In This Week's Issue
Recent Research
ITIF: Feds Must Fund Collaboration, TBED to COMPETE
With the America COMPETES Act up for reauthorization, there is
an opportunity for Congress to inject some innovation into the
nation's innovation policies, writes Rob
Atkinson, in a recent paper from the Information Technology &
Innovation Foundation. Atkinson outlines eight specific
recommendations to improve the Act — many
closely tied to the goals and current investment strategies of
state and regional tech-based economic development organizations
— including direct funding support for TBED. The
proposals include:
- Create a $110 million SCNR program (Spurring Commercialization
of Our Nation's Research) under NIST to support
university, state and federal laboratory technology
commercialization initiatives.
- Fund joint government-industry STEM Ph.D. fellowships.
- Allow foreign students receiving STEM Ph.D.s from U.S.
universities to automatically qualify for green cards.
- Create a university-industry collaborative R&D tax
credit.
- Fund industry-university-government manufacturing research and
deployment centers.
- Establish an Office of Innovation Policy in OMB (i.e., an
Office of Information and Regulatory Affairs for Innovation).
- Institute a National Innovation and Competitiveness Strategy
modeled on the National Broadband Strategy.
Atkinson asserts, given the fiscal constraints facing the entire
nation, it is important to leverage non-federal resources whenever
possible and “spur collaboration between various
players in the innovation system.” He recommends state
and regional TBED organizations receive half of the SCNR funding
through a formula-based allocation system.
More information is available at: http://www.itif.org/files/2010-america-competes.pdf.
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SSTI News and Analysis
Proponents Say Visa Bill Would Boost U.S Technology
Entrepreneurship
A bill recently introduced in the U.S. Senate would allow
immigrant entrepreneurs to obtain a two-year visa if they have
secured the support of a qualified U.S. investor. Supporters,
including bill sponsors Senators John Kerry and Richard Lugar,
argue that the measure would help ensure American competitiveness by
drawing on global entrepreneurial talent. The bill would also help
create new investment opportunities for U.S. venture
capitalists.
The current version of the StartUp Visa Act of 2010 would enable
an immigrant entrepreneur to receive a two-year visa if a qualified
U.S. investor is willing to dedicate a minimum of $250,000 to the new
venture. A new category of visa, EB-6, would be created alongside
the current EB-5 category. EB-5 visas allow foreign nationals to
obtain a green card if they invest $1 million in the U.S. and are
able to create ten jobs. The EB-6 visas would be drawn from the
current EB-5 pool. If after two years the EB-6 recipient can prove
that they secured the original $250,000 in capital and were able to
create five full-time jobs, attract an additional $1 million in
investment or generate $1 million in revenue, they would receive
permanent legal resident status.
An immigration
reform bill in the House of Representatives includes a similar
provision for immigrant entrepreneurs.
Visa reform for entrepreneurs is favored by many within the TBED
and equity capital communities. The
National Venture Capital Association approves of the bill,
citing its own research indicating that close to half of all
venture-based companies were founded by immigrant entrepreneurs.
Compete America, a pro-immigration reform coalition including
Boeing, Coca-Cola, Google, the Business Software Alliance, Cisco,
Microsoft and Texas Instruments, endorses the bill noting that many
of the most iconic American technology companies were started by
immigrant entrepreneurs.
Read the full text of the bill at:
http://startupvisa.files.wordpress.com/2010/02/startup-visa-act_-final-final-1.pdf.
A number of recent studies seem to confirm the importance of
foreign startup founders in the U.S. technology economy. A paper by
William Kerr and William Lincoln tracks patenting levels in firms
and cities based on fluctuations in H-1B visas admissions. H-1B
visas allow foreign workers in specialized occupations to obtain
temporary work status. The researchers found that decreases in the
number of H-1B visas available had a significant impact on
patenting levels. The authors suggest that immigration plays a
vital role in American innovation, and by increasing visa
opportunities, the U.S. can help generate new technologies and
jobs.
