In This Week's Issue
SSTI News and Analysis
House Committee Approves Reauthorization of the America COMPETES
Act
The U.S. House of Representatives Committee on Science
and Technology approved the America COMPETES Reauthorization Act of
2010 on Wednesday. The bill adjusts the original spending
projections based on the amount authorized in 2007, while maintaining
the goal of doubling funding over the next ten years. Programs
affected by the reauthorization include the Innovative Technology
Loan Guarantee program, the Advanced Research Projects Agency for
Energy (ARPA-E) and the Regional Innovation Clusters program, among
others. Read the committee release ...
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VC and Renewable Energy Measures Win Legislative Support in
Maine
Maine's 2010 legislative session wrapped up
last week, ending on a relatively high note for tech-based economic
development (TBED). Actions supporting TBED include a measure
signed by Gov. John Baldacci to encourage venture capital
investment in innovative companies and the
legislature's approval of a bond package that
includes $11 million for ocean wind energy demonstration sites
through the University of Maine System.
LD 1, An Act to Stimulate Capital Investment for Innovative
Businesses in Maine, allows the Maine Public Employees Retirement
System to invest up to $20 million in innovative companies through
venture funds. The goal of the program is to attract
more venture capital and spur more innovative startups in the
state. A larger Fund of Funds measure was pocket vetoed by the
governor in 2008 because of its potential liability for the state,
according to Gov. Baldacci (see the May 14, 2008
issue of the Digest).
A companion bill,
LD 1666, to expand the existing seed capital investment tax
credit, died in the Appropriations Committee. Although the tax
credit likely would have paid for itself with increased economic
activity, it was rejected because of its estimated cost of $500,000
in the next fiscal year, reports the Bangor Daily
News.
Legislators also approved a bond package that includes
modifications to economic development and energy investments for
the June and November ballots. Lawmakers cut about $13.5 million
from the current June ballot, a bulk of which came from funds for
weatherization and energy efficiency programs. Other modifications
include:
- A $5 million increase ($11 million total) for the University of
Maine System to develop one or more ocean wind energy demonstration
sites. Funds are provided for R&D, product innovation, and
robotics equipment to accelerate wind energy components
manufacturing in the state; and,
- A $1 million reduction ($4 million total) for the Small
Enterprise Growth Fund to provide Maine companies and entrepreneurs
access to sources of venture capital.
Additional investments through the Department of Economic and
Community Development, including $3 million for the Maine
Technology Institute (MTI), remain intact (see the July 1,
2009 issue of the Digest).
The supplemental 2010-2011 biennial budget that eliminates a
$310 million shortfall was signed into law last month. The
bill reduces funding for MTI by $384,071 in FY10 and $384,872
in FY11.
Gov. Baldacci also signed an "Act to Implement
the Recommendations of the Governor's Ocean Energy Task
Force." This
legislation will support the development of ocean wind, tidal
and wave power and states a policy preference for a transition to
the use of renewable ocean electric power to meet Maine's heating
and transportation needs, reports Progressive States
Network.
Broadband measures signed into law this session include
LD 1646, which sets goals to expand broadband access by
establishing policies to promote universal broadband access and
provide the necessary infrastructure, and
LD 1778, a measure to facilitate Maine Fiber in building its
dark fiber network throughout the state.
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Maryland Budget Supports BIO 2020 Initiative
Maryland legislators recently passed the FY11 budget, allocating
$10.4 million for stem cell research and $8 million for tax credits
for biotechnology companies. Many of the appropriations follow
closely in line with Gov. Martin
O'Malley's recommendations,
which aim to support the Maryland BIO 2020 initiative, a statewide
plan investing in biotechnology over 10 years.
The Maryland Technology Development Corporation (TEDCO) will
receive $15.85 million in FY11, $115,000 more than the FY10
appropriation. Although $12.4 million is allocated for the Stem
Cell Research Fund, $2 million is earmarked for the Maryland
Biotechnology Investment Tax Credit Reserve Fund within the
Department of Business and Economic Development.
Created to spur investment in Maryland biotech companies, the
Biotechnology Investment Tax Credit Reserve Fund also will receive
$6 million from the general fund for a total $8 million in FY11, a
$2 million increase from last year.
TEDCO also will receive $3.45 million to administer its
technology development, transfer and commercialization programs, a
slight increase from the FY10 adjusted appropriation of $3.4
million.
Lawmakers approved $3.8 million for the Maryland Biotechnology
Center, which was created in 2009 as one of the first initiatives
under BIO 2020. The center administers programs and provides
resources to integrate entrepreneurial strategies to stimulate the
transformation of scientific discovery and intellectual assets into
capital formation and business development.
The capital budget approved by lawmakers includes funding for
two projects in support of the BIO 2020 initiative. Montgomery
College will receive $16 million for construction of the Germantown
Bioscience Education Center and $5 million was approved for the
East Baltimore Biotechnology Park.
