In This Week's Issue
SSTI News and Analysis
State Legislatures Shift Right, Sweeping Proposals
Expected
Legislative control will shift from Democratic to Republican
majority in eleven states and Republicans now control the
legislature and governor's office of 20 states,
up from nine, after adding more than 675 seats in last
week's midterm elections, reports the National Conference of State
Legislatures (NCSL). The GOP gained control in one or both
chambers in the following states: Alabama, Colorado, Indiana, Iowa,
Maine, Michigan, Minnesota, Montana, New Hampshire, North Carolina,
Ohio, Pennsylvania, and Wisconsin. Results from elections in New
York, Oregon and Washington are still pending. Republicans won
control of both chambers in Southern states previously controlled
by Democrats, including Alabama and North Carolina, and gained
control of both houses in the Midwestern states of Michigan,
Pennsylvania, Ohio, Wisconsin and Indiana, according to
Stateline.org. Sweeping proposals on budgets, taxes, social
issues, redistricting and challenges to the federal health care law
are anticipated in the coming year, reports NCSL. Post-election
maps and charts are available at: http://www.ncsl.org/?tabid=21318.
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Funding Higher Ed in the Post Recession Era: CO, TX and VA
Offer Recommendations
With the end of federal stimulus funding for higher education on
the horizon, states are considering proposals to retool current
funding formulas for colleges and universities and looking to
alternative funding sources to sustain their programs and services
in the coming years. Ahead of the 2011 legislative session, groups
commissioned by governors in Colorado and Virginia recommended a
voter-approved tax and more stable funding streams from the state,
respectively. In Texas, the Higher Education Coordinating Board
endorsed a method in which a percentage of university funding would
be based on student outcomes. The proposals were submitted to Gov.
Rick Perry and the legislature last week, reports the Austin
American-Statesman.
Colorado
Colorado should take the issue of higher education funding to
the voters next year with a ballot question proposing a new tax,
finds a task force charged with proposing funding solutions for
Colorado's institutions of higher education. The
Higher Education Strategic Planning Task Force delivered its report
to Gov. Bill Ritter last week identifying $760 million as the
minimum amount of state funding needed by higher education to
provide the current level of service, reports The Pueblo
Chieftain. However, in order to move Colorado from second-last
in the nation in its investment in higher education to the top
one-third, the sustained funding level would need to reach $1.5
billion annually, the article states.
In addition to a voter-approved tax on Coloradoans, the task
force recommends implementing a 1 percent surcharge on oil and gas
extraction, which they say could raise $15 million. Other tax
proposals include restoring the income tax level from 4.63 percent
to 5 percent and expanding sales tax to specific services.
With only weeks left in office, Gov. Ritter proposed level
funding for higher education in his FY12 budget. However, federal
stimulus funds directed to higher education last year will end in
2011 making it more difficult to sustain higher
education's current funding level. Gov.-elect
John Hickenlooper promises to review the recommendations set forth
by the task force and bring together public and private leaders
from across the state to "create a vision for
Colorado higher education," according to his campaign
website. An article in The Pueblo Chieftain reports that
during his campaign, Hickenlooper said he would ask oil and gas
companies to voluntarily pay higher severance fees and reach out to
wealthy philanthropists to generate scholarship funds.
Texas
Universities and community colleges would have to compete for 10
percent of their base funding, reporting performance measures tied
to student outcomes under a cost-savings proposal set forth by the
Texas Higher Education Coordinating Board. Some of the performance
measures universities would be evaluated on include number of
degrees awarded, number of degrees awarded to students from
low-income families, number of degrees awarded in science,
technology, engineering or mathematics fields, and graduation
rates, reports the Austin American-Statesman. Community
colleges would be evaluated on degrees awarded, certificates
completed and college-level math courses completed, among others,
according to the article.
Another major recommendation the article points to is giving
priority to low-income students with strong academic credentials
over students with weaker academics in allocating the
state's main financial aid award, the Texas
Grant. The board submitted the proposals to Gov. Perry and the
legislature last week.
Virginia
Gov. Bob McDonnell will introduce legislation in the upcoming
session that aims to award 100,000 college degrees over the next 15
years and restructure the state's funding
formula for higher education based on recommendations from the
Commission on Higher Education Reform, Innovation and Investment.
To provide a more stable and predictable funding stream for
schools, colleges, universities and their students would be awarded
financial incentives to fulfill state higher education goals such
as graduating more students in four years and awarding more degrees
in high-demand fields, reports The Washington Post. Gov.
