SSTI Digest

Enacted FY16 funding is used for comparisons unless otherwise noted.
The FY17 budget request for the Department of Defense (DOD) would provide $523.9 billion (0.4 percent increase) in discretionary base funding. The budget is intended to make strategic investments in areas identified as priorities, such as developing new operational concepts, adjusting to strategic changes, pioneering and dominating technology frontiers, reforming the defense enterprise, building the force of the future, and providing resources to the U.S. military force and their families.

Enacted FY16 funding levels are used for comparisons unless otherwise noted.

Estimated FY16 funding levels are used for comparisons unless otherwise noted.
The president’s FY17 budget proposal would provide $24.6 billion (4.1 percent decrease) in discretionary funds for the Department of Agriculture (USDA). The administration is proposing a $700 million investment in the Agriculture and Food Research Initiative (AFRI), USDA’s competitive, peer-reviewed research program for fundamental and applied sciences in agriculture. USDA will also contribute to the cross-agency Mission Innovation clean energy initiative and the administration’s clean water innovation strategy.

Research, Education and Economics
USDA’s Research, Education and Economics (REE) agencies would receive $2.9 billion in discretionary funding (1.3 percent decrease). Overall funding however, would increase with several major investments through mandatory funding, totaling $535 million.

Earlier this week, President Obama released his final budget proposal, outlining $4.1 trillion in spending for federal agencies. Each year, SSTI reviews the president’s federal budget request for programs and spending related to entrepreneurship, regional innovation, economic development, manufacturing, research and development, technology commercialization, and STEM education and workforce training.

This week, U.S. Commerce Secretary Penny Pritzker announced the 25 recipients of the Economic Development Administration’s 2015 Regional Innovation Strategies grants. These awards support innovation and capacity-building in regions around the country through two grant programs: the i6 Challenge and the Seed Fund Support Grants competition. The Regional Innovation Program remains a key priority for SSTI.  Seventeen i6 Challenge recipients will receive a total of $8 million to create and expand proof-of-concept and commercialization centers, while eight Seed Fund Support Grant winners will share a total of $2 million to support cluster-based seed capital funds. The full list of awardees is available at: https://www.commerce.gov/news/press-releases/2016/02/us-secretary-commerce-penny-pritzker-announces-awardees-10-million.

Over the last few months, a number of universities across the country have launched pre-accelerator programs – a new trend that has emerged in university-led efforts to support entrepreneurial growth among faculty and students. This week, the Digest examines this growing trend and attempts to provide insight into two important questions about pre-accelerators:

Technology companies raised $225 million globally on rewards-based crowdfunding sites in 2015, according to a new report from the UK-based Crowdfunding Centre. In State of the Crowdfunding Nation, the Crowdfunding Centre reported that reward-based crowdfunding sites helped raise over $1.5 billion worldwide between the calendar years of 2014 and 2015. Global rewards-based crowdfunding campaigns raised $823.5 in 2015 million (a 20 percent increase over 2014) from nearly 10.2 million backers. In the United States, approximately 20,000 fully funded campaigns raised over $590 million in the United States in 2015. When broken down by category, tech companies attracted the most funding from backers and on average raised over $51,000 per campaign. In addition to tech companies, video games companies raised over $47 million in 2015 using reward-based crowdfunding sites. Download the report (purchase required)

Last year, the venture capital investment hit a 15-year high, with total dollars topping every year since 2000. A slow fourth quarter brought the remarkable trajectory of the year back down to earth, but with a total of $11.3 billion invested, 2015 became the second highest year on record since PricewaterhouseCoopers (PwC) and the National Venture Capital Association (NVCA) began the Moneytree Report in 1995. Much of this growth was due to larger deals, and, in fact, the total number of deals was down from the previous year. California continues to dominate the market, with California firms receiving 57 percent of all investment. Washington surpassed Texas to join the top five states in terms of venture dollars, and Boston surpassed San Jose to join the top three metropolitan regions.

The White House recently released a preview of its plans to build a stronger pipeline between K-12 education and high-skill employment. The President’s Computer Science for All Initiative would boost investment in states, districts and teacher training to improve computer science (CS) education for K-12 students. The three-year, $4 billion plan would also call on multiple federal agencies to focus investments on improving CS skills. The president also proposed nearly $6 billion in new funding to help young people acquire skills and access to high-quality job opportunities. Much of this support would come through the Workforce Innovation and Opportunity Act youth formula program, with $2 billion in additional support though programs for at-risk students, $200 million for apprenticeship programs and $20 million for the Summer Jobs and Beyond program.

In the February 3 Federal Digest, the U.S. Small Business Administration (SBA) issued proposed rules affecting Impact Small Business Investment Corporations (SBICs) and is accepting comments. In addition to codifying the existing, temporary guidelines, the proposal would add new investment certifications, change the expedited processing benefit for reduced fees and replace the branding penalty for non-compliant SBICs with the threat of imposed default.

As long-term trends continue to impact the U.S. economy and its recovery from the Great Recession, more must be done to develop diversely skilled and adaptable workers, according to a new report by the U.S. Council on Competitiveness. In addition to describing the radical changes facing the landscape for America’s workforce, WORK: Thriving in a Turbulent, Technological and Transformed Global Economy provides numerous recommendations on how to best respond to these challenges. Ultimately, the WORK report views itself as a roadmap to align education and training to 21st century skills needs, effectively leverage intellectual capital, and supply businesses with the talent needed to compete globally.

At his State of the State address last week, Gov. Bruce Rauner announced that Illinois’ principal economic development organization, the Illinois Department of Commerce & Economic Opportunity, as well as some of the state’s business leaders will collaborate to organize a newly formed private, nonprofit organization exclusively focused on increasing Illinois’ competitiveness for job creation and investment. A key recommendation of the governor's bipartisan transition committee last year, the Illinois Business and Economic Development Corporation (ILBEDC) is modeled from other successful state and local economic development organizations and will focus on sales, marketing and customer service.