Read The Supply Side of Innovation: H-1B Visa Reforms
and U.S. Ethnic Invention at: http://hbswk.hbs.edu/item/6097.html
In Which Immigrants Are the Most Innovative and
Entrepreneurial? Distinctions by Entry Visa, Jennifer Hunt
tracks the workforce performance of immigrants relative to natives
based on the type of visa they secured to work in the U.S. While
older immigrants and immigrants who enter the country with
permanent legal residence do not outperform U.S. natives in wages,
patenting, commercialization and licensing or publishing,
recipients of student/trainee visas and temporary work visas
surpass native performance in all of those areas.
Student/trainee and temporary work visa recipients with
master's and doctoral degrees are more likely to
start successful businesses based on technical knowledge than
U.S.-born residents with similar backgrounds. The results suggest
that U.S. competitiveness is hurt when foreign graduate students
return to their native country.
Read Which Immigrants Are the Most Innovative and
Entrepreneurial? Distinctions by Entry Visa at: http://www.nber.org/papers/w14920
(for purchase).
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$1.9B for Research, Tech Innovations in
Canada's 2010 Budget
Minister of Finance Jim Flaherty last week presented a budget
plan for the upcoming year that includes $19 billion in new federal
stimulus funds as part of Canada's two-year, $62
billion Economic Action Plan. The 2010 budget directs $1.9 billion,
or 10 percent of the stimulus funds, for post-secondary education
infrastructure, research, technology innovation and environmental
protection. A recent article
in The Chronicle of Higher Education points to conflicting
reactions to the proposed investments, however.
Although the 2010 budget would increase funding for the
nation's three research granting councils by $32
million per year, the councils were cut nearly $150 million last
year, which was never restored, the article states. When inflation
is taken into account, this leaves the councils in worse shape than
they were previously, said James Turk, executive director of the
Canadian Association of University Teachers, in the article.
Meanwhile, the Association of Universities and Colleges of
Canada, representing 95 Canadian public and private universities,
commended the proposed investments citing efforts such as the
Knowledge Infrastructure Program, which they say is leading to
cutting-edge discoveries through collaborative efforts of
universities and research partners.
Measures to support clean energy generation and strengthen
capacity for R&D and research commercialization are outlined in
the budget. Highlights of the proposed investments include:
- $222 million over five years to strengthen research at TRIUMF,
Canada's premier national laboratory for nuclear
and particle physics research;
- $135 million over two years to the National Research Council
Canada's regional innovation clusters
program;
- $100 million over four years to establish the Next Generation
Renewable Power Initiative to support development,
commercialization and implementation of advanced clean energy
technologies in the forestry sector;
- $75 million for genomics research;
- $48 million over two years for research, development and
application of medical isotopes;
- $45 million over five years to establish a post-doctoral
fellowship program to help attract researchers;
- $40 million over two years to launch a new small and
medium-sized enterprise innovation commercialization program;
- $15 million in additional funds per year for the College and
Community Innovation Program; and,
- $10 million for the Canadian Youth Business Foundation to
support young entrepreneurs.
The Canadian Space Agency would receive $397 million over five
years to develop the RADARSAT Constellation Mission, the next
generation of advanced radar remote sensing satellites.
The 2010 budget boosts spending by $1.1 billion in the fiscal
year ending March 31, 2011, which is the smallest increase since
1997, reports The Globe and Mail. A three-point plan
to decrease the more than $55 billion deficit to $1.8 billion by
2014-15 also is outlined in the proposal. The 2010 budget is
available at: http://www.budget.gc.ca/2010/pdf/budget-planbudgetaire-eng.pdf.
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Russia Pledges 10% of Budget to Innovation
In a meeting of the Government Commission on High Technology and
Innovation last week, Russian Prime Minister Vladmir Putin made
several announcements in support of new technology and innovation
investments. Putin said $37.3 billion, or more than 10
percent of the federal budget, is appropriated for fundamental and
applied science, higher education, high-tech medicine, space
exploration, aviation, and the nuclear industry in 2010. The
Finance Ministry and Economic Development Industry also will
consider introducing tax incentives for innovation and providing
innovative companies priority access to government purchases. Putin
also announced the establishment of the Department of Science, High
Technology and Education within the Government Executive Office to
identify ways of removing administrative barriers for innovative
businesses and to craft policies to attract capital for research
and high-tech projects. Read the transcript: http://www.government.gov.ru/eng/gov/priorities/docs/9605/.
