In the July 15, 2009 Issue:

• NTIA Releases Details of Federal Funding for State Broadband Maps and Planning
• High-Tech Industry Wins Big in Wisconsin
• Reduced Funding Scales Back Indiana Life Sciences, Technology Development Initiatives
• Minnesota Lawmakers Establish Green Jobs Plan; Gov Takes Final Action on Budget
• Final Version of NIH Guidelines for Human Stem Cell Research Released
• Summer Camps and Tech Challenges Prepare Next Generation Scientists, Engineers
• Recent Research: Does the Clustering of Venture Capital Centers Make Sense?
• Useful Stats: R&D Performed by Industry within U.S., Per State, 2003-2007
• TBED People and Organizations

---

NTIA Releases Details of Federal Funding for State Broadband Maps and Planning
The National Telecommunications and Information Administration (NTIA) has released new information about its stimulus-funded grant program for state-based broadband mapping and planning initiatives. The State Broadband Data and Development Grant Program will provide approximately $240 million in grants to assist states or their designees to develop state-specific data on broadband deployment and adoption. The competitive, merit-based awards will require funding matches with applications due by August 14.

The program was introduced as part of the American Recovery and Reinvestment Act and the Broadband Data Improvement Act. By funding various statewide initiatives, NTIA plans to combine the resulting data with public information to create a national broadband map. The Recovery Act requires that such a map be publicly-available by February of next year. This map will help inform future research and policy decisions to expand high-speed internet access.

In addition to maps, the state grants also will provide support to efforts to identify barriers to broadband adoption and will fund the creation of local technology planning teams. Each state only may have one entity that receives funding through the program. At least 20 percent of the project costs must be funded by sources other than the federal government. If no applicant in a particular state meets the program standards, NTIA will perform the data collection on its own.

More information about the State Broadband Data and Development Grant Program is available at: http://www.ntia.doc.gov/broadbandgrants/.

NTIA expects the state grants and the broadband provisions of the stimulus to have a significant economic impact. In February, NTIA released a paper by Raul Katz and Stephan Suter that analyzed the likely economic benefits of the federal investment.  The Recovery Act should create approximately 128,000 jobs in network construction over the next four years and up to 270,000 additional jobs related to the expansion of broadband networks, according to the study. The study concluded that in order to maximize the number of new jobs created through broadband programs, state and local governments should align their broadband initiatives with job creation and retention programs.

Download “Estimating the Economic Impact of the Broadband Stimulus Plan” at: http://www.ntia.doc.gov/broadbandgrants/comments/1EA7.pdf.

return to the top of the page

---

High-Tech Industry Wins Big in Wisconsin
Gov. Jim Doyle signed the 2009-11 biennial budget last month, providing funding for university-based research and enhancing tax credits for angel and venture investors supporting high-tech R&D.

Several of the governor’s priorities outlined earlier this year in the Digest as part of the state’s stimulus plan were funded this session, including the following provisions to enhance the Angel Investment and Venture Capital Tax Credit programs, known as Act 255:

• Tripling the Acceleration Wisconsin tax credit from $1 million to $4 million for angel and venture investors in support of startup technology companies, beginning retroactively for the 2008 tax year;
• Tripling the annual pool of credits available from $5.5 million to $18.25 million per year for angel credits and from $6 million a year to $18.75 million a year for venture credits, beginning Jan. 1, 2011;
• Raising the aggregate creditable investment from $8 million per year from any combination of angel or venture sources, beginning Jan. 1, 2011;
• Allowing angel investors to claim the entire 25 percent credit on their investment in the first taxable year; and,
• Permitting insurance companies to claim the venture capital investment tax credit against gross premium tax liability.

The enacted budget also funds several TBED initiatives from the governor’s budget proposal (see the Feb. 25, 2009 issue of the Digest). They include:

• Providing an R&D tax credit for businesses that increase R&D by more than 125 percent of the company’s three-year R&D average in the form of an income and franchise tax credit worth $1 for every $1 investment above 125 percent beginning Jan. 1, 2011;
• Creating a capital gains tax exemption for investments of up to $10 million in new businesses. The pool of available credits will be tripled beginning in 2011; and,
• Exempting the sales and use tax for machinery and other tangible personal property used for qualified manufacturing or biotechnology research, effective Jan. 1, 2012;

In support of new job creation, the enacted budget consolidates five existing tax credit programs, including development zones, enterprise development zones, agricultural development zones, technology zones and airport development zones. The goal is to further target those credits to businesses that create jobs, invest capital, and provide training and retraining to new and incumbent workers, according to the governor’s office.

