000 per center in the first year and a total of $650,000 for the remaining four years, after which time the centers are expected to become self-sufficient. Total industry and in-kind support for years 1-5 is estimated at $2.6 million with additional support anticipated from private and extramural funding.

Several action items for the UW System and the private sector or joint public-private sectors also are outlined in the report. Some of the ideas include:

• Amending the UW leave of absence policy to allow the Board of Regents to extend leaves of absences for up to five years for faculty engaged in startup activity;
• Identifying and retaining qualified and experienced CEO candidates, for a limited time, in startup companies through an Entrepreneur-in-Residence program; and,
• Recruiting SBIR grant writers and coaches.

The full report of the Research to Jobs Task Force is available at: http://wis.uwsa.edu/news/2009/09_2009/Research-To-Jobs-Report.pdf.

Attend SSTI’s Annual Conference for More Fresh Ideas
The three examples above are indicative of organizations and states that are looking forward and seizing the moment even during this economic downturn. If you’re trying to break new ground in building tech-based economies, SSTI’s Annual Conference has the agenda and speakers you’ve been looking for. With just the right mix of speakers challenging conventional thinking and sharing best practices, the conference will send you home with a new set of ideas and energy to undertake the work ahead. For more information, visit http://www.ssticonference.org.

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President Obama Outlines National Innovation Strategy
The Obama administration’s interest in directing more federal support to innovation and research was evident very early in the President’s first weeks in office with more than $100 billion of the Recovery Act funding going toward innovation, education and research infrastructure. Earlier this week, the National Economic Council and Office of Science & Technology Policy released a brief report presenting the guiding principles and priorities for the administration’s innovation agenda.

“A Strategy for American Innovation: Driving toward Sustainable Growth and Quality Jobs” outlines three broad objectives, each with specific action items. While many of the goals of the plan have already received significant investments through the Recovery Act, there are several more initiatives that are still in the proposal stage or call for additional investments beyond the Recovery Act. Highlights include:

• Invest in the Building Blocks of American Innovation
  • Double the R&D budget of key science agencies (the National Science Foundation, the Department of Energy’s Office of Science, and the National Institute of Standards & Technology);
  • Invest 3 percent of GDP in R&D including both the public and private sectors;
  • Make the research & experimentation tax credit permanent (expected cost is $75 billion annually);
  • Restore the U.S. to first in the world for college graduates ($200 billion over 10 years);
  • Triple the number of NSF Graduate Research Fellowships awarded in science and engineering;
  • Develop new career pathways in community college programs;
  • Design world-class online courses for post-secondary students through a ten-year, $500 million investment into community colleges;
  • Build an efficient high-speed rail network ($8 billion in Recovery Act, $1 billion annual budget request);
  • Develop the next generation of air traffic control based on satellite surveillance ($865 million in FY10 budget);
  • Assure net neutrality to preserve the freedom and openness in Internet access; and,
  • Support research for next-generation information and communication technology.
• Promote Competitive Markets that Spur Productive Entrepreneurship
  • Increase access to capital for new businesses, including eliminating the capital gains tax on small businesses;
  • Provide training and mentoring to entrepreneurs;
  • Create competitive communities by promoting regional innovation clusters;
  • Stimulate entrepreneurship through increased access to government data through portals like data.gov;
  • Use innovation to improve government programs at all levels of government;
  • Commit White House resources to scaling and promoting community innovations (FY10 budget request includes $50 million for a Social Innovation Fund);
  • Open markets abroad while enforcing trade agreements;
  • Protecting intellectual property rights;
  • Reform and modernize U.S. export controls; and,
  • Ensure working financial markets.
• Catalyze Breakthroughs for National Priorities
  • Double the nation’s supply of renewable energy in the next three years;
  • Invest in clean energy innovation through a ten-year $150 billion fund for research, development and demonstration of clean energy technologies;
  • Enact a cap-and-trade program to curb oil dependence and greenhouse gas emissions while spurring renewable energy technologies;
  • Create a Re-Energyse education campaign jointly run by the Department of Energy and the National Science Foundation to encourage young Americans to pursue clean energy careers; and,
  • Harness science and technology to address the “Grand Challenges” of the 21st century.

The National Innovation Strategy is available at: http://www.whitehouse.gov/administration/eop/nec/StrategyforAmericanInnovation/.

