SSTI Digest

Two of the Small Business Administration's (SBA) proposed changes to the federal SBIR/STTR programs have caught the attention of small business advocates and groups warning of loopholes in the language that they say could negatively impact U.S. companies and affect eligibility.

The proposed rule amends the size eligibility requirements by addressing ownership, control and affiliation issues raised in the reauthorization act passed by Congress last year (see the Dec. 21, 2011 issue of the Digest). Specifically, advocates of SBIR/STTR are concerned that foreign-owned companies would be provided a mechanism to compete for awards under SBA's proposed size standard rule and that venture capitalists, hedge funds and private equity firms would be given more opportunity to participate in the program than what was intended in the reauthorization act. Another proposed change calls for determining an applicant's size and eligibility both at the time of application and the time of award.

In 2011, European startups and other projects raised approximately €1.5 billion ($1.8 billion) through crowdfunding, according to a report from Nesta, an innovation focused foundation located in the United Kingdom. In The Venture Crowd, Nesta researchers found that a significant portion of those funds raised were by reward-based crowdfunding, where participants receive non-financial rewards in exchange for donating to a project. However, other crowdfunding models are growing rapidly including donation crowdfunding, crowdfunded lending and equity crowdfunding.

The report focuses on the recently adopted equity crowdfunding model, for which individual investors receive small stakes in a privately owned startup in return for investment and its rapid growth across Europe (approximately €9.9 million in equity was raised in 2011). Five online portals are the major facilitators of these investments via equity crowdfunding by connecting entrepreneurs with potential investors and seek funding from the crowd. Another three web portals are intended to launch by the end of this year.

The White House recently released Capturing Domestic Competitive Advantage in Advanced Manufacturing, a blueprint intended to serve as a national framework for the sustainable resurgence in advanced manufacturing in the United States. The report was written by the Advanced Manufacturing Partnership (AMP) steering committee, a national public-private partnership formed by the Obama administration in 2011 to help increase public and private investments in advanced manufacturing and create high-paying manufacturing jobs. The report outlines a set of 16 recommendations around three pillars — enabling innovation, securing the talent pipeline and improving the business climate. For a sustainable resurgence in advanced manufacturing, the report's authors contend that the government and industry must work together with a sustained focus, aligned interests and coordinated actions to adopt the report's proposed recommendations. Recommendations include:

Financial Industry Regulatory Authority (FINRA), the largest independent regulator of securities firms doing business in the United States, invites public comment on the appropriate scope of FINRA rules that should apply to firms engaging in equity crowdfunding activities, either as funding portals or as brokers. Under crowdfunding exemptions of the JOBS Act, intermediaries performing crowdfunding on behalf of entrepenuers and startups must register with the Securities and Exchange Commission (SEC) as a funding portal or broker. They also are mandated to register with an applicable self-regulatory organization (SRO) such as FINRA.

While taxes and regulations comprise the basic framework for state competitiveness, ample opportunity exists for other strategic interventions that can create a vibrant, entrepreneurial state economy, according to a pair of reports released this week by the National Governors Association (NGA). The first report examines six factors that drive state competitiveness and the kinds of policies states use to encourage economic growth. A second report lays out 12 recommendations for state leaders, with examples from successful initiatives around the country. The reports are the product of NGA's year-long initiative to shed light on the key elements that drive economic growth and to share best practices for state leaders involved in economic development.

Pennsylvania Gov. Tom Corbett has signed off on a series of bills intended to give state-owned universities more flexibility in working with regional businesses and creating new advanced degree programs. The bills are collectively known as the Higher Education Modernization Act and apply specifically to the Pennsylvania State System of Higher Education (PASSHE), which is the nation's tenth largest state university system, incorporating Pennsylvania's 14 state-owned institutions. Under the new legislation, PASSHE universities would be allowed to create new applied doctoral programs to meet the needs of Pennsylvania businesses. Also, faculty, staff and students would be allowed to enter into agreements with businesses, enabling them to participate in entrepreneurial activities, internships and mentoring programs. Read the announcement...

With veteran unemployment rates exceeding the already-high national unemployment rate, organizations and agencies around the country are seeking ways to plug veterans into the innovation economy. These efforts capitalize on the leadership skills and technical knowledge of military veterans by helping them become entrepreneurs. Operation Boots to Business is a new nationwide initiative, backed by the U.S. Small Business Administration (SBA), that will provide entrepreneurship training courses at military bases to help veterans transition into business ownership. Arizona State University's Venture Catalyst will offer a version of its Rapid Startup School program for veterans as part of a more extensive effort to help veterans become a part of the innovation community.

Although the economic ramifications of the recent global recession still remain, countries across the world have remained committed to supporting their innovation economies. Several initiatives across the globe highlight these efforts including the European Union (EU) announcing that it will commit significant funding to three innovation-focused programs and an economic development strategy in British Columbia, Canada, to support the province's technology sector and spur job creation. A recent report also found that a positive link exists between economic development, technology transfer, increased rates of innovation and the strengthening of IPRs in both developed and developing countries.

To continue the momentum surrounding economic gardening, innovation and entrepreneurship efforts that began last year, lawmakers provided level funding and added funds for arts and cultural programs and community-focused workforce initiatives in the FY13 budget. Michigan's higher education institutions will receive a 3 percent increase in funding, which is tied to performance metrics that include R&D expenditures and degree granting in critical skills areas.

A new report from the Ohio Board of Regents proposes a statewide commercialization ecosystem to create jobs, promote economic growth and increase wealth in the state. According to the report, recent research suggesting that, when compared to other states, Ohio lags behind in the commercialization of technology. In The Condition of Higher Education in Ohio: Advancing Ohio's Innovation Economy, there are several recommendations to improve the state's technology transfer pipeline to turn academic research into market-ready products and services including:

Some of the brightest, most innovative ideas are made in the tech-based economic development field. Every day, practitioners are discovering new ways to support companies and entrepreneurs who are building the next economy. SSTI recognizes these achievements through the award for Most Promising TBED Initiative. Last year's winner, NorTech wowed the judges with their systematic approach to growing industry clusters. Submit your accomplishments by July 17 and become the next winner of this prestigious award. Proposals should address a specific need in a community geared toward improving overall economic conditions. This is a great opportunity to capture national recognition and secure support for your program. More information is available at: http://www.sstiawards.org/.

A new online flexible degree program backed by Gov. Scott Walker and the University of Wisconsin (UW) System aims to significantly raise the number of college graduates by allowing adults with some college experience to work at their own pace, earn credit for what they already know, and pay reduced rates through partnerships with employers. In order to appeal to the nearly 700,000 Wisconsin adults with some postsecondary education credit, the UW Flexible Degree provides a more personalized, self-paced college experience and a shortened time to degree completion. Courses are offered in smaller segments and are based on competency so those who have knowledge in certain areas from past schooling or work experience can move faster. Wisconsin officials say no other state institution offers a program like this, although a few states such as Indiana, Texas and Washington have added Western Governors University (WGU) satellites to their state programs. Similarly, most WGU students have some college credit when they enroll, but they pay a flat fee of $6,000 a year for as many courses as they can complete.