University-based R&D investments include $8.2 million for the Wisconsin Institute for Discovery for research in biotechnology, nanotechnology, and information technology. The institute is part of the Grow Wisconsin Plan first announced by the governor in 2003 (see the Sept. 19, 2003 issue of Digest).

The enacted budget also includes the governor’s recommendation to provide $8 million over the biennium to establish University of Wisconsin Bioenergy Initiatives at the Madison, Stevens Point and River Falls campuses for projects to develop the next generation of bio-based fuels and energy. To establish the Wisconsin Genomics Initiative for research into personalized health care for disease identification and prevention, the budget appropriates $2 million in FY10.

Lawmakers allocated $25 million in FY11 for the Wisconsin Covenant Scholars grants. This appropriation will establish a funding base for the grants, which are available to students who maintain a B grade average who are entering into the higher education system in the fall of 2011.

The 2009-11 enacted budget is available at: http://www.legis.state.wi.us/2009/data/acts/09Act028.pdf.

return to the top of the page

---

Reduced Funding Scales Back Indiana Life Sciences, Technology Development Initiatives
While maintaining a $1 billion reserve over the next biennium, the 2009-11 budget signed into law by Gov. Mitch Daniels reduces by half funding for the state’s 21st Century Research and Technology Fund and appropriates only a fraction of the requested $70 million for the Indiana Innovation Alliance, an initiative to grow the state’s life science industries.

Indiana’s 21st Century Research and Technology Fund administered by the Indiana Economic Development Corporation (IEDC) will receive $35 million over the next two years – half the amount appropriated last biennium. Supporting numerous entrepreneurial ventures over the last 10 years, IEDC uses the fund to offer loans and grants to companies bringing new technologies to market, to match SBIR grants, and to create University Centers of Excellence. Additionally, no funding was included for IEDC’s High Growth Business Incentive Fund, which received $3 million last biennium.

The Technology Development Grant Program, which supports the creation and expansion of technology parks, will receive $3.8 million over the biennium, $400,000 less than last biennium.

Lawmakers allocated $20 million over the next two years to establish the Indiana Innovation Alliance, a partnership between Indiana University (IU) and Purdue University. Hoping to bring more external funding into the state by providing matching funds for large-scale research grants and initiatives, the presidents of the two universities asked lawmakers for $70 million over the biennium to be divided among two priority areas. This included $25 million each year to enhance state-of-the-art core research capabilities for university and corporate research, specifically in bioeconmic areas, and $10 million each year to expand education and healthcare innovations by growing statewide medical and bioscience programs.

In the end, lawmakers approved just $10 million each year, allocating $5 million for core research for the two universities, $3 million for expansion of the IU School of Medicine, and $2 million for Purdue’s health care technology assistance program, reports the Lafayette (IN) Journal and Courier.

Legislators also concurred with the governor’s proposal to eliminate the $20 million Life Sciences Fund approved as a one-time appropriation last biennium to support recruitment and retention of world-class scientists specializing in life sciences at the Indiana School of Medicine.

Federal stimulus funds were allocated during the session to support several economic development projects in the higher education system. Specifically, the enacted budget includes $20 million in bond authority for a drug discovery center at Purdue University West Lafayette and $10 million for the Midwest Institute for Nanoelectronics Discovery, a partnership between industry, Purdue University, and the University of Notre Dame. Launched in March 2008, the collaboration is one of four across the nation designed to create new research opportunities that will lead to development of atomic-scale technologies and drive future computing breakthroughs, according to the Semiconductor Research Corporation (SRC). Additional funding comes from Notre Dame, IBM Corporation, SRC’s Nanoelectronics Research Initiative, and the city of South Bend.