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WY Lawmakers Approve Funding for Energy Research
Lawmakers approved last week the 2010-11 biennial budget,
dedicating more than $76 million for energy research projects
funded by the state's share of federal Abandoned
Mine Land (AML) funds. The University of Wyoming School of Energy
Resources will receive $45 million for development of a
subcommerical scale CO2 sequestration research demonstration
project, $14 million for clean coal technology research, and $17.4
million for operation of the school. Three bills regulating the
wind energy industry also were signed into law by Gov. Dave
Freudenthal last week.
The wind industry bills signed by the governor mandate a $1 per-megawatt-hour tax on wind energy generated in the state beginning
in 2012 (HB 101),
set minimum state standards for wind projects (HB 72),
and suspend the power of wind companies to use eminent domain for
one year (HB
79).
The approved budget also appropriates $87 million in total funds
to the Wyoming Business Council, which includes $27.7 million for the
Wyoming Business Council Division, a slight decrease from the appropriation for the current biennium.
The 2010-11 enrolled budget bill is available at: http://legisweb.state.wy.us/2010/Enroll/HB0001.pdf.
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White House Unveils National Cybersecurity Initiative
The Obama administration recently released a national plan to
secure public and private sector networks. The Comprehensive
National Cybersecuirty Initiative consists of 12 priority areas,
including improved coordination of cybersecurity research,
commercialization assistance for strategic technologies and
expanded cyber education. Read the complete strategic plan at:
http://www.whitehouse.gov/cybersecurity/comprehensive-national-cybersecurity-initiative
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Input Sought on Green TBED Initiatives
From RUPRI:
MIT's Department of Urban Studies and Planning is researching
how economic development organizations are working with small
businesses to address market opportunities or needs related to
global climate change and the "green economy." The department
currently is looking for economic development organizations to
complete a brief, voluntary survey (10 minutes) relating to "green"
programs and activities. Results will be shared with the economic
development community and be made publicly available. To take the
survey, go to http://www.surveymonkey.com/s/7Q7QRDT. Questions regarding this survey may be sent to Karl Seidman at
seidman@mit.edu or (617) 253-3964 or Rebecca Economos at
economos@mit.edu.
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Useful Stats
U.S. Venture Capital Dollars and Deals,
1995-2009
Last year, U.S. venture capital investment dropped to its lowest
level in over a decade, according to data from the
PricewaterhouseCoopers Moneytree Survey and the National Venture
Capital Association (NVCA). This drop was fueled by the national
economic crisis, which created a number of issues within the
industry. Cash-strapped investors were less willing to make risky
investments, venture firms avoided fundraising campaigns because of
the overall climate, fewer venture-backed companies achieved
successful exits and many venture capital firms dedicated their
investments to supporting their portfolio companies (see the
January
27 issue). This week's Useful Stats column
provides an overview of venture industry investment over the past
15 years, and what recent trends might mean for the industry.
Venture investment fell from $28.3 billion to $17.7 billion in
2009, a 37.5 percent decrease from 2008. The number of venture
capital deals fell by 26.6 percent to 2,795. Average deal size fell
by 14.9 percent to $6.3 million. A number of factors contributed to
the reduction in overall deal size, including an increase in seed-
and early-stage investment and a reduction in the size of
later-stage deals, even as larger, later-stage firms have come to
represent a larger share of portfolio companies.
The 2009 drop was significant, but, on a larger scale, the
industry has experienced little growth over the past few years.
After the high water mark of 2001 when venture investment
hit an astonishing $105 billion, investment levels slid to $22
billion and then $19 billion in 2002 and 2003. For a while, it
appeared as though industry activity would climb again to
ever-increasing height, albeit more slowly. After peaking in 2007,
however, with $30 billion the industry had experience two
consecutive years of decline.
