SSTI Digest

Two senior leaders of state programs designed to help commercialize new intellectual property joined a TBED CoP webinar last week to discuss how they determine whether those initiatives are successful. John Hardin, executive director of the Office of Science, Technology & Innovation at the NC Department of Commerce, described the One NC Small Business Program and the evaluation process the office performs each year. They use surveys of award recipients and econometric analysis to demonstrate the program’s effectiveness. Vinit Nijhawan, managing director, MassVentures, discussed the START program targeted at deep tech companies and Catalyst grants, which support clean tech startup companies. Both programs have been shown to assist companies with commercialization activities. More than 100 attendees participated in the webinar, which generated many practical questions (and thoughtful answers) about how methods used in North Carolina and Massachusetts may be transferable to other states. The presentation and recording are available here.

High-growth firms are often conflated with all other firms. Unfortunately, this tendency makes it extremely difficult to differentiate those with a higher likelihood of significantly impacting the economy and innovation. While reports like the Global Entrepreneurship Monitor (GEM) have found increasing rates of entrepreneurship over the past decade, barring a drop at the onset of the pandemic, new U.S. Census Bureau data on high-growth firms reveals the opposite for the number of high-growth firms, with steady, significant decreases in the number and share of high-growth firms across the nation.

While some college computer engineering profs may be advising their students not to worry about artificial intelligence derailing their salary projections and long-term career options, it would appear businesses are getting on with deploying the latest AI advances as quickly as possible to see what improvements might be made for the firms’ productivity rates and bottom lines. A recently released working paper from Germany’s Fraunhofer Institute for Systems and Innovation Research (Fraunhofer ISI) reports on an early analysis of AI adoption in the innovation research process. The authors’ preliminary conclusion?  “AI is currently used more for competitive differentiation, but in 15 years it can become the standard as a so-called basic technology and thus a factor critical to competition.”

This article, including the downloadable data sheet, visuals, and analysis, was updated on July 10th, 2024, to include new data from Treasury’s SSBCI Capital Program Summaries.

This article was edited on April 4th, 2024, to correct for an error in, and add to, the original data. Refer to the note at the bottom of this article for more detail.

Information on the geographic distribution of innovation and entrepreneurship is not easy to tease out of many federal statistical data sets, leading regional policy often to be based on trends in all business starts or life span and size—ignoring the fact that some firms have greater impact on regional economic growth than others. The U.S. Census Bureau is well aware of the challenge and, earlier this week, released an experimental data set that allows for an examination of state-level long-term trends in the change in high-growth firms and establishments across the nation.

The data set, titled “The Business Dynamics Statistics of High Growth Firms,” with the acronym of BDS-HG, covers key economic data on high-growth firms with metrics such as the number of firms and establishments, job creation and destruction, employment, and growth rates. It extends the statistics published by the Business Dynamics Statistics (BDS) program with a focus on high-growth companies.

As part of the CHIPS & Science Act, Congress created the Tech Hubs program to help more regions become leaders in key technology sectors through substantial investments into regional consortia. It authorized spending $10 billion on the program from FY2023 through FY2027. But appropriations for the program are not keeping up with the vision that was embraced by strong bipartisan majorities in both chambers. For FY2023, Congress appropriated $500 million for the program, and it followed that up with only $41 million for FY2024. The need for the program has not changed. If you believe the program should receive funding in line with the vision Congress laid out in the CHIPS & Science Act, we invite you to join us and let Congress know by signing a letter that will strongly voice support for the program. Read the full letter and sign on today.

Earlier this week, the White House announced a series of actions being undertaken by federal agencies to focus on women’s health.  Both NIH and ARPA-H announced new funding opportunities centered around women’s health, while the White House and other agencies took action without indicating any funding associated with that funding.

ARPA-H’s Sprint for Women’s Health, launched in February 2024, commits $100 million to transformative research and development in women's health. ARPA-H is soliciting ideas for novel, groundbreaking research and development to address women's health and opportunities to accelerate and scale tools, products, and platforms.

Many federal funding programs have the potential to support technology-based economic development (TBED) initiatives, even when technology and innovation aren’t their explicit focus. This is the case with the Appalachian Regional Commission (ARC). SSTI recently sat down with Christy Johnson, ARC program analyst, to learn how three of ARC’s funding opportunities can support TBED activities in the Appalachian region.

The Office of Advanced Manufacturing at the National Institute of Standards and Technology (NIST), an agency of the U.S. Department of Commerce, intends to announce an open competition for a new Manufacturing USA institute. The expected competition, according to the notice of intent (NOI), will seek to establish a Manufacturing USA institute “focused on the use of artificial intelligence to improve resilience of U.S. manufacturing.”

The U.S. Government intends to enter into a five-year agreement with the winning institute, with the possibility of a non-competitive extension for up to an additional two years and provide federal funding of up to $70 million. This funding is to be matched or exceeded by funding from private industry and other non-federal sources, with a minimum 1:1 cost share.

Editor’s note (April 4, 2024): This article has been updated to reflect relevant programs included in the second of two FY 2024 omnibus appropriations bills.

Many tech-based economic development (TBED) programs are seeing level funding in FY 2024, with some of the most high-profile programs experiencing decreases. Politically, this situation is less about disapproval than broader budgetary circumstances, as Congress agreed that spending would revert to FY 2022 levels. Practically, however, this means even the continued programs will not be keeping pace with increased demand or costs. The good news for organizations seeking federal support is that, despite the topline setback, there are multiple programs that can fund regional TBED initiatives.

A note about supplemental funding

From the Securities and Exchange Commission (SEC) to the Department of the Treasury, the White House budget, and Congress, various stakeholders across the federal government have proposed multiple regulations in the past several weeks that would affect the venture capital industry in general and, in some cases, venture development organizations. We offer a brief roundup of these issues.

House passes bill to facilitate private investment

The House passed a bill last week that would modify multiple regulations affecting venture capital and crowdfunding rules, as well as several company assistance activities that are common for venture development organizations.

A summary of changes in the law, as amended, includes the following:

The White House published its FY 2025 budget this week. As Congress will ultimately produce its preferred budget, the president’s release like those of previous Administrations serves as more of a messaging document outlining a vision and priorities. For tech-based economic development (TBED), the message is that Congress has provided ample tools but needs to continue to fund them.

Among the federal TBED programs included in the (188-page) budget summary perhaps the biggest ask among these programs is EDA’s Tech Hubs, which the administration recommends at $4 billion in mandatory funding. The program was authorized at $10 billion, but Congress so far has appropriated just $500 million.