SSTI Digest

In an effort designed to stimulate economic growth and workforce development in Ohio and New York communities, KeyBank Foundation announced a $24 million grant awarded to JumpStart, Inc. The grant represents the foundation’s single largest philanthropic commitment to date. Ray Leach, CEO of JumpStart said in a prepared statement that the grant “will dramatically increase the impact of entrepreneurs and small businesses on neighborhoods and communities." Leach went on to say that the grant will provide capital for more startup and scaling companies, and will increase the participation of minorities and women in the growth of those companies.

The "KeyBank Business Boost & Build Program, powered by JumpStart" is based on a five-pillar initiative that includes accelerating the growth of small businesses and micro-enterprises, the majority of which are to women or minority owned, as well as providing support for the tech economy through workforce training as well as technical assistance.

With a focus on improving health, driving economic growth, and expanding the country’s research capacity, the National Institutes of Health (NIH) within the U.S. Department of Health and Human Services is the largest public funder of biomedical research in the world. Because of NIH’s central role in supporting science, technology, and innovation, a better understanding of the agency’s footprint may be helpful to the technology-based economic development practitioner community. This edition of Useful Stats utilizes data from NIH’s Research Portfolio Online Reporting Tool (RePORT) and covers each year from 2007 to 2016. The data does not include projects funded by the American Recovery and Reinvestment Act of 2009.

The U.S. Department of Treasury released its final annual report for the State Small Business Credit Initiative (SSBCI), which provided funding to states for lending and investment programs. “Venture capital” programs, often structured for pre-seed (13 percent of funds), seed (27 percent) or early stage (45 percent) investments, attracted $4.2 billion in immediate private financing against $327 million in federal dollars. This leverage of $12.76 of private investment for every public dollar was further improved by more than $2 billion in subsequent private financing to date. Perhaps more significant than the program’s ability to attract private investors has been its success in generating investments outside of the nation’s most concentrated markets.

Some states are better positioned for success in the data economy than others, but all have opportunities for growth, according to a recent report from the Center for Data Innovation. To determine The Best States for Data Innovation authors Daniel Castro, Josh New, and John Wu use 25 indicators across three dimensions: data availability, digital infrastructure, and human and business resources. The authors suggest that all states are capable of improving their capacity for data-driven innovation. To do so, they recommend that state policymakers: make their data accessible and transparent; develop infrastructure items such as broadband Internet and smart connectivity; and, support the use of data to make existing industries more competitive.

As we enter the second half of 2017, the U.S. venture capital (VC) market is driven by several noticeable trends. After peaking in 2015, the current VC market continues its slow decline in the number of deals, but Q2 of 2017 saw a spike in mega-rounds – rounds of $100 million or more. These mega-rounds are accompanied by strong fundraising efforts including a record-setting mega fund launch.

While the number of VC deals in the U.S. continued to decline, the total dollars invested increased and nearly matched Q2 of 2016 due to several mega-rounds. In Q2, the number of deals declined by nearly 4.5 percent from 1,206 in Q1 2017 to 1,152 in Q2 according to PricewaterhouseCoopers (PwC)/CB Insights’ Moneytree Report for Q2 2017.  However, the total dollars invested increased from $14.4 billion in Q1, 2017 to $18.4 billion in Q2 – an increase of nearly 28 percent.

Over the past week, the U.S. Senate Committee on Appropriations has passed bills to fund commerce and science, transportation, energy and water and agriculture. Regional Innovation Strategies would be funded at $21 million, an increase of $4 million over FY 2017. Other innovation proposals received mixed support, as the Senate cut $3.2 billion from commerce, justice and science funding and another $400 million from agriculture.

Innovation funding levels

The following lists provide an overview of FY 2018 (compared to FY 2017 | House FY 2018) science and innovation funding levels on a per-subcommittee basis.

Agriculture (bill)

From Main Street businesses to technology startups, research has shown the rate of new business formation in the United States has plummeted since the 1970s. In the past year, the Digest has frequently cited research from the Economic Innovation Group (EIG), the Kauffman Foundation, and the Federal Reserve on the impacts of declining dynamism on America’s economic outlook. A recent letter by economists at the Federal Reserve Bank of San Francisco suggests that an often-overlooked aspect of business formation is the availability of labor, and that policies that seek to improve and deepen the labor pool may help increase new business growth.

The number of minority-owned employer firms in the United States inched closer to the million-mark in 2015 after growing by 4.9 percent from the previous year, according to recently published data from the U.S. Census Bureau’s Annual Survey of Entrepreneurs. The 996,248 minority-owned employer firms in the U.S. employed roughly 8.0 million people in 2015 (6.2 percent increase from 2014) and had payrolls of $254.0 billion (8.0 percent increase from 2014). Given population sizes, not surprisingly, California had the most minority-owned firms of all states (approximately 228,148 firms – 22.9 percent of the country’s total) while the New York City metropolitan area led among regions (approximately 127.736 firms – 12.8 percent of the country’s total).

In its latest survey of U.S. public perception of manufacturing, Deloitte and The Manufacturing Institute found that the majority of Americans surveyed (roughly 8 in 10) view manufacturing as vital to maintaining economic prosperity in the country, but less than 5 in 10 find those jobs interesting or secure, and less than 3 in 10 would encourage their children to pursue a manufacturing career. However, respondents also said they believe future manufacturing jobs will require high-tech skills, be clean, safe and more innovative. That opportunity to build on the positive perceptions already present and dispelling the myths surrounding manufacturing jobs are explored in A look ahead; How modern manufacturers can create positive perceptions with the US public. The authors note that with such findings, “manufacturers could benefit from uplifting current perceptions and tapping into the future vision in order to help attract talent, both young and old, to the industry.”

In Blockchain and Economic Development: Hype vs. Reality, experts from the Center for Global Development address the economic development potential of blockchain technology including its potential and existing hurdles to its growth. After explaining blockchain technology’s nuts and bolts, the authors highlight technology areas that would benefit from blockchain technology and the benefits it could offer with wider adoption, including facilitating faster and cheaper payments; providing a secure digital infrastructure for verifying identity; securing property rights; and, making transactions more secure and transparent. 

On July 11, without Gov. Tom Wolf’s signature, Pennsylvania’s budget (HB 218) for FY 2018 became law. State lawmakers, however, are still in the midst of a stalemate over how to pay for a nearly $32 billion budget. While Wolf and other Democratic leaders prefer increasing revenue through tax reform, Republican leaders are focusing on other alternatives including a bond effort and expansions of gambling to address the over $2 billion shortfall.

The Department of Community and Economic Development (DCED) will receive $16.3 million (a decrease of 9.9 percent from FY 2017) in state appropriations for general government operations  to serve as the state’s primary economic development organization. To support the state’s innovation economy, the budget would appropriate funding to several tech-based economic initiatives in FY 2018 including:

Funding for TBED programs took a hit under Massachusetts Gov. Charles Baker, who vetoed millions of dollars in programs that the legislature had approved in the FY 2018 state budget. Michigan programs fared better with funding maintained to diversify the state’s economy and funding for entrepreneurship ecosystems getting a boost. And in Virginia, after a messy budget process addressing an addendum to its biennial budget, many innovation programs saw increases.

Massachusetts

Gov. Charles Baker signed the FY 2018 budget passed by the Massachusetts legislature, but not before vetoing millions of dollars in programs that would support technology-based economic development.