McDonnell estimated an additional funding outlay that could range
from $30 million to $100 million if the universities make better
use of their facilities, according to the article.
Gov. McDonnell is expected to unveil his Virginia Higher
Education Opportunity Act of 2011 when the session convenes in
early January.
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Main Street Calls for Technology-based Economic Development, Report Indicates
Southerners voiced that focusing on innovation and
technology-based business operations, supporting entrepreneurship,
identifying community asset, developing skilled workforce and
increasing community involvement in economic development strategies
are vital for the South to recover from the current economic
downtown according to a recent report — The
Road to Recovery is Named Main Street — from
the Southern Growth Policies Board. The report was assembled
using comments of over 2,300 citizens from communities across the
south. During community gatherings and via online surveys,
Southerners discussed not only the challenges and concerns caused
by the Great Recession, but also the priorities and potential to
build stronger regional economies. Participants provide states,
regional economic development organizations and local governments
with five key themes: look beyond industrial recruitment, reduce
regulation, identify and build on community assets, revamp
workforce training and facilitate partnerships. The
report also examines the lessons learned by facilitators in
increasing community involvement in economic development and its
importance to develop successful long-term development strategies.
Read the
report ...
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Seed Stage Angel Capital Becoming Scarce
Angel investors continue to move their focus
from seed stage startups to later stage deals, according to recent
analysis by the University of New Hampshire's
Center for Venture Research.
During the first half of 2010, 26 percent of angel capital was
invested in seed and startup stage companies, down from 35 percent
in 2009 and 45 percent in 2008. Meanwhile, overall angel funding
fell to $8.5 billion, a 6.5 percent decrease from the first half of
2009. Though angel investors are conducting a greater number of
smaller deals than they were in the last few years, this has not
translated into investment in younger companies.
Jeffrey Sohl, director of the Center for Venture
Research, hypothesizes that the migration away from seed and
startup deals reflects a need to invest in portfolio companies to
help them survive the recession and eventually reach a profitable
exit. If the trend toward later stage investment continues,
however, the lack of capital availability for young startups could
result in a crisis for new venture creation.
Read the Center for Venture Research release at:
http://wsbe.unh.edu/files/q1q2_2010_angel_market_press_release.pdf.
On the venture capital side, the picture for
startups is less bleak. While overall venture investment fell in
the third quarter of 2010, first-time financings remained steady
and seed and startup stage investment is on track exceed last
year. Seed stage investment totaled $1.75 billion in 2008 and $1.73
in 2009, according to the most recent release from
PricewaterhouseCoopers and the National Venture Capital Association
(NVCA). As of the third quarter of 2010, seed state venture
investment totaled $1.51 billion. The number of seed stage deals
also appears to be holding steady. Investors have made 285 seed and
startup deals so far this year compared to 245 during the first
three quarters of 2009.
Read the latest PricewaterhouseCoopers and NVCA
Moneytree Report:
https://www.pwcmoneytree.com/MTPublic/ns/moneytree/filesource/exhibits/10Q3MTPressRelease_Final.pdf.
Though capital is reaching startups through
venture capital investment, it is not increasing at the pace
required to fill the growing seed-stage capital gap. With seed
investment declining and new, first-sequence investments down 12
percent in the first half of the year, the recession may have a
long impact as new companies are unable to secure the financing
they need. Without new deals in the pipeline, investors may not
have suitable targets for lower-risk, later-stage investments.
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Solar Jobs Could Grow by 26 Percent, Solar Census Shows
U.S. jobs in solar energy could increase by 26
percent by this time next year, according to the first nationwide
solar census from The Solar Foundation. The census estimates that
there are currently 93, 000 solar workers in the U.S., and 50
percent of solar firms plan to add jobs in the next 12 months.
Solar workers are defined as employees who spend more than 50
percent of their time supporting solar activities. Read the census at: http://www.thesolarfoundation.org.
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Recent Research
Knowledge Spillover: Automatic or Cultivated?
Academics and policymakers should "be more
careful with the assumption that technological knowledge spillovers
and networks occur automatically in innovative
clusters," according to a recent article on the
Cambridge IT cluster. The report, Do Clusters Really
Matter for Innovation Practices in Information Technology?
Questioning the Significance of Technological Knowledge
Spillovers, examines the impact that a cluster has on R&D
workers in IT field with an emphasis on territorial learning and
knowledge spillovers. Over 100 IT professionals in various R&D
job positions — junior developers, Chief
Technology Officers to Managing Directors at small firms
— from Cambridge, United Kingdom (UK) were
surveyed or interviewed. The region's IT cluster is
widely considered "one of most innovative and successful
high-technology region in the UK and the EU." Author Franz Huber
found that 49.1% R&D workers did not find clustering to be
"beneficial for their work." However, Huber quickly points out that
Cambridge's "guarded
culture" may reduce the amount of formal and informal
diffusions of knowledge.
