In This Week's Issue
SSTI News and Analysis
White House Teams Up With Industry to Boost U.S.
Entrepreneurship
Following up on President Barack Obama's
State of the Union pledge to focus on American competitiveness and
innovation, the White House announced the Startup America
initiative, a program to support and celebrate U.S. entrepreneurs.
On Monday, a panel of cabinet members, White House officials,
executives and economic development leaders provided an outline of
the public/private effort, which has already generated $400 million
in private commitments. Startup America aims to expand a number of
federal programs to provide capital and mentoring services to
entrepreneurs, and to create a nationwide partnership that will
leverage private sector partners to provide entrepreneurial support
resources. The initiative also will support the expansion of
several existing TBED-related initiatives across the country.
The Obama administration plans to commit $2 billion to encourage
private sector investment in early stage and potentially
high-growth companies over the next five years. Two new programs,
administered by the Small Business Administration (SBA), will use
the operating infrastructure of the Small Business Investment
Company (SBIC) program to match private capital raised by investment funds
to invest in promising businesses at no new cost to taxpayers. The
$1 billion Impact Investment Fund will offer a 2:1 match to funds
that invest in high-growth, high-tech companies in underserved
communities. SBA's $1 billion Early-Stage
Innovation Fund will provide a 1:1 match to private capital raised
by early stage and seed funds.
As part of the initiative, Treasury will expand the New Markets Tax
Credit program and will hold a conference in March to seek input on
how to simplify and streamline the program.
Treasury's New Markets program would be funded
at $5 billion, up from $3.5 billion, to spur investment in
lower-income communities. In addition, the administration plans to
recommend in the FY12 budget making the capital gains tax
exclusion for certain small business stock permanent.
The Economic Development Administration (EDA) will relaunch the
i6 Challenge, which funded community tech commercialization and
venture formation efforts, as i6 Green. The $12 million program
would support proof of concept centers that focus on cleantech,
environmental sustainability and regional economic
development. Funding would go to efforts that are
supported by regional partnerships that bring together corporate,
university, nonprofit and foundation stakeholders.
Another major focus of the initiative is entrepreneurship
education and mentoring. SBA and the Department of Energy (DOE)
plan to support four new private business accelerators and a
network of mentors for clean energy entrepreneurs. The program will
target entrepreneurs who previously have received funding from DOE
and ARPA-E. The agencies hope to expand the effort over time,
recruiting 200 mentors to support an additional 100 clean energy
startups. If the program is successful, SBA and DOE may open
additional accelerators in the future.
Other federal aspects of the initiative include:
- Two new business accelerators, to be launched by the Department
of Veterans Affairs, dedicated to assisting veteran
entrepreneurs;
- A series of eight roundtables and an online suggestion tool to
help the administration identify barriers to small business and
entrepreneurship; and,
- A new three-track examination system at the U.S. Patent and
Trademark Office to offer accelerated services, at a fee, to some
applicants.
More details will be available when the
President's budget is released later this
month.
Find out more about the federal side of Startup America at:
http://www.whitehouse.gov/issues/startup-america-faqs.
This week's announcement also served as the launch of a new national alliance to enhance U.S. entrepreneurial competitiveness. The Startup America Partnership is an alliance of corporations,
entrepreneurs, universities, foundations and other groups dedicated
to expanding entrepreneurship education, increasing the
commercialization of new technologies and expanding entrepreneurial
mentoring. Steve Case, co-founder of AOL and chairman of the Case
Foundation, will chair the group, with Carl Schramm, CEO of the
Kauffman Foundation serving as a founding board member. The
partnership will help leverage the involvement of private
corporations to create and fund new initiatives that help achieve
those goals. Intel and IBM have committed $200 million and $150 million,
respectively, to help provide capital and mentoring to
entrepreneurs. HP and Facebook also have announced entrepreneurship
efforts in conjunction with the partnership.
Several successful
entrepreneurship initiatives around the country also have indicated their intent to expand in conjunction with the Startup America Partnership. TechStars, a
startup accelerator with locations in Boulder, New York City,
Seattle and Boston, is launching the TechStars Network, an
affiliation of 15 independent accelerators based on the
mentorship-driven TechStars model. The MassChallenge Startup
Competition and Accelerator plans to provide services to over 1,000
entrepreneurs this year with support from many of the private
companies associated with the partnership. Funding provided by
Startup America's corporate and foundation partners also will help Astia, a community that
supports women-led startups, double the number of women
entrepreneurs they provide services to. The partnership also
has announced projects with the Deshpande Foundation,
JumpStart America and the National Collegiate Inventors &
Innovators Alliance to build new venture acceleration programs and
with the Network for Teaching Entrepreneurship, the Blackstone
Foundation, and Mark Ecko to improve entrepreneurial education for
young people.
