SSTI Digest

Last week, SSTI examined the geography of “America’s Seed Fund,” the SBIR/STTR awards, on a state-by-state basis. A look at how the more than 25,500 awards were distributed at the regional level over the five-year period from 2013 to 2017 yields additional insight. The metropolitan areas with the largest concentrations of SBIR/STTR awards include knowledge hubs with large universities and access to federal R&D, such as Boston, Los Angeles, and Washington D.C. Smaller regions with a large federal R&D presence, like Huntsville, Alabama, Santa Maria, California and Dayton, Ohio also rank highly.

Compared to venture capital, the geography of SBIR/STTR deals is considerably less concentrated. Overall, less than half (44.2 percent) of the SBIR/STTR award dollars distributed between 2013 and 2017 went to the top 10 metropolitan areas. The top 10 metropolitan areas represent approximately 80 percent of all venture capital dollars, according to CityLab.

The President’s Task Force on Apprenticeship Expansion released a new report focused on “strategies and recommendations to promote apprenticeships, especially in sectors where existing apprenticeship programs are insufficient.” A key element of President Trump’s federal workforce development agenda, apprenticeships are seen as an effective tool for addressing the skills gap confronting U.S. employers and a pathway to a well-paying careers for American workers. The report includes recommendations across five areas related to apprenticeships including: education and credentialing; attracting business to apprenticeship; expanding access, equity, and career awareness; and, administrative and regulatory strategies to expand apprenticeship. While proponents of apprenticeships were supportive of several recommendations proposed within the report, the task force also faced criticism due to proposed cuts to other Department of Labor programs to pay for the expansion of federal funding for apprenticeships, and push back and questions from those in higher education.

State economic growth relies on the availability of a workforce capable of filling open positions. But increasingly around the country, one of the top concerns of employers is finding the right talent to fill these roles. Beyond corporate strategies in hiring, states are increasingly developing new initiatives to keep their pipeline of talent flowing. SSTI has found a variety of new initiatives being considered around the country, from foundation support for scholarships for credentials in high-demand fields in New Hampshire to pending legislation to support, with state funding, a Pathways in Technology Program (P-Tech) in California.

Alabama

This June, the Innovation Growth Lab's (IGL) third global annual conference will explore future innovation, entrepreneurship and small business policies. The summit, happening in Boston June 12-14 at Harvard Business School and MIT, includes more than 50 world-leading experts and participants from over 20 countries coming together as part of a global community at the forefront of innovation. Discussions will range from how to accelerate economic growth and make it more inclusive to support for local startup ecosystems and how to increase innovation and productivity in small businesses. There will also be a range of capacity-building workshops on new policy tools and methods led by organizations such as NASA, the SBA, the World Bank, Harvard Catalyst, and others. Registration is still open and more information is available here.

Several recent articles covered in the National Bureau of Economic Researchers (NBER) Digest suggest that current understanding of policies surrounding wages, clusters and labor concentration may warrant revisiting. In one piece of academic research, a historical argument of shared productivity gains with employees is challenged, while another article shows a loss of bargaining power for employees in concentrated labor markets.

Industry consolidation slowing wage growth, productivity

The SBIR/STTR program, which dubs itself as “America’s Seed Fund,” is one of the broadest forms of early-stage capital available to small technology companies. During the five-year period from 2013 to 2017, the 11 federal agencies participating in the SBIR/STTR program distributed 25,524 awards. Using charts, maps, and a downloadable spreadsheet, this Digest article looks at trends in SBIR/STTR awards by state over the period, including the companies with the most awards and states where SBIR/STTR awards outnumber VC deals. A future article will look at awards by metropolitan area.

Federal agencies with extramural R&D budgets exceeding $100 million are required to allocate 3.2 percent of their R&D budgets to the SBIR/STTR program. The U.S. Small Business Administration, which oversees the SBIR/STTR program, releases data on individual awards across agencies. SSTI has collected this data and compiled it by state. The interactive graphic below displays the data by award type (SBIR/STTR), phase, agency, and year.  

The Small Business Innovation Research (SBIR) program dubs itself as “America’s largest seed fund.” Three recent research articles add to the existing literature on the program. First, a study finds that SBIR supports high-risk efforts to convert R&D. A second study suggests that SBIR awardees are more likely to locate in denser regions but in less dense neighborhoods in those regions. A third study finds that SBIR awardees from federal agencies with more diverse workforces tend to perform better. For the economic development community, these findings may influence the way SBIR-related services such as entrepreneurial assistance programs and matching grants are delivered.

SBIR supports higher-risk efforts to convert research and development

The federal government’s priorities for funding research and development do not necessarily match those of the general public, an analysis of ScienceCounts and National Science Foundation data suggests. ScienceCounts is a national nonprofit with the objective of enhancing the public's awareness of, and support for, federally-funded scientific research. Last year, alongside Research America, the organization released the results from their first study. In an analysis of education, ideology, gender, and age, the study looks at public opinions on whether a variety of scientific issues should be an urgent focus of research.  Overall, a comparison of these findings with the actual federal funding levels of R&D finds a disconnect between the general public and the federal government’s priorities.

For the economic development community as a whole, the issue of retaining and attracting talent is of the utmost importance. While a visualization in a Wall Street Journal article looks at where graduates move after college, an interactive analysis by the Pew Research Center examines where foreign student graduates work in the United States. Taken together, these two tools allow the user to learn more about their region by shedding light on the destinations of recent domestic and international college graduates.

Venture development organizations (VDO), nonprofit organizations across the country investing in innovation startups to help grow their regional economies as well as earn a respectable return, saw at least 20 exits in the first quarter of 2018, based on data entered on Pitchbook.com. Here are some examples from the quarter:

A spinout of the Carnegie Mellon University Endowment, Pittsburgh-based Wombat Security Technologies has been acquired for the sum of $225 million to become an operating subsidiary of Proofpoint. Among the nine exiting investors, who injected a combined total of $11 million into the firm since 2011, are Idea Foundry, Innovation Works and Riverfront Ventures. Idea Foundry also was an exiting investor during the quarter resulting from the acquisition of Zulama by EMC Publishing.

New data analyzing the first cohort of Tennessee Promise students reveals a higher graduation rate and increased number of students earning a college credential when compared to the previous year’s non-Promise cohort. The inaugural class of Tennessee Promise students graduated from high school in 2015 and completed their five semesters of eligibility in December. The program is showing impressive early results including:

While the increasing gaps between the coasts and the heartland continues to capture the media’s attention, a collection of recent research suggests that inequality within regions may be the greatest factor hampering economic growth. Five recent articles tell a nuanced story of how economic and racial inequities may impede regional economic development efforts. The research presented here from a variety of outlets examines the role of inequality in the overall economy of regions.

For example, research in the Journal of Regional Studies examines how the Great Recession challenged the economic resilience of metropolitan areas and how income inequality worsened these impacts. A separate analysis by the Urban Institute finds that economically healthy cities are more likely to be inclusive.  In particular, older industrial cities struggle with issues stemming from inequality. Additionally, to complicate matters further, research from the Center for Economic and Policy Research finds inequality is likely worse than actually reported.

Economically healthy cities are more likely to be inclusive.