SSTI Digest

This week we begin a series on state legislation pertaining to the innovation economy that has been enacted this year around the country. This first installment of the States of Innovation 2017 series deals with clean and renewable energy.

States have passed more than 230 bills related to clean and renewable energy to date in 2017, according to the National Conference of State Legislatures (NCSL). Broadly, the legislation can be divided between policies directly supporting energy innovation — through R&D expenditures or targeted economic development initiatives — and policies implementing structural changes —through the regulatory environment, incentives for production facilities, renewable portfolio standards and other requirements. This breadth of activity clearly demonstrates that clean and renewable energy is of high interest throughout the country, but will be challenging to innovators and entrepreneurs planning development over time or across states.

Seventeen venture development organizations (VDOs) from across the country shared in the success from a baker’s dozen exits posted in Pitchbook during the third quarter of 2017.  Information tech companies lead the pack, but seven come from other sectors of the economy including life sciences, vehicle manufacturing, materials, polymers, robotics, and chemicals – demonstrating the important role VDOs may play in broadening innovation’s contributions to regional economies.

Snapshots of all 13, along with two more late Q2 deals, follow in SSTI’s third article looking at the economic development impacts of nonprofit and publicly-backed VDOs. The first two stories are available here (Q1:17) and here (Q2:17).

First observed in 2011, Manufacturing (MFG) Day started as a grassroots movement intended to draw the public’s attention to manufacturing and its career opportunities and has become an annual celebration meant to inspire the next generation of manufacturers. Since 2012, both public and industry participation in MFG Day activities have grown, as has its overall scope and goals. This year, an effort is being made to reach out to millennials, many of whom have an outdated image of manufacturing, to connect with a younger workforce vital to filling the openings in an increasingly digital manufacturing industry. This year, close to 2,500 national events are scheduled for MFG Day on Oct. 6 and throughout the month. U.S. manufacturers will open their facilities to their communities, invite interested students, prospective employees, and local stakeholders and lawmakers to explore the industry through programs, workshops, open houses and speakers telling their stories in a collective effort to address, educate and promote manufacturing as a viable and rewarding career choice. 

Creative, digital, design and engineering occupations all have bright outlooks, along with architectural and green occupations, according to a recent report from Nesta, a global innovation foundation. Nesta took into account five major trends in mapping out how employment is likely to change in the future, and the implications for skills.

Nesta used a comprehensive mixed-methods approach in The Future of Skills; Employment in 2030, including consideration of diverse and interacting sources of structural change, which are expected to impact future skills needs. In analyzing both the U.S. and United Kingdom, the foundation assembled detailed information about occupations, which were debated and discussed in workshops. That information was used to train a machine learning classifier to generate predictions for all occupations and estimate the skills that would most likely experience growth or decline.

Senators Jerry Moran (R-Kan.) and Mark Warner (D-Va.) along with Senators Roy Blunt (R-Mo.) and Amy Klobuchar (D-Minn.)  introduced the Startup Act today – legislation that would help regions throughout the country address critical gaps between R&D and economic prosperity. SSTI has worked with the offices on sections of the bill that reauthorize and expand the Regional Innovation Strategies program and would implement a new commercialization grants program. SSTI supports the Startup Act (S. 1877) and calls upon other senators to cosponsor this bill and for the House to take up the legislation.

In a press statement accompanying the reintroduction, Moran explained the urgency of the issues to be tackled by the varied elements of the bill.

Do state policies focused on growing opportunity through science, technology, innovation and entrepreneurship work? Which approach has more success: encouraging technology commercialization and entrepreneurship or building and filling incubators and research parks?  To try to answer these questions, new empirical research looks at the effectiveness of sustained state investments in technology-based economic development activities on high-technology job growth.