Find out more about the Startup America Partnership at:
startupamericapartnership.org.
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Governor's Plan Restructures Nevada
Economic Development, Boosts Funding by 55%
Focusing on job growth and promoting the state for new business
development, Gov. Brian Sandoval announced his plans to reorganize
the Commission on Economic Development into a public-private
partnership and increase funding for the state's
economic development efforts by an additional $2.2 million in
general fund appropriations each year. The governor also included
in his 2011-13 biennial budget $10 million in FY12 for a proposed
Nevada Catalyst Fund designed as a closing fund to bring new
businesses to the state.
Although details on the proposed public-private partnership
called Jobs Unlimited have yet to emerge, the governor said in his
State of the State address that collaboration and tighter
performance indicators would be the metrics of the new system. Many
of the economic development proposals touted by the governor build
on recommendations from the New Nevada Task Force, convened last
year by the lieutenant governor.
The 23-member task force presented nine reports, which included
recommendations on technology commercialization and renewable
energy development. A subcommittee on technology commercialization
recommended adopting a program similar to the Utah Science
Technology and Research initiative (USTAR) with goals including
attracting research grants, developing educational programs within
the state's universities, and encouraging
entrepreneurs to work with established local companies. In his
address to the legislature, the governor emphasized technology
commercialization, bioscience, renewable energy and defense sector
expansion to re-build the state's economy.
The 2011-13 biennial budget as proposed by the governor provides
$34.6 million for the Commission on Economic Development, up from
$22.4 million last biennium. This includes $17.1 million in general
funds for FY12 and $7.1 million in general funds for FY13. Of this
amount, $10 million would be directed to a new Nevada Catalyst Fund
in FY12 for grants to attract new businesses to the state or assist
with expansion of existing businesses. The grant program would be
administered through a nonprofit corporation, according to budget
documents.
To improve rural broadband access across the state, the governor
recommends a one-time appropriation of $3 million to the Department
of Administration for the Nevada Broadband Task Force.
Funding for higher education would be cut 7 percent under the
governor's proposal. When combined with a loss
of one-time federal stimulus dollars, the total reduction is 17.7
percent in available funds.
Gov. Sandoval's 2011-13 budget is available
at:
http://budget.state.nv.us/budget_2011_13/budget_book/2011-2013%20Executive%20Budget.pdf.
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Spending Plans in IA and MA Seek to Balance Cuts with Job
Creation Efforts
Deep cuts to higher education and reorganizing economic
development efforts are common themes in executive budget proposals
across most of the country as governors seek to both reduce
spending and create jobs. Iowa Gov. Terry Branstad recently
introduced legislation to replace the state's
existing economic development agency with a public-private
partnership. Meanwhile, his budget eliminates the Iowa Power Fund,
established by the legislature in 2007 to invest in private sector
renewable and alternative energy industries. In Massachusetts, Gov.
Deval Patrick recommends $10 million to continue state support for
the Massachusetts Life Sciences Center, but also plans to collect
$25 million from the state's quasi-public
agencies and defer $5 million in tax credits slated for life
science companies to help fill a projected deficit totaling up to
$2.5 billion.
Iowa
Gov. Terry Branstad outlined his
administration's five-year goals in the 2012-13
budget presented to lawmakers last week. Although the state
currently operates on an annual budget, the governor recommends
funding levels for FY12 and FY13 consistent with his proposal to
institute a biennial budgeting process, which he says will provide
additional funding stability to entities dependent on state
resources.
To help reach an ambitious goal of creating 200,000 new jobs
over the next five years, the governor introduced
draft legislation this week to replace the Iowa Department of
Economic Development with a public-private partnership called the
Iowa Partnership for Progress (IPEP). The new nonprofit authority
would be governed by an independent board of directors and chaired
by the governor or his designee. A new economic progress board would
oversee policy implemented by the partnership.
In his budget
address, Gov. Branstand promised to equip the partnership with
new tools to market and sell the state to job creators. IPEP could
accept private funds for advertising campaigns and marketing under
the legislation. Debi Durham, the newly-appointed economic
development director, said in a Des Moines Register article
that the partnership also could provide a home for the Iowa
Innovation Council. IPEP also would be tasked with promoting
statewide entrepreneurial education in K-12 and higher
education.
