SSTI Digest

When TechShop unexpectedly closed its 10 locations around the country on Nov. 15, announcing its intention to file for Chapter 7 bankruptcy, it not only surprised many who were affiliated with the maker space, but raised questions surrounding the larger maker space community. Dan Woods, CEO of TechShop, cited financial reasons for the closing. They had earlier announced the closing of the Pittsburgh shop, but had opened a new shop in Brooklyn, New York, just weeks before the sudden closure. While the future of those facilities is still undetermined, those in the maker space community say the demand for maker spaces has not diminished and they continue to evolve.

Student impact

Venture-backed startups generate nine times the knowledge spillovers (e.g., patenting activity and citations) when compared to that produced by R&D investment of established companies, according to recent research. In Measuring the Spillovers of Venture Capital, researchers from the University of Munich found that, on average, two-thirds of this increase can be traced to more patenting by other companies within the VC-backed company’s spillover pool (e.g., companies with geographic or industry proximity). The companies that most benefited from the knowledge spillover were large, established companies.

Senate Appropriations subcommittees have advanced the remaining FY 2018 departmental budgets: Defense, Homeland Security, Interior, and Financial Services. Unlike the House’s proposal, the Senate would largely maintain FY 2017’s innovation funding. Highlights include level funding for SBA’s entrepreneurial programs — with $6 million for clusters initiatives and $2 million for accelerators — and level funding for the CDFI Fund.

The California Institute for Regenerative Medicine (CIRM) is exploring options for its future as funding provided through its bond issue dwindles. In a meeting earlier this week, two governing board committees of the agency focused on short and long term finances including a proposal to cut clinical awards by $68 million over the next two years, an effort to raise $222 million in private funding, and the possibility of a $5 billion ballot initiative in November 2020, according to the California Stem Cell Report. The original $3 billion bond issue passed in 2004 was expected to produce research breakthroughs which have not yet resulted in widespread use. The full board is meeting Dec. 14 and may consider the proposals then.

Despite concern that America’s entrepreneurial engine is severely damaged, new research from the Information Technology and Innovation Foundation (ITIF) finds that the number of technology-based startups has grown by 47 percent from 2007 to 2016, with wage growth higher than the national average. Because of their high growth potential, the authors suggest that technology-based startups should be the primary focus of entrepreneurship policy. To bolster these types of entrepreneurs, the authors propose recommendations across four main areas: tax reform, regulatory reform, STEM skills, and technology transfer.

While venture capital remains heavily concentrated across a select few metropolitan areas, the geographic distribution of angel investors is widespread, according to new research from the Angel Capital Association, The Wharton School at the University of Pennsylvania, and the John Huston Fund for Angel Professionalism at Rev1 Ventures. Stemming from a survey of 1,659 angels, the largest such project to date, The American Angel paints a demographic portrait of that subset of the investment community in the United States. Nearly two-thirds of the angel investors surveyed by the group were located outside of New York, Boston, and the Bay Area. On average, coastal angel investors made smaller investments than those from other regions – $32,000 compared to $37,000 per investment. Texans, on average, made the largest angel investments at $44,000.

The National Science Foundation (NSF) released a new federal funding opportunity (FFO) for the Innovation Corps-National Innovation Network Teams program (I-Corps Teams). I-Corps team awards provide mentoring and additional funding to promising, NSF-funded researchers at institutions of higher education to accelerate innovation, attract subsequent third-party funding, and increase the commercialization of scientific discoveries. NSF intends to commit $12.75 million to support up to 255 I-Corps teams and proposals are accepted on a continuing basis.

NSF intends to hold a webinar to answer questions about the I-Corps Teams program. Details will be posted on the I-Corps website as they become available.

Last week in honor of Veteran’s Day, the U.S. Department of Agriculture, states, universities, and various nonprofits announced new efforts that are intended to help U.S. veterans succeed as entrepreneurs and launch careers in 21^st century STEM-driven fields. From tax credits in Massachusetts to online training in data analytics, efforts will focus on providing veterans with the necessary training, education, tools, capital, and other resources to create a better future for those veterans, their families, and communities across the country.

At the federal level, the U.S. Secretary of Agriculture Sonny Perdue announced the launch of a new website and resources to support veterans interested in opportunities in agriculture, agribusiness, and in rural America. The efforts will focus on the “three Es” – employment, education, and entrepreneurship – by pulling together programs from the department’s 17 agencies that will assist veterans along career and entrepreneurial pathways.

State spending for the Oregon innovation economy during the 2017-2019 biennium in the Oregon Business Development Department received a sharp increase, thanks in part to nearly $14 million of funding for the new Oregon Manufacturing Innovation Center (OMIC).  According to the Business Oregon website, “OMIC brings together as founding partners The Boeing Company, the broader regional metals manufacturing industry and employers, Portland Community College (PCC), Portland State University (PSU), Oregon State University (OSU), Oregon Institute of Technology (OIT)” for collaborative applied research and to address advanced technical training needs in the industry. Funding is distributed among a number of sources in the state budget:

Median deal size from angel groups fell by 5.5 percent from $127,000 in 2016 to $120,000 in the first six months of 2017 (H1’17), according to the 2017 ARI HALO Report First-Half from Pitchbook and the Angel Resource Institute. In addition to a decline in median deal size, early-stage pre-money valuations also decreased from $3.6 million in 2016 to $3.5 million in H1’17. While there was only a slight drop from 2016, the median pre-money valuation dropped by nearly 24 percent from the record high median pre-money valuation of $4.6 million in 2015.

The report includes data from 1,465 deals and over $1 billion invested in total rounds including co-investors. ARI, however, excluded deals with first-time investment rounds greater than $5 million to avoid skewing the data.

Grant programs administered by the U.S. Economic Development Administration (EDA) under the Public Works and Economic Development Act (PWEDA) increasingly support projects to help distressed regions across the country to become more competitive in a science and technology-intensive global economy. The examples below of projects receiving federal PWEDA funds in just the past two months may help inspire similar innovation initiatives in other parts of the country.

Cluster Feasibility Studies

Two recent reports examining the state of the states’ budgets and resources have some warnings for those involved in the budgeting process. A study by Moody’s Analytics reveals that many states are not prepared for the next recession while a study from the Volcker Alliance examines how states are making their spending decisions, with the hope that clear budgets will help inform the public.