SSTI has prepared a table, based on PricewaterhouseCoopers/NVCA
data, presenting venture investment levels over the past 15 years.
The data includes annual venture dollars, per capita dollars,
annual venture capital deals and average deal size in dollars.
Population estimates are based on the U.S. Census Bureau Annual
Population Survey.
The SSTI table is available at: http://www.ssti.org/Digest/Tables/031010t.htm.
PricewaterhouseCoopers Moneytree survey reports and historical
data are available at: http://www.pwcmoneytree.com.
Many in the field are now reconsidering investor expectations
and what the venture capital industry means to American innovation
and regional tech-based economic development as a result.
Successful exits are rare, risks are high, investments require
time-consuming guidance to become profitable and returns are lower.
Industry activity appears to be settling into a more modest
equilibrium and, as mergers & acquisitions (M&As) become
the most common form of exit, the payoffs for investors are not the
sky-high returns of the dot-com boom.
A report based on a recent panel discussion at the San Francisco
campus of the Wharton School of Business argues that these changes
may permanently have altered the way the industry works, but do not
represent the twilight of the industry. Although returns are
smaller, venture-backed companies still generate a fifth of U.S.
GDP, according to an
NVCA publication cited in the report. Panelists agreed that
long-term industry health will depend on changes in industry
regulation and federal support for the venture capital industry.
The industry also must work to encourage initial public offerings
(IPOs), since the M&A and IPO markets are interconnected.
Read Saying Goodbye: New Exit Strategies for Today's Venture
Capitalists at: http://knowledge.wharton.upenn.edu/article.cfm?articleid=2440.
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Incubator RoundUp
Specialized Incubators Increasing Their
Numbers Nationwide
Silicon Valley, a region often looked to for trends in the
technology field, is expected to see a rise in the number of new
high-tech incubators and the expansion of existing incubators in
the coming months. A recent
Wall Street Journal article points to these openings as a
sign of revival for technology startup companies amid a relatively
slow period last year as startup investment plunged during the
recession. Across the nation, specialized incubators spanning clean
energy, sustainable architecture and advanced materials have
emerged over the past several months to support high-tech
ventures.
USTAR announced in January the opening of
Utah's first incubator focused on information
technology and renewable energy. The
Southern Utah Information Technology and Renewable Energy
Incubator, located in St. George, will support businesses
focused on high technology, green technology and alternative
energy.
Another high-tech business incubator opened in Utah late last
year. The BioInnovations
Gateway (BiG) located in Salt Lake City is in an incubator for
emerging biotech and medical device companies, a high-tech training
facility for the next generation of bio-innovators, and a contract
research resource for Utah's life science
industry, according to a news release. The incubator provides
state-of-the-art equipment and support for up to seven resident
companies.
Innovations,
a Chandler, AZ-based biotechnology incubator will hold its grand
opening May 1. The incubator hopes to attract scientists and
high-tech entrepreneurs and will offer 40,000 sq. ft. of wet and
dry labs, classrooms and office space.
The New York State Energy Research and Development Authority
(NYSERDA) will provide $1.5 million to establish a clean energy
incubator on the campus of Stony Brook University. The
Long Island High Technology Incubator is the fifth clean energy
business incubator established by NYSERDA over the past year and
will offer on-site and virtual business incubation services
leveraging university resources.
3M announced last month plans
to enter into a strategic relationship with MAMA Sustainable
Incubation AG, a newly formed Berlin-based technology incubator
that will specialize in development of solutions for emerging green
markets such as renewable energy, sustainable architecture and
water treatment, reports Finance &
Commerce.
Rensselaer Polytechnic
Institute is revamping its business incubator program to focus
exclusively on energy and environmental startups, reports The
Times-Union. Under the new plan, the 30 year-old incubator
located in Troy will no longer house companies and instead will be
used for other university programs. The change follows a review of
all programs at the school that foster startup and
entrepreneurship.