Respondents reported three reasons the Cambridge IT cluster is
not beneficial — disadvantages of the cluster
for small firms, no need to interact within the local region and no
opportunities to benefit from other members of the cluster. Upper
management at small firms routinely listed disadvantages of the
cluster including local competition for labor, high costs of
labor/facilities and proximity to customers is poor. These
respondents believed that high costs and competition for top talent
make it difficult for small companies to thrive in the Cambridge
cluster. Many respondents also cited little need for contact with
local companies because the company's internal talent is sufficient
for achieving. The Internet also limits formal local collaborations
due to the ability to collaborate globally. Client-driven projects
limit the relevancy of some firms benefiting from Cambridge's
research-intensive culture.
The report highlights several benefits of working in proximity
to related businesses and resources. These include:
- Labor market advantages - Many R&D workers were
drawn to the cluster due to career prospective and private
dimensions (e.g., proximity to other potential future
employers);
- The "Cambridge brand" - Individuals and companies
benefit from being related to Cambridge as a global brand (e.g.,
attraction of international customers, marketing, increased
availability of venture capital);
- Formal business links - Some respondents indicated
formal business relationships (e.g., local suppliers and buyers,
research collaborations with the University of Cambridge, business
partnerships) do occur within the cluster;
- Infrastructure to support entrepreneurship - The
availability of infrastructure, institutional support and venture
capital make clusters excellent for cultivating entrepreneurs;
and,
- Knowledge activities - Respondents found knowledge
activities unrelated to R&D (e.g., personal networks for
managerial/business knowledge, professional organizations and
conferences) to be a strength of working in the Cambridge
cluster.
These benefits indicate that there are possible opportunities
for knowledge spillover and network development. Firms have
successfully developed formal business links and informal knowledge
activities do occur. However, Huber proposes the
"guarded culture" of
Cambridge's IT cluster creates barriers limiting
the diffusion of R&D knowledge. Traditionally, Cambridge IT
firms have not collaborated closely due to intrafirm competition.
The regional also has limited professional and social opportunities
for IT professionals to interact with other R&D workers
according to some interviews.
The report's findings challenge the assumption that knowledge
spillovers and networks automatically occur within clusters.
However, policymakers and regional development economic development
practitioners can cultivate formal and informal networks to
increase diffusion of knowledge through well-crafted innovation
policies. These policies should focus on developing formal and
informal networks between R&D workers, creating incentives for
collaboration between firms and increasing business-university
relationships.
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Useful Stats
Qualifying Therapeutic
Discovery Project Grants and Credits by State, FY 2009-10
The Internal Revenue Service (IRS) has released
the list of projects approved for Qualifying Therapeutic Discover
Project grants and credits. Introduced in the Patient Protection and
Affordable Care Act passed earlier this year, the program supports
projects that show a reasonable potential to create new therapies,
lower health care costs or advance the cause of curing cancer
within the next 30 years. The credit or grant covers up to 50
percent of the cost of qualifying biomedical research at firms with
no more than 250 employees. Grants also were made available in lieu
of credits, and, in the end, outnumbered credits 50:1.
Under the program, a total amount of $1 billion
was allocated for credits and grants (see the
May 5 and
May 26, 2010 issues of the Digest). Although applicants
could apply for up to $5 million, the IRS and National Institutes
of Health limited the maximum award amount to $244, 479.24 due to
the high volume and quality of applications. Instead, many
companies qualified for multiple awards given to support individual
research projects.
Read more at:
http://www.irs.gov/businesses/small/article/0,,id=228690,00.html.
SSTI has prepared a table of recipients of both
Qualifying Therapeutic Discovery Project Grants and Credits by
state. The table presents the number of projects in each state that
received grants and were certified as eligible for credits, as well
as the total dollar value of those grants and credits. In some
cases, companies received multiple grants and certifications for
separate projects. These awards are reported as additional
projects. If a single project received grants or certifications for
both 2009 and 2010, these are reported as a single recipient
project.
A total of 4516 Qualifying Therapeutic Discovery
Project Grants were awarded, together worth $981.3 million.