Another $5 million in federal stimulus funds was allocated to support the Woodrow Wilson Teaching Fellowship program to add new math and science teachers in underserved areas of the state and for startup costs to establish new Tech High Schools.

The 2009-11 enacted budget is available at: http://www.in.gov/legislative/bills/1092/HE/HE1001.1.html.

return to the top of the page

---

Minnesota Lawmakers Establish Green Jobs Plan; Gov Takes Final Action on Budget
As one of several states working to recruit and retain companies that create green jobs, Minnesota lawmakers passed a measure to create a multiagency authority to promote, market and coordinate state agency collaboration on green enterprise and green economy projects. At the same time, legislators rejected Gov. Tim Pawlenty’s Green JOBZ proposal, creating a tax-free program for renewable and clean energy businesses modeled after the original JOBZ program and part of the governor’s Jobs and Recovery Act (see the Feb. 4, 2009 issue of the Digest).

The Ominbus Environment, Natural Resources, Energy and Commerce bill signed by the governor establishes the Green Enterprise Authority, a cooperative effort between the Department of Employment and Economic Development (DEED) and the Department of Commerce to design programs to attract green jobs to the state. The Green Enterprise Authority will receive the remaining balance of the FY09 special revenue fund appropriation for the Green Jobs Task Force. Establishment of the authority was a major priority of the task force, a bipartisan coalition of legislators, business leaders, policy experts and state agencies created by the legislature in 2008.

Lawmakers also rejected a measure providing $50 million in investment tax credits for certified capital companies (CAPCOs) introduced by the governor earlier in the session. Gov. Pawlenty proposed the investment tax credits, which would be deferred until 2012, available to insurance companies for early-stage investments in CAPCOs.

The governor vetoed a bill that included a $10 million-a-year, 25 percent tax credit for angel investors, citing opposition to tax increases in other parts of the bill, reports the Star Tribune.

Gov. Pawlenty took final action on the state’s two-year budget last month following approval of a spending plan by the legislature in May that left a $2.7 billion shortfall between spending and revenues, according to the governor’s office. Executive actions taken to balance the budget include a $100 million reduction in higher education appropriations and a 2.25 percent reduction to most state agency operating budgets. This is in addition to the 5 percent reduction imposed on many agencies as part of the recently enacted budget.

The Omnibus Economic Development bill includes $200,000 each year of the 2009-11 biennium for the Office of Science and Technology (OST). The OST was created in 2008 to develop a collaborative partnership between industry, academia and government to coordinate federal funding procurement efforts in S&T in Minnesota. DEED received $400,000 in FY09 to expand current SBIR and STTR efforts and develop a process for technology partnering and commercialization to enhance the S&T funding and technology pipeline.

Lawmakers also approved $500,000 each fiscal year for the BioBusiness Alliance of Minnesota to recruit, retain and expand bio business activity, implement the Destination 2025 statewide plan, and update a statewide assessment of the bioscience industry.

The K-12 Education Omnibus bill approved by lawmakers includes $750,000 in FY10 for Math and Science Teacher Academies. The legislature approved $3 million for the creation of regional academies in 2007, which provide professional development and training opportunities to math and science teachers.

return to the top of the page

---

Final Version of NIH Guidelines for Human Stem Cell Research Released
The National Institutes of Health (NIH) last week published the final version of its guidelines regarding human stem cell research, in part determining which human embryonic stem cells (hESCs) are eligible for research with NIH funding. The final guidelines contain adjustments from the draft version of the guidelines released on April 23 for public comment, from which the NIH received approximately 49,000 statements from advocacy groups, scientists, medical organizations, religious groups, members of Congress, and private citizens.

After condensing and responding to these public comments, the recent NIH publication outlined the final guidelines text include:

• The NIH will create and maintain registry of all approved human embryonic stem cell lines;
• It must be proven the hESCs were derived from human embryos created for vitro fertilization by fertility clinics for reproductive purposes;
• No payments, cash or in-kind, can be offered for donated embryos;
• Any stem cell lines created after July 7, 2009 (the date of the guidelines’ release) must come with documented informed consent of the donation by the parents or mother; and,
• Any stem cell lines created before July 7, 2009 – including those created with private funds – can be used in research eligible for NIH funding if a designated advising committee determines previous consent to use the embryos has been provided.