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Report Says Growth of Venture-Backed Companies Outpaces Overall Economy
Companies backed by venture capital grew their revenue and employment numbers at a much higher rate than other businesses in recent years, according to a report from the National Venture Capital Association (NVCA). Between 2006 and 2008, revenue at U.S. venture-backed companies increased by 5.3 percent, while total U.S. business revenues grew by only 3.5 percent. Employment at venture-backed companies grew by 1.6 percent during that same period, compared to 0.2 percent in the overall U.S. private sector. Last year, venture-backed companies accounted for 11 percent of U.S. employment and 21 percent of U.S. gross domestic product (GDP).

The report maintains that because of the remarkable growth of venture-backed companies and the strategic nature of the industries that attract venture investment, the venture industry is important in sustaining national economic growth.

NVCA's biannual report on the impact of venture capital uses data on investment activity from the quarterly NVCA/PricewaterhouseCoopers Moneytree survey.

Though the venture capital industry (not including venture-backed companies) represents only 0.2 percent of GDP, the report argues that venture investment plays a vital role in supporting emerging sectors. Part of the reason venture-backed companies experience such high rates of growth is that venture investors gravitate toward companies and industries with high-growth potential.

By supporting high-growth sectors, venture firms help new sectors grow and thrive, the report argues. Within many high-tech and emerging sectors, venture-backed companies dominate employment and revenue figures. Venture-backed software companies employ 81 percent of the U.S. software workforce. Three-quarters of all U.S. telecommunications and semiconductor jobs are within venture-backed companies.

Although U.S. venture activity has been centered in Silicon Valley and Massachusetts's Route 128, NVCA argues that several smaller hubs have emerged to spread the advantages of a strong venture industry throughout the country. Pennsylvania, Minnesota, Florida and Washington each experienced strong employment and revenue growth at venture-backed companies between 2006 and 2008.

The report discusses the role that government can play in supporting entrepreneurship and innovation. NVCA encourages the government to implement more favorable rates for capital gains taxes and carried interest and to craft a leaner and more consistent regulatory process. The report also advocates increased government funding for basic research to ensure a steady stream of technologies. In the model depicted by NVCA, basic research is translated into applied research and commercial products by venture capitalists and the entrepreneurs they support. Notably, their recommendations do not include direct equity investments in companies, investment through private venture funds, non-financial support for entrepreneurs or incentives to local venture firms.

Increasing Access to Capital
The idea that the government role in supporting venture capital should be focused on decreasing the tax and regulatory burden of venture firms and on basic, not applied research, indicate a disconnect between the perspectives of the TBED community and the venture industry. As federal, state and local policymakers expand their efforts to grow the venture industry through funds-of-funds, early-stage investment, angel capital networks and capital matchmaking services, venture capitalists remain focused on reducing government interference beyond basic research. Reconciling these views would be a major step in improving the effectiveness of policies to increase the availability of capital.

A major theme of SSTI’s upcoming 13th Annual Conference is focused on the future of public equity effort, including a much anticipated plenary session and two engaging breakout sessions:

SSTI’s Annual Conference, Seize the Moment: Tech-based Economic Development for the Next Economy, will be held Oct 21-23 in Overland Park, KS. More information is available at: http://ssticonference.org.

NVCA’s “Venture Impact: The Economic Importance of Venture Capital-Backed Companies to the U.S. Economy” is available at:  http://www.nvca.org/index.php?option=com_docman&task=doc_download&gid=482&Itemid=93.

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Brookings: “Stark” Differences in Performance for Largest 100 U.S. Metros by Mid-2009
The differences in economic performance among the metropolitan areas with the largest populations are vast, as a few metros already are emerging from the recession and others are in danger of being left behind, according to a recent brief by the Brookings Institution. To be issued every quarter, last week’s MetroMonitor: Tracking Economic Recession and Recovery in America’s 100 Largest Metropolitan Areas examines changes in employment, unemployment rate, gross metro product (GMP), housing prices and foreclosed properties through the end of June 2009.

In what Brookings has labeled the 20 best-performing metros (located mostly in and around Texas and the inland Northeast), the number of employed workers was down on average 1.7 percent since pre-recession peaks and 17 of them have seen housing prices increase since June of last year. For the 20 weakest-performing metros (located in Florida, inland California, and around the Great Lakes) employment has wilted an average of 8.2 percent from their peaks and housing prices dropped an average of 11 percent.

Using Moody’s data on GMP, only 20 of the 100 metros had a gross metro product in the second quarter of 2009 larger than the first quarter. From their pre-recession peaks, the top 100 metros had a decline of 3.7 percent by June, worse than the 2.8 decrease for the entire U.S. While Detroit’s decline in GMP was the worst among the metros, dropping 14.5 percent from its peak, there were three metros – those centered around Austin (TX), Washington D.C., and McAllen (TX) – which have surpassed their pre-recession peak output.