A new Economic Progress Fund would replace the Grow Iowa Values
Fund within the Department of Economic Development and funding
would be reduced by 34 percent over the next two years. The
governor recommends $25 million in both fiscal years to provide
grants and loans for innovation and commercialization efforts,
workforce training through community colleges, and business
expansion, among other investments.
No funding is recommended for the Iowa Power Fund, which
received $19.6 million in FY11. The fund was set up under former
Gov. Chet Culver as a $100 million state commitment over four years
to invest in renewable energy development (see the May 7, 2007
issue of the Digest).
To help the state reach its goal of increasing its ranking in
the number of business startups from 44th to
25th, the governor will propose legislation allowing
startup companies to function free of state income taxes for the
first three years and free of state sales taxes for their first
three years or $50,000 in taxable purchases, according to budget
documents.
Gov. Branstad's 2012-13 budget is available
at:
https://governor.iowa.gov/wp-content/Iowa%20Budget%20Book%20Fiscal%20Years%202012-2013.pdf.
Massachusetts
The governor's $30.5 billion proposed FY12
budget cuts spending by $570 million and calls for increased
revenue totaling $627.3 million, which includes $200 million in
one-time funds from reserves. As part of the new revenue
enhancements, the governor recommends postponing $5 million in tax
credits refunded or used by the Massachusetts Life Sciences Center
(MLSC) to eligible corporations.
The FY12 budget would provide a third-year of level funding
totaling $10 million for the MLSC, contingent upon a FY11
consolidated net surplus, as stipulated by the original
legislation. The governor's intent was to
provide $25 million annually for the effort. So far, the
legislature has approved $35 million for the Life Sciences
Investment Fund since passage of the state's
10-year, $1 billion Life Sciences Initiative in 2008 (see the
May 7,
2007 issue of the Digest). Other components of the
initiative include a capital program, which funded $34 million in
capital projects last year, and a tax incentive program capped at
$25 million per year.
To date, the center has committed $215 million in state funding
and leveraged more than $700 million in outside investment,
creating approximately 7,500 jobs.
Another $25 million in revenue would come from the
state's quasi-public entities, including Mass
Tech Collaborative and the Growth Capital Corporation. The agencies
would contribute a total $25 million to preserve certain programs,
including Mass Broadband Operations and the Small Business
Development Center.
State funding for higher education would be cut by 1.4 percent
or $12.2 million in FY12. However, the
governor's budget proposes new funding of
$500,000 to support science, technology, engineering and
mathematics (STEM) education and the STEM pipeline fund,
established in 2003 and administered through the Department of
Higher Education. The goal of the program is to increase the number
of students who participate in programs that support STEM careers,
increase the number of qualified STEM teachers and improve the STEM
educational offerings.
View the executive budget at: http://www.mass.gov/bb/h1/fy12h1/.
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National Institute of Standards and Technology Announces New
$20 Million Grant Program
The National Institute of Standards and Technology (NIST)
intends to award $20 million in grants to support
the construction of new or expanded scientific
research facilities.
The NIST Construction Grant
Program (NCGP) provides competitively awarded, cost-shared grants
(non-federal cost sharing of at least 20%) to support construction
and expansion projects including laboratories, test facilities,
measurement facilities, research computing facilities and
observatories. Proposed projects should complement the research
goals of one or more of the Department of
Commerce's three science agencies
— NIST, the National Oceanic and Atmospheric
Administration and the National Telecommunications and Information
Administration. Only institutions of higher education and nonprofit
research organizations are eligible to receive funding.
Awards will range from $5 to $10 million. The money will be
distributed up to five years. Applicants must submit a letter of
intent by February 24, 2011 to be included in the competition. Read
the press release ...
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TIP Outlines R&D Grant Funding Priority Areas in New
Three-Year Plan
The Technology Innovation Program (TIP), a program within the
National Institute of Standards and Technology (NIST), released its
Three-Year Plan
covering proposed
grant competition topics through FY 2014. Future TIP
grant competitions may target specific research topics within eight
areas of critical national need: civil infrastructure,
manufacturing, energy, health care, water resources, complex
networks and sustainability. For additional information regarding
these topic areas or to comment on TIP's
authored whitepapers visit http://www.nist.gov/tip/wp/index.cfm.
Program officials emphasize that the three-year plan is not a
formal solicitation for proposals. There are no current TIP
competitions. Specific competitions related to these topics will be
announced in the Federal Register, on grants.gov and on the TIP website. Read the plan ...
