SSTI Digest

Following reforms to the Community Development Financial Institution (CDFI) application process, four of the five venture capital funds that applied for CDFI financial assistance funding in FY 2017 were awarded. In trying to increase the impact of CDFIs by supporting their growth, reach and performance, the Fund implemented reforms to the application, making it easier for CDFIs to demonstrate their impact with an award regardless of what type of financial institution they are — they can be banks, credit unions, loan funds, microloan funds or venture capital providers. The four VC funds that received awards were Fund Good Jobs, Kentucky Highlands Investment Corporation, Launch New York, Inc. (which is also newly certified this year), and National Community Investment Fund. In total, the last round saw more awardees overall than ever before in the history of the CDFI Fund.

The innovation economy is a featured component of both newly elected governors’ agendas, with each showing support for TBED-related initiatives in their platforms. In New Jersey, Governor-elect Phil Murphy (D) has pledged to reclaim the state’s innovation economy while in Virginia Governor-elect Ralph Northam (D) proposed a new workforce development plan focused on “the new-collar jobs of the 21st century.”

While traditional economic development within the states has shifted to an economy more reliant on innovation, many policy discussions remain mired in acknowledging just some of the more recognized tech-based regions, says the Information Technology and Innovation Foundation (ITIF) in its latest report. However, as economic indicators reveal that all states’ economies incorporate some degree of innovation as a driver of their economy, the 2017 State New Economy Index measures states’ capacities to function in this new economy.

The index builds on seven prior editions and uses 25 indicators across five different categories to measure how well each state is positioned to succeed in an economy driven by technological innovation. The economic categories are:

The third annual National Apprenticeship week will be celebrated next week, with more than 700 activities planned across the country to showcase programs, facilities and apprentices. For those still interested in participating through an open house, skills competition, or other event, there is still time to register your event.

Later this month, National Entrepreneurs’ Day will be celebrated on Nov. 21. Earlier, the White House declared all of November entrepreneurship month with a statement focused on entrepreneurs’ need for regulatory relief and IP protections and expanding opportunities for women. Global Entrepreneurship Week will also be celebrated the week of Nov. 13-19, encompassing events and competitions in 160 countries and supported by a network of of more than 15,000 partner organizations.

The United States has no global equal when it comes to scientific output, producing more publications than China, Germany, and the United Kingdom combined, according to the recently updated Nature Index. The index, a product of the scientific journal Nature, measures output of high-quality research in the natural sciences at both the national and state levels. However, the most recent update finds that U.S. contributions have declined in both absolute and relative terms since 2012, and if current trends remain, China could become the world’s top contributor by 2027.

As the image below notes, California, Massachusetts, New York, and Maryland contribute the most to the United States’ score in the index. In the past five years, reduced contributions from states like these have made the biggest dents in the country’s overall score, according to Nature. From 2012 to 2016, the majority of states saw a decline in their contribution to the Nature Index. 

Since no single measure of performance can completely capture the important role that research universities play as drivers of economic growth in the innovation economy, a different approach is required, according to new research from BioCrossroads and TEConomy Partners. Using Indiana as a case study, The Importance of Research Universities highlights the multitude of ways that research universities contribute to prosperity, including economic development, enhanced capabilities of human capital, knowledge expansion and innovation, and societal well-being and quality of life. In Indiana, the report’s authors find that the direct economic impacts of the state’s three main research universities’ (Indiana University, Purdue University and the University of Notre Dame) research expenditures are more than four times that of the famous Indianapolis Motor Speedway.

Around the country, free or greatly reduced tuition programs at institutions of higher education – oftentimes called “promise scholarships” – are being increasingly utilized as a way to support education and workforce development. With a focus on those programs occurring at the community level, a new interactive database from the Upjohn Institute sheds light on more than 85 examples of place-based promise programs, including their history, their scope, and their impacts. Last month, SSTI examined recent legislation around promise scholarships in seven states, including Tennessee, whose program provides two years tuition-free at state community or technical colleges.

This week we continue our series on state legislation pertaining to the innovation economy that has been enacted this year around the country. This third installment of the States of Innovation 2017 series deals with innovation and entrepreneurship-focused tax credits.

Over the past year, state lawmakers in approximately have looked to grow innovation and entrepreneurship in their respective states by introducing and expanding tax credit efforts intended to increase the availability of startup capital, support R&D activities, facilitate business growth, and spur job creation. The two most common types of tax credits proposed to support innovation at the state level are angel tax credit programs and R&D tax credit programs. In addition to these two areas, states also proposed other tax credits intended to support job creation and business growth.

Connecticut and Wisconsin both ended their protracted budget negotiations with the governors signing budgets in late September and late October. Faced with budget constraints and uncertainty about the spending plan, Connecticut’s funding for economic and community development is decreasing along with funding for the state’s MEP center and Manufacturing Supply Chain program, with no general funds provided for them in the second year of the biennium. Wisconsin appears to be maintaining its status quo on TBED-related initiatives and has increased funding to universities that increase enrollments for “high-demand” degree programs, making $5 million available on a competitive basis.

Through the third quarter of 2017, the venture capital market saw an average deal that invested more money into larger and older companies than in prior years. With fewer exits and deals occurring throughout the industry — as well as a historic $90+ billion in uninvested capital (aka “dry powder”) — a reasonable expectation might be that funds would have a difficult time raising capital. In fact, fund raising, while likely to finish behind 2016, is set for another straight year with greater than $30 billion raised, and this money is going into more funds with an overall increasing fund size.

The Science and Technology Directorate (S&T) within the Department of Homeland Security is looking for partners to help develop scientific advancements and technological innovations that solve homeland security challenges. The directorate is open to a broad range of potential partners, from technology developers and innovators creating ideas in their garages, to small businesses and large corporationsand has issued a guide detailing the ways partners can work with the agency.Industry Guide: R&D Investment Priorities and Business Opportunities 2017 includes a table providing an overview of the R&D investment outlook for the types of technologies and capabilities DHS anticipates will address current homeland security needs.

The directorate plans to invest portions of the R&D and innovation funds during fiscal years 2018-20121 in the following technical categories:

The U.S. Small Business Administration (SBA) has announced the 20 recipients of the fourth Growth Accelerator Fund competition. The winners, which represent a broad set of industries and a diversified range of demographic groups, will each receive a cash prize of $50,000 to address gaps in regional entrepreneurial ecosystems as part of the award. Awardees will be required to submit quarterly reports for a year, and must report or provide their metrics, including jobs created, funds raised, startups launched and corporate sponsors obtained. 

The 2017 recipients of the Growth Accelerator Fund competition are: