In This Week's Issue
SSTI News and Analysis
Kansas Budget Funds University Research Initiatives; TBED
Programs Moved to Commerce
The budget approved by lawmakers for FY12 includes $15 million
in research grant money for three Kansas universities to expand
programs in emerging industry sectors as proposed by Gov. Sam
Brownback and allocates $10.5 million annually for an initiative to
enhance engineering education and increase the number of qualified
engineers in the state.
Announced by Gov. Brownback earlier this year, the University
Economic Growth Initiative will provide $15 million for research in
areas seen as critical to growing the state's
economy (see the Jan.
26, 2011 issue of the Digest). This includes $5 million
each for animal health research at Kansas State University (KSU),
cancer research at the University of Kansas (KU) Medical Center,
and aviation research at Wichita State University. The universities
must provide a dollar-for-dollar match.
Lawmakers also approved a
bill allocating $10.5 million per year to expand engineering
programs and create a steady stream of graduates for businesses.
Specifically, the University Engineering Initiative Act aims to
increase the number of graduates to 1,365 per year by 2021. The
money, which comes from lottery revenues, will be split equally
between three newly created funds for KSU, KU and Wichita State and
requires a 1:1 match from non-state sources. Another
bill passed by the legislature adds $65 million in bonding
authority for KU's School of Engineering
expansion project with debt service paid from special revenue funds
of the university. Both measures await action by Gov.
Brownback.
Lawmakers concurred with the governor's
recommendation to eliminate the Kansas Technology Enterprise
Corporation (KTEC) and move some of its programs to the Department
of Commerce.
HB 2054 transfers the organization's duties
to Commerce beginning July 1. Some of its programs will continue to
receive state support, including entrepreneurial centers, centers
of excellence, the Mid-America Manufacturing Technology Center, and
the angel tax credit programs, reports The Wichita Eagle.
The Pipeline program, which provides funding and resources to
entrepreneurs, will not receive additional funding in the new
fiscal year.
Earlier this year, Gov. Brownback established the Council of
Economic Advisors as part of his economic reform plan. Chaired by
the governor, the council replaces Kansas Inc., an independent
economic development research agency, and is charged with unifying
the state's programs to grow the economy.
The FY12 budget conference committee report documents are
available at: http://skyways.lib.ks.us/ksleg/KLRD/Appropriations.html.
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Senate SBIR/STTR Reauthorization Act Hits "Brick Wall" Due to
Amendments
The Small Business Innovation Research (SBIR) program and the
Small Business Technology Transfer (STTR) program reauthorizations
may face a bleak future due to a recent vote on the Senate floor.
Senator Mary L. Landrieu (D-LA)
said, "Today was our last chance to reauthorize
these important programs and provide some continuity to the small
businesses that depend on them. This bill, the federal
government's largest research and development
programs for small businesses, passed out of our Committee with
nearly unanimous support, but wound up hitting a brick wall when it
reached the Senate floor."
The Senate SBIR/STTR Reauthorization Act of 2011
(S.
493) failed to receive the votes
necessary to invoke a cloture vote — a procedure
that allows the Senate to place a time limit on consideration of a
bill to overcome a filibuster. A cloture vote was proposed after
the Senate managed to debate only 11 of the 137 amendments.
Proponents of the bill argue that the 137
amendments, most of which are not germane to the SBIR/STTR programs,
eroded bipartisan support for the program.
If passed, the Senate SBIR/STTR Reauthorization Act of 2011
would:
- Reauthorize the SBIR/STTR programs for eight years;
- Increase the SBIR set-asides by participating agencies to 3.5
percent over 10 years;
- Increase the STTR set-aside by participating agencies to 0.6
percent over six years;
- Allow small business concerns majority-owned and controlled by
venture capital firms to be eligible for up to 25 percent of the
SBIR funds; and,
- Increase SBIR/STTR awards to $150,000 for Phase I and $1
million for Phase II awards.
The SBIR and STTR programs are administered by the U.S. Small
Business Administration and funded by set-asides from existing
research and development budgets at participating agencies (e.g,
NIH, DOD and NSF).
Meanwhile, the House Committee on Science,
Space, and Technology
approved the Creating Jobs Through Small Business Innovation
Act of 2011 (H.R.
1425) to reauthorize SBIR and STTR programs through the 2014
fiscal year. The
legislation only would increase the size of awards ($150,000
for Phase I and $1 million for Phase II) but would not increase the
current percentage "set-asides" (2.5% for SBIR and 0.3% for
STTR).