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Canada Will Launch $3 Million Pilot Program to Accelerate
Commercialization
In March, Canada's Advanced Research and
Innovation Network (CANARIE) will begin a pilot program designed to reduce the time and cost of bringing new
information and communications technology (ICT) products, services
and protocols to market. The Digital Accelerator for Innovation and
Research (DAIR), a virtual research and development environment,
will enable small and medium-sized ICT firms to create complex,
large-scale products and demonstrate them to customers without
building a costly, in-house R&D infrastructure. ICT researchers
at universities across the country also will have access to the
program allowing them to investigate next-generation Internet
technologies. During the pilot program, DAIR will run on a
dedicated portion of CANARIE's advanced research
and education fiber-optic network. Read more about DAIR ...
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Useful Stats
U.S. Venture Capital Investment 1995-2010 and Investment by State 2010
U.S. venture capitalists invested $21.8 billion in 2010, a 19.4
percent increase over 2009 and the first increase in venture
investment since 2007, according to the National Venture Capital
Association (NVCA) and PricewaterhouseCoopers Moneytree Survey. The
growth in activity affected nearly every industry, particularly
clean energy software and Internet-specific companies. Early stage
investments, though not seed stage investments, grew by
double-digits as did first-time financings. In addition to the
gains in venture dollars, VC deals grew to 3,277, a 12 percent
increase over 2009. Venture capital (VC) returns also have begun to
improve for the 3, 5 and 10 year horizons, according to the
Cambridge Associates and NVCA.
Software once again became the single largest investment sector,
surpassing life science. In the third and fourth quarter, the
software sector returned to 2007 levels of activity, while life
science saw slight declines, particularly in the medical device
industry. Clean energy sector dollars grew by 76 percent, a
significant increase but still below 2008 levels. Much of this
growth was due to large deals, including five of the
year's top ten deals. Early stage investment
dollars grew by 15 percent and expansion stage investment grew by
47 percent, while seed stage and later stage investments remained
comparatively steady. As these middle stage deals became more
prevalent, average deal size also increased to $6.6 million.
Despite the uptick, average deal size remains at 1990s levels.
SSTI has prepared a table showing U.S. VC dollar investment, per
capita dollars, deals and average deal size from 1995-2010. View
the table at: http://ssti.org/Digest/Tables/020211t.htm.
Read the NVCA/PWC Moneytree Survey press release:
http://www.nvca.org/index.php?option=com_docman&task=doc_download&gid=689&Itemid=93.
The NVCA/Cambridge Associates report found that venture capital
performance began to improve in the second half of 2010, reversing
the downward trend of the previous year. While the shift was not
dramatic, the improved performance over the three, five and 10-year horizons are the first signs of recovery since the financial
crisis. Researchers expect the postive trend to continue into
2011.
Read the NVCA/Cambridge Associates release at:
http://www.nvca.org/index.php?option=com_docman&task=doc_download&gid=697&Itemid=93.
State-by-State
California continues to dominate the VC landscape with more than
half (50.3 percent) of all venture dollars and 39.3 percent of
deals. Massachusetts, however, has the highest per capita figures,
with $359.84 invested per resident and 53.2 deals per every million
residents. Together, these two states received 61.2 percent of U.S.
venture capital investment in 2010, far outpacing the rest of the
country. Within California, Silicon Valley continues to be the
primary location for deals and dollars, receiving 39 percent of all
U.S. venture dollars in 2010. The Los Angeles/Orange County region
also has been an increasingly important center of venture activity.
In 2010, the Los Angeles region grew its venture dollars by 65.8
percent over 2009 and received 7.3 percent of U.S. venture dollars,
greater than the entire Southeast or the Midwest.
Top states for venture dollars and deals relative to population
include Massachusetts, California, the District of Columbia,
Colorado and Washington. These five states are the only state
economies that have higher venture dollars per capita than the
overall national level of $71.08. Without
California's extremely high level of venture
activity, U.S. venture dollars per capita falls to $40.16, roughly
in the middle of the state rankings.
SSTI has prepared a second table of 2010 venture capital totals
by state, share of the national total, deals per million residents
and dollar amount per capita. View the table at:
http://ssti.org/Digest/Tables/020211at.htm.
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TBED People and Job Opportunities
People and Organizations
Alabama then-Governor-elect Robert Bentley on January 3 named
former House Speaker Seth Hammett as director of the
Alabama Development
Office, replacing Interim Director Linda Swann. He also
appointed the president of the Birmingham-based Economic
Development Partnership of Alabama, Bill Taylor, to lead
efforts to grow and retain existing Alabama industries, while at
the same time recruiting new businesses to the state.