This final bullet is a component amended from the draft version, which originally required stem cell lines created before July 7 also to demonstrate the stricter “documented” level of informed consent. There was concern this previous need for documentation would make some older stem cell lines not eligible for NIH funding. With these new guidelines, the NIH’s standards on hESCs are more closely aligned with other countries and recent ethical recommendations put forth by the National Academies.

The most consistent complaint among scientists at the University of Wisconsin-Madison of the newest guidelines is that they exclude cloned embryos that may be ideally suited for future transplantation because of genetic similarities, according to an article by Todd Finkelmeyer with Madison’s The Capital Times. The guidelines also prohibit hESCs derived from other sources, including “somatic cell nuclear transfer, parthenogenesis, and/or in-vitro fertilization embryos created for research purposes” to be used in NIH-funded research.

As mentioned in a previous article on President Obama’s executive order on stem cell research (see the March 11, 2009 issue of the Digest), the impact to the states of federal changes on stem cell guidelines depends on the existence of any state legislation limiting stem cell research.

The new NIH guidelines, as issued on July 9, 2009, are available at: http://stemcells.nih.gov/policy/2009guidelines.htm.

return to the top of the page

---

Summer Camps and Tech Challenges Prepare Next Generation Scientists, Engineers
The lazy days of summer may be the most challenging time to keep students and teachers motivated and engaged in academics. Fortunately, several programs across the country have risen to the challenge. And, with the Obama Administration’s pledge to make math and science education a national priority, now may be an opportune time for collaboration among federal and state agencies, private foundations, and industry to reverse the U.S. decline in science, technology, engineering, and mathematics (STEM) fields.

As U.S. students continue to lag internationally in math and science test scores, there is a growing concern among policymakers, educators and industry leaders about the nation’s ability to compete in a global economy. Results of the U.S. Department of Education Trends in Mathematics and Science Study released last December show that average science performance in fourth- and eighth-graders has stagnated since 1995, according to a Washington Post article. Students in ten other countries outperformed U.S. students in science, and students in eight countries outperformed U.S. students in math.

This summer, several initiatives are underway to build excitement in STEM fields and recruit a new generation of scientists and engineers. From real-world challenges to enhancing the quality of curriculum for teachers and encouraging minority participation, the following overview provides examples of innovative efforts from communities across the country.

Challenging Youth To Solve Real World Problems

Maine
In May, Gov. John Baldacci kicked off the Maine High School Wind Blade Challenge at the University of Maine. Thirty-one teams from 18 high schools across the state were formed to research designs and produce wind blades for the first annual competition. The wind blades were then tested at the University of Maine Fieldhouse to determine the winner. Testing measured the power output of each blade turbine design at a set wind speed. Each team worked with leading composite companies and manufacturing labs and received a kit of composite resources to produce the blades. The competition encourages students and teachers to explore the use and application of composite materials in expanding alternative energy industries, reports Composites World.

Ohio
Students from across the country travelled to Ohio this summer to participate in a project to help draft plans for redevelopment of a Dayton, Ohio landmark as part of the University of Dayton Pre-Engineering Program Camp.

A collection of five historic buildings in Dayton’s central business district, the Dayton Arcade has been awaiting redevelopment for 18 years, according to a news release. Student teams examined ways to incorporate Leadership in Energy and Environmental Design principles into the Arcade’s interior and drafted plans that focused on identifying high-performance green interiors that are less costly to operate and maintain and have a reduced environmental impact. Officials said the students’ work could help identify ideas that Dayton Arcade LLC can use in the future.

The Pre-Engineering Program Camp is one of three University of Dayton School of Engineering camps being offered this summer. Organizers hope the challenge will persuade students to pursue careers in the field by identifying with a real-world problem and being a part of the solution.

Nationwide
eCybermission, a U.S. Army challenge for students in grades six through nine, encourages students to identify a challenge or issue within their community and propose a solution using STEM principles. The web-based competition drew more than 12,000 students competing this summer for $5,000 savings bonds. After selecting an issue, students proposed a solution, conducted research and experimentation, and presented recommendations in the form of a scientific paper. Some of this year’s projects addressed invasive species that destroy crops in local farming communities and how to make children’s Halloween costumes less flammable.