In the most recent round of Regional Innovation Strategies (RIS) funding, 42 organizations from 28 states were awarded $17 million to support the creation and expansion of tech transformation networks (i6 Challenge) and early-stage seed capital funds (the Seed Fund Support). In total, EDA’s awards leveraged over $22 million in private, state and local matching funds. Eight of those winners are members of SSTI and we heard from several of them on what this award will mean for their organization.  SSTI’s Innovation Advocacy Council has been instrumental in supporting the program, working with members of Congress to ensure its continued success.

In 2015, businesses spent 4.4 percent more on R&D performed in the U.S. than they did in 2014, reaching $356 billion total, the NSF reports. Of the total R&D expenditures in 2015, companies spent $22 billion (6 percent) on basic research, $56 billion (16 percent) on applied research, and $278 billion (78 percent) on development.

Funding from companies' own sources was $297 billion in 2015, a 5 percent increase from the $283 billion spent in 2014. Funding from other sources was $59 billion in 2015 and $58 billion in 2014. Companies in the manufacturing industries accounted for the lion’s share ($236 billion of 66 percent) of domestic R&D, with most of that (83 percent) coming from the companies’ own funds. That spending was also concentrated in a small number of states. Businesses in California accounted for 32 percent of the $297 billion, followed by Massachusetts (6 percent of the national total), Washington (6 percent), Michigan (5 percent), Texas (5 percent), New York (4 percent), New Jersey (4 percent), Illinois (4 percent), and Pennsylvania (3 percent).

Two states taking a fresh look at their economies convened task forces that recently released reports detailing efforts the states can make to improve their state’s economic futures. In Missouri, Gov. Eric Greitens asked an innovation task force to take stock of the state’s current standing and offer options to help businesses and innovators succeed. The resulting summary report offers more than 30 options that the state could pursue in growing its economy. In West Virginia, WVU President Gordon Gee, Marshall University President Jerome Gilbert and WV Secretary of Commerce Woody Thrasher released findings from the West Virginia Forward report that identifies possible short- and long-term solutions for the economic challenges the state faces and will result in a memorandum of understanding among the three to help implement the report’s findings.

While more Americans live in communities that are “prosperous” compared to “distressed,” large gaps persist across geographies, demographics, and educational attainment, according to a new report from the Economic Innovation Group (EIG). The 2017 Distressed Community Index, an update to last year’s release, is comprised of seven related metrics and categorizes communities into one of five tiers based on performance: prosperous, comfortable, mid-tier, at risk, and distressed. To “reconnect” distressed communities and foster economic inclusion, the report’s authors recommend activities to support grassroots economic growth and reversing policies (e.g., restrictive zoning, occupational licensing requirements, and discriminatory housing policies) and other actions that have helped “tip the scales” in favor of the prosperous.

Columbus-based State Auto Labs, the innovation arm of the State Automobile Mutual Insurance Company, is collaborating with venture development organization Rev1 Ventures on a $25 million corporate venture fund to support innovation and entrepreneurship in the insurance industry. Through the partnership, Rev1 Ventures and State Auto Labs will help connect InsurTech and FinTech startups with resources such as capital, technologists, and industry experts. The fund, Rev1’s largest to date, will focus on four key investment areas: technology related to the internet of things; the role of machine learning and artificial intelligence in supporting data driven decision-making; distribution technologies; and, products and solutions that focus on the changing needs of insurance customers. 

SSTI’s 2017 Annual Conference held last week in Washington, D.C., helped build bridges to the future through its gathering of more than 250 participants working to create a better future through science, technology, innovation and entrepreneurship. Congressman David Cicilline addressed the gathering and stressed the importance of the Regional Innovation Strategies program in his keynote address. Thought leaders revealed insights on the current political climate, social and demographic trends across the nation, and the importance of building an inclusive effort to create sustainable and meaningful change.

Attendees were able to mingle with Hill staff during the National Innovation Reception and outstanding programs from across the country were recognized in the Creating a Better Future Awards program. The premier gathering of peers return home with new ideas and solutions developed from the numerous sessions focused on challenges and solutions to a variety of issues including capital formation, workforce and talent development, scaling start-up companies and more.