None of the metros, however, have surpassed their pre-recession peaks in employment levels. Out of the 100 metros, only the five centered around Akron (OH), Columbia (SC), McAllen (TX), Buffalo (NY), and Madison (WI) had either broken even or added jobs from the first quarter to the second quarter of 2009.

Changes in employment levels were linked strongly to the economic concentrations of certain industries. For example, while employment across the U.S. declined 4.1 percent from its peak in the fourth quarter 2007 to the second quarter of this year, during the same period employment dropped by a much larger 5.6 percent for the 12 metros with strong specializations in automobile and auto parts manufacturing.

For the 14 other metros that specialize in manufacturing apart from the auto industry, employment levels dropped by 4.0 percent, better than the national average. Also faring better than the national average were the nine metro areas with heavy concentrations in banking and 21 other metro areas that specialize in non-banking forms of financial services.

The report, MetroMonitor: Tracking Economic Recession and Recovery in America’s 100 Largest Metropolitan Areas, in addition to individual profiles for each of the metro areas, is available at: http://www.brookings.edu/metro/MetroMonitor.aspx.

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Nominations Are Now Open For Southern Growth’s Innovator Awards
Each year, Southern Growth Policies Board honors Southern initiatives that are improving economic opportunities and quality of life in the region. The 2010 Innovator Awards will be chosen from creative initiatives in the region that aim to help communities recover from the recession. Innovator Awards are presented annually to one organization in each of Southern Growth’s 13 member states, and winners are recognized at Southern Growth’s Annual Conference. The deadline for nominations is Nov 6. To learn more about the criteria for this year’s Innovator Awards and to fill out a nomination form, visit: http://www.southern.org/innovators/innovators.shtml.

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Useful Stats
Is the U.S. Becoming Less Innovative? Patents per Employee Drop
The number of U.S. patents per employee decreased in 43 states from 2003 to 2007, as patents per employee for the U.S. as a whole declined by 10.3 percent over the same five-year period. To track this metric, SSTI has prepared a table calculating the number of patents issued by the U.S. Patent and Trademark Office (USPTO) per 100,000 employees for each state. The table also displays the relative ranking of each state from 2003 to 2007, as well as each state’s five-year percent change.

For the U.S. in 2007, there were 69.2 patents issued per 100,000 employees. Idaho led the nation in 2007 with 210.1 patents per 100,000 employees. Finishing out the top five were Vermont (179.9), California (144.5), Washington (133.1), and Oregon (132.1). On the other end of the spectrum, Alaska recorded the lowest number of patents per employees, at 7.7 patents per 100,000 workers, followed by the District of Columbia, Hawaii, Arkansas, and Louisiana.

Only seven states and the District of Columbia experienced an increase in patents per employee from 2003 to 2007. Washington’s output increased by 40.3 percent over this period. Rounding out the top five in percentage increases were North Dakota (36.5%), D.C. (36.3%), Rhode Island (15.1%) and Vermont (13.7%).

The SSTI table is available at: http://www.ssti.org/Digest/Tables/092309t.htm

The state of origin for a patent is based upon the residence of the first-named inventor. Raw USPTO data on patent counts from each state and each state over a twenty-year period is available at: http://www.uspto.gov/web/offices/ac/ido/oeip/taf/cst_all.pdf.

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

The U.S. Department of Energy - National Energy Technology Laboratory (NETL) Office of Research and Development (ORD) has posted two positions: Technology Transfer Analyst and Technology Transfer and Outreach Specialist. The NETL Office of Research and Development conducts first-class research and development in clean energy systems that are of critical importance to the nation.

• Technology Transfer Analyst. This position serves as the Technology Transfer program manager. The incumbent is the primary participant responsible for defining, developing and implementing the NETL Technology Transfer Program. Qualifications and salary information can be found in the vacancy announcement at: http://www.netl.doe.gov/careers/2009/NETL-09-116.pdf.
• Technology Transfer and Outreach Specialist. This position functions as a critical part of ORD’s efforts in outreach and technology transfer. Specifically, the incumbent has the responsibility to ensure and track all agreements established on behalf of ORD, meeting all NETL, FE, and DOE reporting requirements. Qualifications and salary information can be found in the vacancy announcement at: http://www.netl.doe.gov/careers/2009/NETL-09-115.pdf.

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