Enriching Curriculum for Teachers

New Jersey
Teachers attending summer programs offered at Princeton University are being paired with researchers and faculty at The Center for Mid-Infared Technologies for Health and the Environment (MIRTHE) to enrich their curriculum by experiencing state-of-the-art research in technologies and engineering systems. MIRTHE runs two summer programs: one for current high school teachers, and the other for community college faculty and professional trainers who are pursuing alternative career paths to science teaching.

The Research Experience for Teachers (RET) targets high school teachers who teach chemistry, physics, or technology-related subjects. This summer, three teachers have joined the National Science Foundation-sponsored program currently in session.

The other program, called the Research Experience for Teachers and Trainers (RETT), targets prospective and active alternative track teachers who come from professional science careers filling the need for math and science teachers nationwide. The program also provides summer research fellowship and internship opportunities for community college faculty and trainers working with alternative track teachers. This year, four teachers were accepted into the program, which is funded by a grant from the Department of Labor. Both programs began in June and run approximately 6-7 weeks.

“The overall goal of the programs is to give high school science teachers a fruitful summer experience whereby they engage in a novel, stimulating program which focuses on mentorship and to provide a resource to them throughout the year,” said Joseph Montemarano, MIRTHE executive director.

Teachers graduating from these programs will prepare a plan for the upcoming school year by either incorporating their research into their school curriculum or creating web pages useful for other teachers. The MIRTHE outreach director follows up with a visit to each teacher’s classroom to track implementation of the plan.

Encouraging Minority Participation

Michigan
Detroit-area high school students in the Horizons-Upward Bound (HUB) program at Cranbrook Schools were invited to explore fuel cell technology through a summer program offered by the Society of Automotive Engineers (SAE). Students participating in SAE’s “A World in Motion” program will build a car powered by fuel cells while applying math and science principles through highly-interactive experiences that incorporate the laws of physics, motion, flight, and electronics, according to SAE. The HUB program, which kicks off this week, prepares students with limited opportunity from the Detroit metropolitan area to enter and succeed in post-secondary education.

New York
With a $45,700 grant from the Motorola Foundation, Cornell University College of Engineering is hosting a week-long summer program to engage minority high school students in science and engineering. Thirty-three students from 15 states and three foreign countries were accepted into the program that begins this month. During the week, the students will work in teams on a college-level laboratory project, reprogramming bacterial DNA to produce complex proteins. The goal is to encourage minority students to explore engineering as a career option through lectures, labs, and interaction with Cornell faculty.

return to the top of the page

---

Recent Research
Does the Clustering of Venture Capital Centers Make Sense?
Three metropolitan areas dominate the U.S. venture capital landscape: San Francisco, Boston and New York. These cities are home to about half of all U.S. venture firms and about half of all U.S. venture-backed companies. Though venture firms have sprung up around the country over the past 25 years, the three cities have maintained, and even expanded, their share of national firms and investment. The continuing dominance of these cities may be frustrating to policymakers, industry leaders and entrepreneurs in other parts of the country, but a recent paper argues that there is a logic behind the clustering of firms in a few cities and that this distribution may be optimal for both the venture industry and the high-tech economy.

Authors Henry Chen, Paul Gompers, Anna Kovner and Josh Lerner map the location of main and branch offices of U.S. venture firms, along with data on their investments and the location of the venture-backed firms between 1975 and 2005. This data is used to discern whether individual investments took place within the same combined statistical area (CSA) of the venture firm’s main office, a branch office or outside of those CSAs. This data also was linked to the success rates of venture firms and investments, as demonstrated by initial public offerings or mergers and acquisitions. The authors control for outside factors that may influence the venture investments and successes, including gross state product per capita, the state’s marginal income tax rate, its long-term capital gains tax rate, the percentage of the population with a college degree and the number of patents per capita.

The results reveal some of the reasons why the industry has become even more concentrated over the years. Venture firms and branch offices tend to open in CSAs where investments have been successful over the past five years. Venture firms favor regions with a proven track record of success over underserved regions where there might be untapped opportunities. This tendency creates a situation in which it is difficult to support the development of a local venture capital industry that does not already have a strong industry presence. Firms also tend to open new offices in regions with higher gross state products per capita and patents per capita.