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Nebraska Lawmakers Support Gov's
Innovation Agenda
Gov. Dave Heineman's proposal to support
innovation, research and product development in
Nebraska's small businesses and institutions of
higher education was passed with unanimous support in the
legislature. Lawmakers also approved an angel tax credit for
investments in high-tech companies and a measure to create an
internship program matching college students with businesses as
part of the governor's Talent and Innovation
Agenda (see the Jan.
19, 2011 issue of the Digest).
The Business Innovation Act (LB
387) includes $7 million each year for grants to small
businesses for the following activities:
- Phase 0, 1, and II SBIR grants capped at $1 million per
year;
- Prototyping Fund capped at $50,000 per project or $1 million
per year;
- Commercialization and support, capped at $2 million per
year;
- Industry-university applied research grants, capped at $3
million per year; and,
- A small business investment program providing microloan
delivery grants capped at $1 million per year.
Of the $7 million appropriation, $5.6 million comes from new funds and the
remainder is redirected funds from existing grant programs within
the Department of Economic Development (DED).
The angel tax credit legislation (LB
389) provides up to $3 million in tax credits for investments
made in small businesses primarily engaged in high-tech activities
and requires a minimum $25,000 investment from individuals. The
bill funds the tax credits by reducing the amount of credits
offered under the Nebraska Advantage Rural Development Act from $4
million to $1 million, according to a press release from the Nebraska legislature.
LB 386 creates the Intern Nebraska Act and allows DED to
allocate up to $1,500 annually from the Job Training Cash Fund in
FY12 and FY13 to provide internship grants to eligible businesses.
The 2011-13 biennial budget signed by the governor also includes
$25 million for a university-based innovation campus.
The main budget bill is
LB 374.
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DOE Offers $25M for U.S.-India Energy R&D Center
The U.S. Department of Energy (DOE) announced that it will
commit $25 million over the next five years to support the
U.S.-India Joint Clean Energy Research and Development Center, as
part of the Partnership to Advance Clean Energy. DOE will provide
matching grants to universities, national labs, private companies
and others to support research in energy efficiency,
second-generation biofuels and solar energy. The $50 million
contributed by DOE and award grantees will be matched by an
additional $50 million in public and private funds from India. Facilities
associated with the program will be located in both countries. Read the announcement...
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Alaska Lawmakers Endow Performance-based Scholarships with
$400M
To ensure funding is available in future years for students who
complete a more rigorous high school curriculum focused on math and
science, the legislature set aside $400 million for
performance-based scholarships in the capital
budget. The FY12 operating
budget also includes $6 million in first-year funding for the
program, which will be available to high school students graduating
in 2011. Lawmakers last year passed legislation establishing the
Alaska Merit Scholarship Program, but failed to provide a funding
source (see the April 28,
2010 issue of the Digest). High-performing students,
including those taking four years of math and science, are eligible
for the scholarships, which provide up to $4,755 annually for
postsecondary education and job training. The educational endowment
was first proposed by Gov. Sean Parnell in 2009.
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Slovenia's Government Approves National
Innovation Strategy Focused on R&D and Entrepreneurship
The Slovenian parliament recently approved the
Resolution on the Research and Innovation Strategy of Slovenia
2011-2020, a comprehensive strategy to establish
"a contemporary research and innovation system
that will ensure a higher quality of life within the country."
According to the
UNESCO Science Report, Slovenia is drastically ahead of
their counterparts in Southeastern Europe. However, Slovenia still
intends to double the government's science
budget from 0.52 percent of GDP to almost 1.0 percent of GDP
(approximately $554.9 million) in 2012 with an expected increase to
1.2 percent in 2020. By 2012, the government expects to exceed the
European Union (EU) required gross domestic expenditure on research
and development (R&D) established by the Barcelona
Objective (3 percent of GDP). Tax breaks and other
government incentives will be utilized to spur domestic private
sector investments and foreign direct investment into
Slovenia's science and technology (S&T)
sectors. This strong commitment to S&T is intended to attract
successful researchers and companies from the Western Balkans and
to increase the number of foreign researchers working in the
country. To strengthen entrepreneurship, the plan includes aid to
young Ph.D.s to establish startups, tax breaks to companies that
invest in R&D, public-private research collaboration and
reductions in red tape. The plan also gives public research
organizations more autonomy but requires them to produce results
that clearly "make a positive impact on science
or the economy." Read the
report...
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Recent Research
How Do Tech Startups Indicate Their Value?