In another victory for the state's high-tech
sector, Gov. O'Malley signed SB 64, a
measure extending the R&D tax credit until 2021.
Hoping to cap tuition hikes in higher education, the legislature
passed a bill
making the Higher Education Investment Fund a permanent and
embedded trust. Drawing from corporate tax revenues, the fund was
created as a dedicated revenue stream for higher education in 2007,
and was scheduled to sunset at the end of this fiscal year.
The enrolled version of the FY11 operating budget bill is
available at: http://mlis.state.md.us/2010rs/bills/sb/sb0140e.pdf.
The enrolled capital budget bill is available at: http://mlis.state.md.us/2010rs/bills/sb/sb0142e.pdf.
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Legislative Wrap-Up: Alaska and Nebraska
Two measures, one dealing with improving access to higher
education in Alaska, and another focusing on economic growth
through renewable energy in Nebraska, recently were approved as
part of the 2010 legislative sessions. Lawmakers in Alaska passed a
measure establishing a merit-based scholarship program championed
by Gov. Sean Parnell, but left funding for the program uncertain.
Meanwhile, Nebraska legislators passed a bill to promote economic
growth through renewable energy export.
Alaska
Lawmakers passed a measure creating a merit-based scholarship
program for higher education that includes many of the same
elements proposed last year by Gov. Sean Parnell, with the
exception of a funding mechanism.
SB 221 establishes the Alaska Merit Scholarship Program
providing grants for students who complete a more rigorous high
school curriculum, including four years of math and science.
Legislators scrapped a plan proposed by the governor that would
have allocated $400 million to initiate the program by tapping into
the interest earned on budget reserve funds.
Under the bill, students with a 3.5 grade-point average or above
will be eligible for grants of $4,755. Students with a 3.0
grade-point average or above will receive $3,566 and those with a
2.5 grade-average will receive $2,378. A minimum score on college
entrance exams also is required. A short-term task force will be
created to study a funding mechanism, and if funding is approved in
the 2011 legislative session, the scholarships would be available
in the fall of 2011, according to the governor's
office. The governor's plan would have provided
a 100 percent tuition scholarship to students with an A average
(see the Oct. 14,
2009 issue of the Digest).
Lawmakers also approved a
bill declaring a statewide energy policy promoting renewable
energy development. The bill calls for the state to receive 50
percent of its electric generation from renewable sources by 2025
and achieve a 15 percent increase in energy efficiency on a per
capita basis between 2010 and 2020. The bill awaits
action from Gov. Parnell.
Nebraska
Gov. Dave Heineman signed into law
LB 1048 earlier this month, a measure designed to encourage the
development, ownership and operation of renewable energy facilities
for the export of wind energy from Nebraska. The law creates a
mechanism for the Nebraska Power Review Board to consider and
approve renewable energy facilities for the purpose of energy
exports and provides an exemption from public
power's use of eminent domain for export
projects. This provision removes what is considered a significant
barrier to greater wind energy development, according to the
legislation. Gov. Heineman said he expects Nebraska to be a top 10
wind energy producing state by 2020.
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Rural Venture Investments As Successful As Metro Counterparts,
Shows Report
Venture capital (VC) funds that
invest in rural and low-income regions can be as successful as
those in tech-oriented metropolitan regions if they are large
enough to attract high-quality deals and provide follow-on funding,
according to a recent report published through the Ford
Foundation's Wealth Creation in Rural Communities
project.
Author Patricia Scruggs examines the practices of rural and urban
angel and venture funds and the impact their investments have on
rural communities. In particular, the report focuses on the
application of triple bottom line (TBL) practices in the equity
capital community. These practices incorporate social and
environmental benefits, alongside financial and economic returns,
in making investment decisions and evaluating the success of the
venture capital firms. While TBL practices still are seldom used in
an explicit and consistent manner within venture firms, they are
growing in popularity and create a useful standard by which
communities can assess the contribution of these firms to the local
economy. TBL criteria are used throughout the report to identify
VCs that have been successful in generating community wealth.
The report finds no statistical difference between returns on
investments in active VC states, such as California and
Massachusetts, and in less active states. The same holds true for
angel capital investments. Properly-sized firms in rural,
low-income and underserved regions can act as local leads for deals
that offer returns that compete on a national level, attracting
investment capital that creates new high-tech companies and jobs,
according to the report.
In addition to direct financial returns, VC firms
can have a positive impact on rural economic development. Lack of
capital often results in growing companies, including high-growth
gazelle firms, in rural areas seeking more active venture markets.
Local VCs can serve as a local lead on deals, attracting
out-of-state dollars without driving away promising companies. The
report identifies three types of positive impact that equity
investments can have: (1) increasing jobs, wages and skills, (2)
building local assets and networks, and (3) catalyzing community
change. VC firms also introduce expertise in financial controls,
capital strategies and high-performance business practices through
the advisory services they offer to portfolio companies. These
services are particularly valuable in rural areas where VCs can
serve as a link to leading-edge knowledge and practices.
The report identifies several common traits among firms that have
been successful in generating community wealth in rural regions.
These tend to work at both the community and investment level,
looking not only at the individual companies and its balance sheet,
but also at the local context of the firm and its industry. By
understanding the dynamics and history of the region, the firms are
able to promote not only individual companies, but also local
industries. Second, successful firms tend to intentionally address
issues of isolation, connecting portfolio companies to suppliers
and customers through the VCs own networks. These firms also
intentionally seek out opportunities that generate wealth for
investors, entrepreneurs and the community as a
whole.
Rural venture firms face some challenges that differ from
those faced in more urban regions. Though funds and investment
dollars must be large enough to attract nationally-competitive
deals, both deals and returns are typically smaller in rural
markets. Smaller returns can make it more difficult for VCs in
rural areas to raise funds that can attract high-quality deals. For
this reason, intervention by state and local leaders may be
necessary to support a healthy equity market.
Since scale is an important element in ensuring that VCs in
underserved regions maximize their positive impact in the local
economy, agencies and organizations seeking to
build a strong equity capital market should focus on expanding the
reach and size of local equity firms. The report recommends helping VCs establish
entrerpeneurial funds that meet the needs of companies at all
stages of development and companies with limited equity capital
requirements. Local leaders also can help to make sure advisory services
are integrated and sustained part of work done by VCs that invest
in their region. Finally, communities should work with firms to
help them adopt approaches that integrate regional wealth creation
into their investment strategies and practices.
Read "The Role of Equity Capital in Rural
Communities" at:
http://www.yellowwood.org/The%20Role%20of%20Equity%20Capital%20in%20Rural%20Communities.pdf.
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White House Extends Comment Period for Commercialization of
University Research
The Office of Science and Technology Policy and the National
Economic Council have extended the comment deadline for their
request for information (RFI) on the commercialization of
university research and proof-of-concept centers (see the March 31, 2010
issue). The new deadline is May 26. Read the announcement
and original RFI ...
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Department of Energy Announces $200 Million for Solar and
Wind Power
U.S. Secretary of Energy Steven Chu has announced that the Obama
Administration will invest $200 million over the next five
years to expand and accelerate the development,
commercialization, and use of solar and water power technologies
across the U.S.. The funding includes up to $125 million for s
photovoltaic manufacturing intiative, $40 million for photovoltaic
supply chain development, $4.5 million for a new national
administrator for the solar instructor training network and $39
million for marine and hydrokinetic technologies. Read the
announcement ...
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SSTI Hosting Informational Phone Call on May 10
Are you planning to submit an application for consideration of
SSTI's 2010 Excellence in TBED Award?
Looking for guidance and helpful hints that may provide a
competitive edge? If so, register now to participate in the
informational phone call hosted by SSTI president and CEO Dan
Berglund on May 10 at 3:30 PM EDT. Questions may be submitted ahead
of time to awards@ssti.org.To sign up, visit: http://www.ssti.org/Awards.
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Staff Picks
Bill Gates Makes Case for Federal Support for Alternative
Energy
In an op-ed with Chad Holliday, the former chairman and chief
executive of Dupont, Gates makes the case that we
"need to rethink the scale and urgency of the
energy endeavor. The federal government must invest more and be
smarter about the innovation process."
Read more ...
Innovation a Political Winner
TechNet has released a survey of U.S. voters that shows strong
support for innovation, but 78% say nation's schools fail to
prepare kids for jobs of tomorrow and 58% believe a foreign country
will drive the most innovation in the coming decade.
Read more ...
In China, Real Estate Fever is Rising
The Los Angeles Times provides a disturbing profile of a
potential real estate bubble in China, illustrating one inland city
where real estate is booming so much that more residential units
were sold there the first three months of 2010 than in Beijing or
Shanghai, cities four times its size.
Read more ...
Innovation and Product Development in the 21st
Century
The MEP Advisory Board released a report that looks at the
"realities of the manufacturing industry,
identifies responses of successful firms to the dynamic
technological and economic changes in front of them, and suggests
opportunities for action..."
Read more ...
Hawaii and NASA Ames Research Center Enter
Partnership
The two signed a three-year Space Act Agreement establishing a
partnership for space exploration, scientific research and
education initiatives in science, technology, engineering and
mathematics, known as STEM, including robotics initiatives.
Read more ...
Aerospace Industry Must Develop New Ways to Recruit and
Retain Workforce
Aerospace companies must consider offering newly recruited
workers flexible job assignments and a variety of projects to
remain competitive with other scientific fields of employment.
Read more ...
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