Colorado Gov. John Hickenlooper nominated Dwayne Romero,
president of Related Snowmass, to be the new director of the
Colorado
Office of Economic Development and International Trade.
Florida Governor Rick Scott fired John Adams, the current
president of Enterprise
Florida, so that he can choose a new leader to help promote his
job creation and economic development agenda.
Minnesota Gov. Mark Dayton chose Mark Phillips, director
of development at Kraus Anderson Construction, as
his commissioner of the Department of Employment and Economic Development.
New York Gov. Andrew Cuomo announced the nomination of
Kenneth Adams as president and CEO of the Empire State Development
Corporation. Gov. Cuomo said the appointment is part of his
plan to change the leadership structure of ESDC, separating the CEO
and chairperson functions.
Oklahoma Gov. Mary Fallin announced she has selected Dave
Lopez to serve as Secretary of Commerce. Lopez is a
civic and community leader and currently serves as
president of Oklahoma City-based American Fidelity Foundation.
South Dakota Gov. Dennis Daugaard signed an executive order
abolishing the Department of Tourism and State Development,
replacing it with a Governor's
Office of Economic Development and a Department of Tourism.
Tennessee then-Governor-elect Bill Haslam on January 10
named Bill Hagerty as commissioner of the state Department of Economic and Community
Development. Hagerty worked on the White House Domestic Policy
staff during President George W. Bush's
administration as a member of the President's
Council on Competitiveness and was a founder and managing director
of a merchant bank and private equity firm, Hagerty Peterson &
Company, LLC. Hagerty replaces Matt Kisber.
Lewis C. Attardo has been named the first full-time Florida Small Business Advocate.
Previously, he served as the interim advocate and director for the
Florida Office of Small Business Advocate and as acting
administrator of the Florida Small Business Regulatory Advisory
Council (SBRAC).
The University of West Florida announced the creation of
the Office of Economic Development
and Engagement.
The Center for Emerging
Technologies has hired Harlee Sorkin to lead a new a
program for first-time bioscience entrepreneurs in the St. Louis
region.
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Staff Picks
President's FY12 Budget Incentivizes
Production of Advanced Technology Vehicles
Vice President Joe Biden outlined details of the
president's forthcoming budget that will support
efforts to put one million advanced technology vehicles on the road
by 2015, first announced by the president in 2008. Consumer
rebates, investments in R&D and competitive grant programs are
part of the package.
Read more ...
Industry Leaders Respond to President's
Clean Energy Goals
This Los Angeles Times article reports the viewpoint of
clean energy industry leaders in response to the
president's ambitious goals announced in the
State of the Union address. CEO's say their
industries need a stable supply of funds, not the erratic cycle of
government incentives that expire every year or so.
Read more ...
Xconomy: New Trends for Biotech Startups
Risk-sharing, earnouts, and contingent value right agreements
are the order of the day, says James Posada in this Xconomy
post. Posada discusses how the days of multi-hundred million dollar
upfront payments to acquire early stage biotech companies are
likely gone for good and describes a new model gaining traction.
Read more ...
What is the Internet Anyway?
A lighter moment in this
video from The Daily What — and a
reminder of how the Internet is still relatively new. Katie Couric
and Bryant Gumbel back in 1994 trying to understand the Internet
and what @ means.
Tracking Underachieving, Overachieving Cities in High-Tech
Inventions
This
graphic from New Scientist tracks the number of patents
awarded in U.S. cities — comparing urban areas
already producing high-tech inventions against those that are
trailing behind.
Intel Investing $100M in University Research
Intel Corporation last week announced plans to invest $100
million in U.S. university research over the next five years
starting with a visual computing lab at Stanford. Other areas of
focus include mobility, security and embedded solutions.
Read more ...
Census Data Reveal Racial Gaps in Educational
Attainment
Although the percentage of Americans with college degrees has
steadily increased over time, a large gap exists for African
American and Hispanic educational attainment. Read the
article and explore the data further with this
interactive map broken out by state and county.
CA Stem Cell Initiative Paying off in Job Creation, Report
Shows
The
California Institute for Regenerative Medicine released a
report citing job creation success from the $1.1 billion in funding
it's receiving from taxpayers. So far, the
initiative is generating 2,739 jobs annually, mostly tied to
laboratory construction and positions for scientists, assistants
and technicians in the early stages of research.
Read more ...
Another CA Report Citing Job Growth in Green
Industries
California also is producing more green economy jobs at a pace
more than three times as fast as the state's
old brown economy,
according to a
report from Next 10.
Read more ...
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