SSTI Digest

From FY 2018 to FY 2019, state fiscal support for higher education grew by 1.6 percent nationwide and increased in 45 states, according to new data from the Grapevine Survey, a project of Illinois State University’s Center for the Study of Education Policy in cooperation with the State Higher Education Executive Officers (SHEEO). Inside Higher Ed has a thorough rundown of the study, including an interview with James Palmer, a professor of higher education at Illinois State University and Grapevine’s editor, who declared it “a marginally better year” for state fiscal support for higher education.  Using data directly from the Grapevine Report, the following map highlights FY 2019 support (point-size) and percent change over the five-year period from FY 2014 to FY 2019, as well as state rankings. Data can be downloaded directly through Grapevine.

Maryland Governor Larry Hogan’s FY 2020 budget proposal includes $56.5 million in new funding to attract businesses to Opportunity Zones. Other new innovation funding would support manufacturer hiring credits and a seed fund for minority entrepreneurs. Under the governor’s proposal, TEDCO, the state’s primary innovation agency, would see its spending increase from $27 million to $45 million.

The Opportunity Zone proposal is likely to garner the most attention from other states, as regions throughout the country are still attempting to make sense of how to leverage the incentive to encourage positive growth. Details are still forthcoming on the exact nature of the proposed programs, but highlights show a multi-faceted approach to encouraging development in the zones:

As the partial government shutdown enters its second month, the impacts across America are increasingly disruptive. The agencies that do not have a current budget were appropriated more than $38.9 billion for R&D, technology transfer, entrepreneurship, broadband, science, economic development and other activities related to regional innovation economies in FY 2018. Most of these programs stand to receive at least this amount for FY 2019. While some programs were able to spend funds from remaining 2018 dollars or from the continuing resolution that expired in December, many other activities have been delayed by more than a month — and with no clear endpoint in sight. To help your organization track the shutdown, SSTI has compiled a list of the most significant impacts on regional innovation.

Based upon the finding of two reports – the 4Q Pitchbook-NVCA Venture Monitor and the MoneyTree Report –   SSTI identified three significant trends that impact the startup capital community: geographic concentration, mega-rounds/funds, and strong VC-backed exit activity.

Approximately $130.9 billion was invested across nearly 9,000 deals in 2018 by the venture capital (VC) industry, according to the 4Q PitchBook-NVCA Venture Monitor. This marks the first year since the height of the dot-com boom that annual capital investment eclipsed $100 billion. The report indicates a decline in the number of seed-stage deals made during the year, although PitchBook will continue to add deal data as it becomes public, which may ultimately change the direction of this trend (as happened in 2017).

The 20 new governors elected last November are filling out their appointments, and SSTI’s analysis of those named as state economic development directors reveals an array of backgrounds leading into their new roles. New Republican governors have shown a greater propensity to choose a leader with an industry background, while new Democratic governors have been more likely to appoint  directors with economic development experience. From a former U.S. representative to the owner of a regional pizza chain, here are the highlights of the 16 state economic development directors appointed since November.

Industry

The state of America’s foreign policy and the livelihoods of its middle-class are inextricably linked, according to a new report from Ohio State’s John Glenn College of Public Affairs and Carnegie Endowment for International Peace. The report’s authors, using Ohio as a lens for their examination, conduct a thorough quantitative and qualitative analysis on this relationship. They find that the relationship between foreign policy and the middle class is complicated, but that improving outcomes for the middle class will ultimately require a comprehensive foreign policy strategy that is tied to economic development. Notably, unlike the many pieces authored from academics and think-tank researchers on the coasts that focus on “the heartland” or foreign policy more broadly, this report features local perspectives from more than 100 economic development stakeholders across six regions in Ohio. The Carnegie Endowment for International Peace plans to release additional state-level case studies throughout 2019.

A note from the publisher (aka, Dan Berglund): Two of the most frequent questions SSTI staff is asked are: “What program, initiative, movement has piqued your interest?” and, “Who should we be watching and learning from?” While the answers are somewhat implied in what we cover in The Digest, host webinars on, and feature in conference content, look for occasional pieces in 2019 labeled “SSTI Feature” that offer a sampling of our answers to those questions.

Last week, U.S. trade representatives traveled to Beijing for a round of trade talks with the hope of coming to an agreement that would end the U.S.-Chinese trade dispute. Alongside large corporations, many U.S. tech startups are watching the results of these talks with a close eye because they face significant concerns over the impact that increased tariffs will have on their business. But while tariffs have garnered most of the press attention, U.S. startups also face reduced access to foreign capital, increased regulatory scrutiny, and potential talent issues. Conversely, China is developing new strategies to ensure that more investment dollars will remain in their domestic startup capital community.

Reviewing another slate of governors’ state of the state and inaugural addresses reveals some recurring themes. With a focus on maintaining gains made since the Great Recession and increasing budgets, many governors are holding off on major new initiatives, but are proposing means to increase broadband access, diversify their economies, build renewable energy efforts, and increase their rainy day funds in case of an economic downturn. SSTI presents part 2 of our Tech Talkin’ Govs series, with coverage of governors in Colorado, Connecticut, Oregon, Virginia, West Virginia and Wyoming.

Follow along in the coming weeks as we continue to cover all of the governors’ addresses for 2019, bringing you excerpts of their words, promises and programs that touch on the innovation economy.

Colorado Gov. Jared Polis reiterated his goal of reaching 100 percent renewable energy in the state by 2040 and desire to expand broadband:

With 36 governors being sworn in following the November elections, 20 of those being new faces and 16 who were re-elected, this year’s inaugural and state of the state addresses promise new ideas along with proposed resolutions to existing challenges. As the governors present their plans to constituents, SSTI revisits our Tech Talkin’ Govs series. The first round of addresses presented here reveals new initiatives in education and building the workforce in Idaho, green energy initiatives in Maine, collaboration in Massachusetts, the largest economic investment in workforce in the state’s history in New Hampshire, and more.

Today’s coverage includes highlights from governors in Idaho, Maine, Massachusetts, New Hampshire, North Dakota, and South Dakota. Follow along in the coming weeks as we continue to cover all of the governors’ addresses for 2019, bringing you excerpts of their words, promises and programs that touch on the innovation economy.

Idaho Gov. Brad Little delivered his first state of the state address on Jan. 7 and said that education is his top priority for the state budget:

NIST released a draft paper in December making recommendations for improvements to federal technology transfer and commercialization policy. The agency’s ideas ranged from clarifying march-in rights to compelling agency participation in technology entrepreneurship development. Although NIST is one of the agencies affected by the shutdown, comments on the draft paper were due Jan. 9. SSTI’s letter commends NIST on its overall approach to the process and recognition of the importance of entrepreneurial development to leveraging American innovation. The letter also encourages the agency to better integrate federal policies with regional innovation activities and to launch a robustly-funded initiative to fund commercialization partners throughout the country.

The full letter is available, below.

Dear Under Secretary Copan:

States invested $1.1 billion into health-related R&D expenditures in FY 2017 according to the newest results from the annual survey of state government R&D, conducted by the National Science Foundation.  Increasing by 13 percent from the previous year, health-related R&D helped push overall state government spending on R&D up by 7 percent over the 2016 figures. State investments in energy-related R&D, on the other hand, dropped by 16.6 percent ($61 million) to a total of $307 million in FY 2017. The following chart shows the distribution of all states’ R&D expenditures across sectors or functions.

Only 21.7 percent of state R&D expenditures were derived from federal funding sources in FY 2017, a slight decrease from the 21.8 percent share provided by the federal government in FY 2016.