SSTI Digest

Entrepreneurial growth continues to rebound and is spreading to different industries and geographies, according to the 2017 Kauffman Index of Growth Entrepreneurship, yet the report also states that entrepreneurial growth “continues to be a rare phenomenon. Most firms are not growth firms.” The five metropolitan areas with the highest levels of entrepreneurship were, in order: Washington, D.C.; Austin; Columbus, Ohio; Nashville; and Atlanta, according to the report. The five largest states with the highest entrepreneurial growth activity were Virginia, Georgia, Maryland, Massachusetts and Texas. The smallest population states with the highest entrepreneurial growth were Utah, Hawaii, North Dakota, Nevada and New Hampshire.

The index measures the growth of entrepreneurial businesses in terms of revenue and employment, relying on the rate of startup growth, share of scale ups and high-growth company density to provide a measure of business growth that can be tracked over time.

Would you expect a community of 100,000 people to have less than one-half as much R&D activity as a community with 250,000 residents? Such a simple question cannot be considered without more information. You may ask which two communities are being compared. Would your answer be different if you learned the smaller community was a college town with a research-intensive university as its core economic engine, while the second community was largely a distribution hub and didn’t have a similar R&D asset?*  Yet politicians, pundits, media and even policymakers often benchmark cities, regions and states on incomplete or irrelevant  information.

Support for the recently introduced Startup Act continues to build across the country. The legislation, profiled earlier in the Digest, would accelerate the commercialization of university research, improve the regulatory processes at the federal, state and local levels, and modernize a critical Economic Development Administration (EDA) program to promote innovation and spur economic growth. The legislation also creates both entrepreneur and STEM visas for highly-educated individuals so they can remain in the U.S. legally to help fuel economic growth. Senators Jerry Moran (R-Kan.) and Mark Warner (D-Va.), along with Senators Roy Blunt (R-Mo.) and Amy Klobuchar (D-Minn.) have received support from SSTI and a number of other groups, including the Ewing Marion Kauffman Foundation, National Venture Capital Association (NVCA), the Kansas City Chamber of Commerce, and Engine.

In a report of FY 2011-2016 data, the National Science Foundation finds that rate of female participants in its currently-funded Engineering Research Centers (ERCs) may be higher than for overall engineering programs. Specifically, participation among female faculty is better by about seven percent, by about 15 percent among female undergraduates, and a more modest 1-2 percent increase among doctorate students. This seems to be a significant gain in a field in which male Ph.D.-holders outnumber women 6:1 (per NSF data for 2015).

The findings for female participation come as policy and program leaders at NSF and the National Institutes of Health are expressing concern about how their institutions are affecting a field with long-recognized gender disparities.

One of the hottest topics at SSTI’s 2017 Annual Conference centered on helping communities build the investment system necessary for local entrepreneurs and startups to thrive. Led by several panels of experts, the conversations led to sharing many great ideas, thoughtful solutions, and tough realities. This week we continue our series of stories on how TBED organizations can help communities ensure a vibrant investment system. This second installment focuses on effective strategies and ideas for building your organization’s investment team. In our first installment, we discussed the necessity of creating a strong deal flow to stimulate the growth and success of the system. In the next installment of this series, SSTI will cover topics such as the hard necessity of saying no and developing a fund that matches your region.

Through its  2017 Assistance to Coal Communities (ACC 2017) initiative, the Economic Development Administration (EDA) announced $30 million in funding to assist locally-driven efforts to communities and regions severely impacted by the declining use of coal through activities and programs that support economic diversification, job creation, capital investment, workforce development, and re-employment opportunities. In total, EDA will support 35 projects in 16 states. Among the 2017 ACC awardees, several SSTI members received funding including:

Last week, Google announced the launch of several efforts as part of its Grow with Google initiative – a five-year $1-billion plus plan to invest in nonprofits that specialize in training workers and helping new businesses get off the ground. Through this new plan, Google indicated it will work to close the world’s education and opportunity gaps. During the Grow with Google launch event in Pittsburgh, Google’s CEO Sundar Pichai announced several new efforts including: 

Initial public offerings (IPOs) can alleviate financing constraints and help support important activities such as operations, R&D, and expansion. Despite these perceived benefits, new research finds that the transition to public equity – and the financial windfalls that follow – prompt many of a company’s early innovators to depart the firm, which has impacts on both innovation internally and at other firms.  The departures of founders and early employees from post-exit startups presents challenges and opportunities for venture development and entrepreneurial support organizations.

This week we continue our series on state legislation pertaining to the innovation economy that has been enacted this year around the country. This second installment of the States of Innovation 2017 series deals with free tuition.

A number of states took action to increase the education and skills of their workforce by implementing free or greatly reduced tuition programs at either community colleges or state colleges. The move to increase access to higher education while not new, took up increased urgency this year. With Arkansas, Florida, Kentucky, New York, North Carolina, Rhode Island and Tennessee all taking action this past year, Maine and North Carolina were among others considering other options but as of today’s publication not moving the proposals forward.

Two recent reports provide good news and bad news regarding innovation in America’s rural areas. Only one in six individuals living in rural areas was self-employed in 2016 — down from one in four in 1988, according to a new issue brief from the Small Business Administration (SBA). This represents a decline of nearly 20 percent over that span of time. Meanwhile, a recent report from the Department of Agriculture’s Economic Research Service (USDA ERS) found that between 2010 and 2014 rural businesses in some nonfarm tradable industries are as likely to be substantive innovators as their urban peers. This is especially true across manufacturing industries with nearly identical rates of substantive innovation between both rural and urban companies.

One of the hottest topics at SSTI’s 2017 Annual Conference centered on helping communities build the investment system necessary for local entrepreneurs and startups to thrive.  Led by several panels of experts, the conversations around this topic led to many great ideas, thoughtful solutions, and tough realities. This week we begin a series of stories on how tech-based economic development organizations can help communities ensure a vibrant investment system. This first installment focuses on the necessity of creating a strong deal flow to stimulate the growth and success of the system. In future installments of this series, SSTI will cover topics such as why it is necessary to say no to a deal and building an investment team.

“It doesn’t matter how much money a fund has or how well it is managed, having access to good deals creates a successful fund.” – Conference speaker

The Federal Reserve System has announced a new initiative intended to invest in America’s workforce and improve outcomes for both employers and workers. To introduce the Investing in America’s Workforce initiative, the System released a new report analyzing information from nearly 1,000 leaders in the field to identify the current state of the field, important challenges, and strategies for improving items such as human capital, access to jobs, and innovative funding for workforce development programs.