Kentucky Highlands
Investment Corporation held a groundbreaking ceremony in
January for the new Business Innovation and Growth Center. The
center, which is expected to generate $6 million in private
investment and create more than 120 jobs in five years, will
include 9,600 sq. ft. of product development, office and laboratory
space for area entrepreneurs. Funding is provided by a $1.1 million
grant from the federal Economic Development Administration and
other various grants and loans.
Construction on a Clemson University and South Carolina Research Authority
innovation center is slated to begin this month. The
43,000-square-foot innovation center is designed specifically for
commercialization of advanced materials by startup companies with
intellectual property primarily coming out of Clemson University.
The center is expected to open in early 2011.
A University of Kansas bioscience incubator that opened in
October is expected to have its first tenants by May, reports the
Associated Press. The 20,000-square-foot Bioscience and
Technology Business Center will house startup companies grown out
of university research, early-stage biotechnology and
pharmaceutical companies, the article states.
EmergeMemphis, a
technology-based incubator in Memphis, TN, recently received a
$500,000 award from the federal Economic Development Administration
that will be used to renovate its facilities and add up to 14
additional early-stage high-growth businesses, reports The
Commercial Appeal. The award will be combined with additional
funds totaling $1.5 million for a 15,000-square-foot expansion and
renovation.
Opening this year in Ashland, VA, the
Dominion Resources GreenTech Incubator will provide assistance
with research, financial services, business planning, and office
space for startup companies focused on alternative and renewable
energy. The GreenTech incubator follows former Gov. Tim
Kaine's “Renew
Virginia” program and is expected to contribute to Gov.
Bob McDonnell's promise to create new companies
and jobs early in the incoming administration, according to a news
release.
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TBED People and Job Opportunities
TBED People
Chris Atkinson is the new director of West Virginia
University's Center for Alternative Fuels,
Engines, and Emissions (CAFEE).
Patrick Scheuermann will take over as director of
NASA's Stennis Space
Center in Mississippi, replacing Gene Goldman. Goldman,
who has served at Stennis since November 2008, will assume the
position of deputy director at Marshall
Space Flight Center in Huntsville.
Woodrow Whitlow, director of NASA's
Glenn
Research Center in Cleveland, has been named associate
administrator for Mission Support at NASA headquarters. Ray
Lugo, the deputy director at Glenn, has been named acting
director.
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Staff Picks
17 States Join with Foundations to Increase College
Graduation Rates
Seventeen states have promised to develop specific plans to
improve their college-completion rates, joining the Complete
College America Alliance of States. They are joined by five
prominent foundations.
Read more...
India Proposes $600M Clean Energy Fund
The Indian Finance Minister is proposing the creation of a
National Clean Energy Fund that would be funded through a tax on
coal usage in the country and would generate around $600 million
per year. (We saw this story originally in NACFAM Weekly).
Read more...
Opposition to Administration's Space Plan
Speaking Up
The Washington Post has a good article on opposition to the
administration's new space plan. The president
will address a conference on NASA policy April 15 in Central
Florida.
Read more...
Kennedy School Looking for a Few Good Ideas
Harvard University is inviting applications for its Innovations in American
Government Award. This year the Innovations program also has
launched a new initiative, Bright Ideas, designed to recognize
and promote promising government programs and partnerships.
Applications and additional information are available at: www.innovationsaward.harvard.edu.
DOE Awards $154M for TX Energy Project
Selected under
the third round of the Clean Coal Power Initiative, NRG Energy will
match a $154 million grant from the U.S. Department of Energy
to demonstrate low-emission carbon capture and storage technologies
in advanced coal-based, power generation in Thompsons, TX.
16 Finalists Named in Race to the Top
Sixteen finalists
were selected by the Department of Education to advance as
finalists in phase I of Race to the Top, a $4.35 billion effort to
reshape America's educational system and prepare
students for 21st century jobs. A list of finalists is
available here.
NIH and FDA Announce Initiative to Fast-track Innovations
FDA and NIH have announced a $6.75 million initiative designed to accelerate the commercialization of innovative medical therapies for patients. The initiative will fund research into better approaches to evaluating safety and efficacy in medical product development.
Read more...
Other Picks
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