SSTI Digest

The rise of advanced manufacturing has opened the door to a resurgence of New England's manufacturing economy, according to a new report from The New England Council and Deloitte Consulting LLC. In Advanced to Advantageous: The Case for New England's Manufacturing Revolution, the authors suggest that the existing network of universities, private manufacturers and government partners give the region a competitive advantage in advanced prototyping, additive manufacturing and the Internet of Things. Leveraging that advantage, however, will require cross-state cooperation to build comprehensive educational pathways, rebrand the local industry and secure an Institute of Manufacturing Innovation. Read the report...

The Small Business Administration (SBA) announced that it will commit $4 million to the second round of the Growth Accelerator Fund Competition. Launched in 2014, the competition makes awards of $50,000 each to help fund operating budgets for accelerators and other entrepreneurial ecosystem models in parts of the country where there are fewer conventional sources of access to capital (e.g., venture capital and angel capital investors). For this round of funding, applications are encouraged from manufacturing accelerator models. Applications are due June 1. Read the announcement…

Although the percentage of college graduates with science and engineering (S&E) or S&E-related majors has increased, the proportion of college graduates employed in an S&E occupation has remained relatively unchanged at 10 percent since 1993, according to a recently released InfoBrief from the National Science Foundation’s National Center for Engineering Statistics. In the brief, authors John Finnamore and Beethika Khan use the most recent data from the National Survey of College Graduates (NSCG) to identify the distinguishing characteristics of the United States’ college-educated population.

In order to build a prosperous, globally competitive economy in Louisiana, state universities must take on a greater role as hubs of regional innovation, according to a report from the Public Affairs Research (PAR) Council of Louisiana. The report includes 46 recommendations to transform the state's economy by revamping existing innovation programs, and boosting university research. PAR's strategic plan is based on a review of innovation policies in other states, particularly Georgia and the work of the Georgia Research Alliance.

PAR focuses on how existing state support for Louisiana R&D is spread too thin among the state's programs and allocated in inefficient ways. In particular, the Board of Regents Support Fund has been designed in such a way that funding is inconsistent and has not been targeted toward industries and operations that could have the greatest economic impact.

Highlights from the recommendations include:

Pennsylvania’s economic development strategy should focus on building businesses rather than poaching, according to a new report from the Keystone Research Center (KRC) – All Pennsylvanians Prospering Together (APP): A Pennsylvania Economic Development Strategy for the Long Term. KRC’s Executive Director Stephen Herzenberg contends, “Pennsylvania needs to renew its historic bipartisan commitment to economic development,” and “create a national model of an economic development strategy in which all the people contribute to a joint effort to expand the economic pie and benefit from the growth of that pie.” In the report, KRC identifies four core principles to guide the state’s efforts:

Only 17 companies had initial public offerings (IPOs) in the first quarter of 2015, the lowest number since the beginning of 2013, according to data from Thomson Reuters and the National Venture Capital Association (NVCA). This is a significant drop from the 37 IPO exits in the first quarter of 2014. Mergers and acquisitions (M&A) were also down, with 86 exits, compared to 115 in Q1 2014. While 2014 was an unusually active time for venture-backed exits, the current data appears to be a return to recession-era levels of deals and disclosed values.

In their release, NVCA noted that a large number of venture-backed companies already have publicly filed for IPOs and there is no reason for concern yet about the future health of the venture market. However, the lull in activity could indicate that the burst of exits in all four quarters of 2014 was an anomaly.

Companies in the biotechnology and medical sectors dominated IPO activity. Of the 17 companies that achieve IPOs, 13 were in these sectors.

Working groups at The Association of Public and Land-grant Universities (APLU) and The Association of American Universities (AAU), two membership organizations of higher education institutions, have released statements on the role of universities in managing intellectual property and technology transfer alongside their core missions and interest in maximizing public benefit. The two sets of recommendations differ slightly, yet both groups emphasize the importance of clearly defining and communicating the principles that guide their work and ensuring that discoveries made on their campuses can be developed for the benefit of the consumer.

Last week, the Securities and Exchange Commission adopted final rules to update and expand Regulation A, an existing exemption from registration for smaller issuers of securities.  The new Regulation A+ will enable smaller companies to offer and sell up to $50 million of securities in a 12-month period, subject to eligibility, disclosure and reporting requirements. Under Regulation A+, there are two tiers of offerings that companies may make that include:

• Tier 1 – for offerings of securities of up to $20 million in a 12-month period with no more than $6 million in offers by selling security-holders that are affiliates of the issuer; and,
• Tier 2 – for offerings of securities of up to $50 million in a 12-month period with no more than $15 million in offers by selling security-holders that are affiliates of the issuer.

Both tiers are subject to certain basic securities requirements while tier 2 offerings are also subject to additional disclosure and ongoing reporting requirements.

U.S. Secretary of Commerce Penny Pritzker announced the first 26 recipients of the 2014 Regional Innovation Strategies program grants. Managed by the Economic Development Administration, the Regional Innovation Strategies (RIS) program is designed to advance innovation and capacity-building activities in regions across the country through three different types of grants:

• i6 Challenge grants;
• Cluster Grants for Seed Capital Funds; and,
• Science and Research Park Development Grants (read more in the Sept 4, 2014 issue of the Digest).

Sec. Pritzker announced $10 million in total funding will be made to the 17 i6 Challenge grant awardees and nine organizations for Cluster Grants for Seed Capital Funds. The winners of the third component of RIS – Science and Research Park Development Grants – will be announced in the coming weeks. Read the announcement…

Because of recent changes in the methodologies used by the U.S. Bureau of Economic Analysis (BEA), research and development is now recognized as investment in statistics on U.S. gross domestic product (GDP).  As a result, from 1929 to 2012, the average annual growth rate of GDP is 0.1 percentage point higher than in the previously published estimates. This revised GDP quantity slightly decreases the R&D-to-GDP ratio often times used as a proxy for a nation’s R&D intensity, according to a fact sheet by researchers at the National Science Foundation.

For many years, the BEA treated private sector research and development expenses (R&D) as an intermediate cost of production and removed these expenses when they calculated the value-adding activities that define GDP. At the same time, government R&D expenditures were included in the consumption expenditures component of GDP, but not separately identified.  The new BEA treatment, which considers R&D as investment in all sectors of the economy, estimates the value of R&D, not its current costs.  

Europe is catching up to the United States in areas such as idea creation and risk capital but lacks the means to retain its talent, according to a recent report from authors at the Imperial College Business School in London. In ICT innovation in Europe: Productivity gains, startup growth and retention,  the authors note that the fragmentation of the European digital market and the scarcity of skills and venture capital create growth constraints for the region’s smaller firms and negatively impact Europe’s ability to retain high-growth ICT firms.  

Over the past few months, SSTI has followed proposals issued by governors in their budget requests, State of the State Addresses, Inaugural Speeches and other events. Now that many state legislatures have begun approving budgets, the Digest will check on the status of these proposals, and examine the state of technology-based economic development funding in the states. This week, we review actions in Arkansas, Mississippi and New York.