Venture firms also exhibit a strong local bias, according to the study. A firm is almost six times more likely to invest in a local firm, controlling for other factors. The authors note, however, that out-of-region investments have a higher success rate than in-region investments. One explanation is that firms have a higher barrier to investing out of their home region and tend to restrict their investments to low-risk and higher-yield opportunities.

Despite the greater likelihood of success in out-of-region investments, firms based in venture capital centers outperform firms in other locales. These regions have a greater number of opportunities, pools of talented employees and benefit from knowledge spillovers. The authors suggest that this concentration may be a rational allocation of resources and make sense for investors.

This pattern, however, represents a problem for leaders and entrepreneurs outside of the three top cities. Without a record of success, regions will have difficulty creating a thriving venture industry. The authors advise that anything a region can do to increase the number of successful venture-backed investments in a region can greatly increase the likelihood of future deals. Once a region has experienced a few successes, they are much more likely to become the home of branch offices, which in turn are prone to invest locally. Also, once a firm has invested in an out-of-region area, they are much more likely to invest in that region in the future.

Download “Buy Local? The Geography of Successful and Unsuccessful Venture Capital Expansion,” at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1420371.

return to the top of the page

---

Useful Stats
R&D Performed by Industry within U.S., Per State, 2003-2007
SSTI has prepared a table displaying the amount companies spent on R&D in each state from 2003 to 2007, the state’s rank in 2007, the percent change over this five-year period, and the rank of that percent change. For the U.S. as a whole, industry-funded R&D was $204 billion in 2003 and rose to $269.3 billion in 2007 – a five-year jump of 32 percent. Note, the amounts in the chart are not indexed to a single year, but reflect values from when the data was released.

California led the country with $64.2 billion in R&D funding from industry in 2007, almost one-quarter of the nation’s total. This was followed by Massachusetts ($19.5 billion), New Jersey ($17.9 billion), Michigan ($15.7 billion), and Texas ($13.9 billion). These top five states represented 49 percent of the country’s industrial R&D funding in 2007. Washington, Illinois, New York, Pennsylvania, and Connecticut rounded out the top ten states.

The state with the largest five-year percent increase from 2003 to 2007 was Montana, more than doubling from $65 million in 2003 to $134 million in 2007. Montana was followed by Alabama, Utah, South Dakota, and Massachusetts. Thirteen states had at least a 50 percent increase over the five years, with 30 states having a larger percent increase from 2003 to 2007 than the U.S. as a whole.

The data for this table comes from Table 5 of the NSF’s annual briefs describing industrial spending for R&D, which is available at: http://www.nsf.gov/statistics/industry/.

SSTI’s table is available at: http://www.ssti.org/Digest/Tables/071509t.htm.

return to the top of the page

---

TBED People and Organizations
President Obama nominated Francis Collins, a physician and scientist who helped guide the Human Genome Project to completion, as the next director of the National Institutes of Health.

Stephen Fleming has been named vice provost of Georgia Tech’s Enterprise Innovation Institute. Since 2005, Fleming has served as chief commercialization officer and led the Enterprise Innovation Institute’s Commercialization Services Division. Fleming succeeds Wayne Hodges, who retired recently after a 40-year career at Georgia Tech.

Larry Irving will step down as co-chairman of the Internet Innovation Alliance in September. Irving will join Hewlett Packard, the world's leading technology company, as vice president of Global Government Affairs.

The Oregon Legislature approved legislation renaming and refocusing the Oregon Economic and Community Development Department. When Governor Kulongoski signs the bill, the department will be renamed the Oregon Business Development Department and will do business under the name Business Oregon.

Sandra Watson has been promoted to assistant deputy director, Innovation & Global Business Development within the Arizona Department of Commerce.

Russ Yelton stepped down as executive director of the business incubator at Asheville-Buncombe Technical Community College on July 22. Yelton will head up a partnership between Northern Arizona University and the city of Flagstaff that will foster an emerging technology program and the creation of several business incubators in the community.

return to the top of the page

<#UNSUBSCRIBE#> from all SSTI publications

---