California led the country and received more than a quarter of the
grants and total grant dollars. California companies were awarded
1247 grants, totalling $278.1 million. California, Massachusetts,
Maryland, New Jersey and Pennsylvania, the top five states for the
grants, together received 55 percent of the total number of grants
and 56 percent of total dollars.
Ninety projects in 28 states (including the
District of Columbia) were certified to receive Qualifying
Therapeutic Discovery Project Credits in 2009 and 2010. California
and Massachusetts were the top two states, with companies in those
states qualifying for a third of the total dollar amount of
credits. In California, 14 companies were certified for $3.3
million in credits and, in Massachusetts, 12 companies were
certified for $2.6 million. Other top states include Arizona,
Pennsylvania and Texas.
View the table at:
http://www.ssti.org/Digest/Tables/111010t.htm.
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TBED People
The Tennessee Biotechnology Association has changed their name
to Life Science
Tennessee.
Ann Arbor SPARK
recently added Bill Mayer as director of their business
accelerator team.
Fred Mondragón, New Mexico's
economic development secretary announced that he is retiring.
Gov. Bill Richardson has appointed Allan Oliver, the deputy
secretary of economic development, to replace Mondragón
during the final weeks of the administration.
Robert Rosenbaum has been appointed president and
executive director of the Maryland Technology Development
Corporation. John Wasilisin has been serving as acting
president and executive director since Renée
Winsky stepped down in July 2009 to become CEO of the Tech
Council of Maryland. Wasilisin will now shift to a role as
executive vice president and chief operating officer.
The Ben Franklin Technology
Partners has announced the appointment of John Sider,
former deputy secretary for Technology Investment for the
Pennsylvania Department of Community and Economic Development, as
its managing director of Statewide Initiatives. Sider is succeeding
Terry Singer who is retiring.
Linda Swann has been appointed director of the Alabama Development Office. Swann
replaces former director Neal Wade.
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Staff Picks
Election's Impact on Science
Three
articles this week looking at the impact last
week's elections are likely to have on science.
First up, Nature considers budget impacts, climate change,
and the direction of NASA.
Read more ...
Scientists Urge Congress to Act on Stem Cells
The Los
Angeles Times
reports on calls from a variety of groups for Congress to pass
the Stem Cell Research Advancement Act during the lame duck
session.
Clean-tech Loses Congressional Advocates
While
Proposition 23's defeat in California was good
news for alternative energy advocates, the changes in Congress
might prove more problematic, according to this
report from the Los Angeles Times.
CS Monitor: Women May Be Losing Ground in Congress
Women
may lose seats in Congress for the first time in 32 years, despite
gains made by Republican women in the House. The Center for
American Women and Politics sees a significant drop in the number
of women state legislators because many Democratic women who lost
were replaced by Republican men.
Read more ...
IBM Pledges $50M to Create 100 Smarter Cities
IBM has
launched the Smarter Cities Challenge, a competitive grant
program in which IBM will award $50 million worth of technology and
services to help 100 municipalities across the globe. IBM experts
will provide recommendations for successful growth, better delivery
of municipal services, more citizen engagement, and improved
efficiency.
States Cut Services and Increase Taxes as Result of Great
Recession
Almost all states have had to cut spending on
services and more than half have raised taxes since the recession
began, according to a Center on Budget and Policy Priorities
report
that warned more tax hikes could be on the horizon.
Govs-Elect in 12 States Say No to Tax Hikes
A Stateline analysis
of the governors' races finds that at least 12
of the nation's new governors have ruled out tax
hikes, even as they face billions in collective deficits. The
12 states are: AL, AK, FL, GA, ME, NY, NV, NM, OH, OK, PA, SC,
TX and WI.
NIH Makes Awards to Encourage Diverse Scientific
Workforce
The National Institutes of Health has awarded six
grants totaling approximately $12 million over three years
through a new initiative aimed at fostering a diverse scientific
workforce.
MA Biotech Firms Squeezed by Economy and Acquisitions
A
Boston Globe
article about Massachusetts biotech industry should resonate
with all trying to grow their life science sector. They report
biotech firms are cutting jobs at Massachusetts life sciences
companies because of capital issues while global drug makers are
stepping up to play a larger role.
In Albany, a Boom Based on Microchips
Albany, NY gets some well deserved national attention in a
Washington Post
report on the state and region's efforts to
reassert the nation's traditional leadership in semiconductors.
Notre Dame, Purdue Launch Nano Business Plan Competition
The University of Notre Dame and Purdue University are teaming up
with state officials to offer Indiana's first
business plan competition targeting startup ventures and emerging
companies in nanotechnology.
Read more ...
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