Getting venture capitalists to invest their limited dollars in a
particular business is difficult. Entrepreneurs must aggressively
pursue potential investors and use every means at their disposal to
pitch their business as a future revenue generator. A recent
academic article attempts to explain the role that patenting and
investment by the entrepreneur's family and
friends play in this interplay between investor and investee. The
authors of Show Me the Right Stuff: Signals for High Tech
Startups examine the meaning that both patents and family and
friends money hold for investors. They find that patents serve as a
proxy for technology quality. Family and friends' funding (FFF), on
the other hand, indicates the commitment level of the company
founder. A mix of both signals yield the best results for firms
seeking venture support.
Authors Conti, Thursby and Rothaermel use ten years of data from
the Advanced Technology Development Center (ATDC) at the Georgia
Institute of Technology to examine firm investment in these signals
to investors. ATDC's data collection practices
provide them with access to each firm's angel
and venture support, patents filed and funding from family and
friends. The authors also examined business plans provided to ATDC
at the time of their admission to the incubator and conducted a
survey of business founders. A censored regression model, isolating
many factors influencing investor decisions, is used to gauge the
relative importance of FFF in signalling the worthiness of an
investment.
The results confirm that both FFF and patents are meaningful
signal to angel and venture investors. Patenting serves as a proxy
for technology quality. Investors that value technology quality,
tend to prefer firms with a greater number of patents. In
situations where investors have pursued firms based on the quality
of the technologies they are commercializing, firms seeking
investment tend to sink more money into patenting their
discoveries. FFF tends to indicate a founder's
commitment level and a lower opportunity cost. The two factors
together seem to have greater positive signaling power than they do
separately.
The authors demonstrate that the two signals differ in
importance for angel and for venture investors. Angel investors
prefer company founders to have something at stake in their
companies. For this reason, angels tend to favor companies with
high FFF support, while patents do not play a statistically
significant role in their decisionmaking. The opposite is true for
venture investors, who may replace the
companies' founders as CEOs with outsiders but
require high quality technologies to eventually achieve an exit.
Venture investors respond to a high number of patents, but FFF
appears to be less important.
Purchase "Show Me the Right Stuff: Signals for
High Tech Startups" ($5) at: http://www.nber.org/papers/w17050.
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TBED People and Orgs
TBED People & Orgs
Karel Schubert has been appointed executive director of
the Bioscience Association of West Virginia. Schubert most recently
founded and is the chief executive officer of BioSynectics, a St.
Louis-based bioscience firm.
J. Michael Saul, deputy director of the R.I. Economic Development Corporation,
who served as interim director for a year, is stepping down. Saul
had overseen the agency's capital
programs such as the Small Business Loan Fund.
Chelsea Burket has joined the team at Fourth Economy as a research
assistant.
TechNet and the Illinois Technology Association
announced a new strategic partnership to collaborate on a dual
state-federal policy and political program for
Illinois' fast-growing and emerging technology
companies.
Read more job postings
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Staff Picks
Not to be Missed Feature on How Jobs Are Created
This may be the most important media report on economic
development this year and is a must listen for policymakers and
practitioners. Last week's broadcast
from This American
Life attempts to answer the question,
"How are jobs created?" and raises
critical questions about how economic development is done and the
impact it has on actual job creation.
The Economist: Still Full of Ideas, But Not Making
Jobs
America's problem is not its innovation
capacity, but that its benefits go to relatively few.
Read more ...
Stateline: Revenues Look Better in Three Big States
Officials in California, New Jersey and Michigan announced
larger than anticipated state revenues providing some indication of
a recovery.
Read more ...
Bernanke Talks Government's Role in
Promoting R&D
Speaking at a conference in D.C., Ben Bernanke said the tendency
of the market to supply too little of certain types of R&D
provides a rationale for government intervention.
Read more ...
LA Times: U.S. Manufacturing Attempts a
High-Tech Comeback
Another view to revamping U.S. manufacturing is for the U.S. to
produce high-value goods to compete on price and quality in
today's global marketplace —
a partnership in Albany is attempting just that.
Read more ...
Manufacturing Jobs on the Rise, but with Much Lower
Pay
New factory jobs in the Rust Belt are on their way, but at much
lower pay. Industries will start at $7.50 an hour in one Ohio
plant.
Read more ...
A Look at Veteran Owned Businesses in the U.S.
Nearly one-third of veteran-owned businesses operated in the
professional, scientific, and technical services and construction
sectors, according to new Census Bureau data.
Read more ...
Facebook for Patents
With a backlog of patents and the budget for the patent office
cut by 10 percent, a company is stepping in as the
"Facebook for Patents" compensating
the public to help improve the patent system, says John Bridgeland
in this StartUp America
post.
What Degree Should Kids Pursue in the New Economy?
This Debate Room
article argues two sides of a topic parents and educators face
in today's economy: should you encourage kids to
pursue the new specialized degrees of the future or the more
traditional liberal arts degree?
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