SSTI Digest

Earlier today, the Economic Development Administration announced the 2022 notice of funding opportunity (NOFO) for the Build to Scale program. State and local governments, nonprofits, institutions of higher education, National Labs and others are eligible to compete for a total of $45 million in funds to support new and expanded initiatives that support regional commercialization, entrepreneurship and capital formation efforts.

EDA has slightly restructured the program for this year’s competition, with two funding streams and two levels of awards for each.

• The “Venture Challenge,” which focuses on innovation and entrepreneurship, includes a “Build” tier for demonstration projects up to $750,000 and a “Scale” tier for proven initiatives at up to $2 million.
• The “Capital Challenge,” which focuses on forming and supporting innovation finance, includes a “Form” tier up to $300,000 and a “Deploy” tier of up to $750,000.

EDA has posted the formal NOFO and explanatory materials on its website. Applications are due June 13.

Earlier this week, legislation was introduced in the Senate that would rescind $2.3 billion from the State Small Business Credit Initiative. The purpose of the action would be to source funds for an additional $10 billion for new COVID expenses; the Senate proposal opts to reduce selected unspent funds from American Rescue Plan Act and CARES Act programs. The cut to SSBCI is targeted at states’ potential third tranches of program funds, as well as 40 percent of the overall SSBCI technical assistance funding.

The language about SSBCI would produce the following effects:

Two recent reports feature evidence demonstrating the importance of early-stage entrepreneurship for the United States economy. The first report from the Kauffman Foundation released four indicators used to track early-stage entrepreneurial development. The second report from the Economic Innovation Group studies how dynamic the U.S. economy is and recommends ways to increase the economy's dynamism, many of which center around startups and new small businesses. Both reports highlight new ways to measure early-stage entrepreneurship and offer ways to expand these businesses.

Despite the shutdown of many business and government activities during the first year of the COVID-19 pandemic, the total number of SBIR/STTR awards made to innovation-focused companies continued to increase over record-breaking 2019 levels, rising 3.7 percent. This edition of SSTI’s Useful Stats examines the total number of SBIR/STTR awards and the top awarding agency by state in 2020.

The total number of SBIR/STTR awards made nationally reached 7,305 in 2020. As seen in the first interactive map below, the states with the greatest total number of SBIR/STTR awards in 2020 were California (1,489), Massachusetts (731), Virginia (452), Texas (380), and Maryland (362). All states captured at least two awards in 2020; the only states seeing less than ten awards were Mississippi (5), Alaska (2), North Dakota (2), and Puerto Rico (2).

This week, the House science committee met to discuss the Small Business Innovation Research (SBIR) Program and Small Business Technology Transfer (STTR) program. The hearing comes as SBIR/STTR is both about to celebrate its 40th anniversary and is set to expire in less than six months without reauthorizing legislation. Members and witnesses focused the conversation on SBIR/STTR’s role in generating economic growth and on recommendations for improvements.

In her opening remarks, Rep. Haley Stevens, chairwoman of the Subcommittee on Research and Technology, highlighted the role of SBIR and STTR programs in taking discoveries from a lab and transforming them into a product. Focusing on her home state, Stevens noted that the SBIR program awarded over $348 million for research and development to small businesses in Michigan. She shared her co-sponsorship of H.R. 4033, The Small Business Innovation Research and Small Business Technology Transfer Improvements Act of 2021, which aims to encourage more manufacturer participation and reporting for the programs.

The witness panel included:

The U.S. Department of Commerce’s National Institute of Standards and Technology (NIST) recently awarded nearly $1.2 million to four institutions through its Advanced Manufacturing Technology Roadmap Program (MfgTech). Awards through this program will fund projects in industries and technologies such as microelectronics and biotechnology for up to 18 months to address national priorities for improving competitiveness and vaccine manufacturing capabilities. 

The Regents of the University of California in Los Angeles, the Semiconductor Research Corporation in Durham, North Carolina, and the Commonwealth Center for Advanced Manufacturing in Disputanta, Virginia, each received $300,000 while Purdue University in West Lafayette, Indiana, received $296,155. NIST reported the following projects are being funded:

The White House has released its proposed budget for FY 2023. While funding levels will ultimately be determined by Congress (see SSTI’s previous commentary putting the proposal in context), the president’s budget identifies administration priorities that can indicate future agency actions — for example, last year’s proposal for the National Science Foundation (NSF) included the Technology, Innovation and Partnerships (TIP) Directorate, and the agency moved forward with the directorate despite receiving no formal authorization or funding level. The FY 2023 budget proposal contains many helpful priorities for regional innovation economies.

Administration budget summary highlights

The portion of the budget that arguably provides the clearest insight to the administration’s priorities is the budget narrative that conveys the priorities to Congress. Initiatives identified here are receiving the greatest emphasis in the White House’s communications.

Although no Funding Opportunity Announcement (FOA) has yet been issued, interested parties have submitted responses to the U.S. Department of Energy’s (DOE) Request for Information from stakeholders on issues related to the Regional Clean Hydrogen Hub FOA strategy. The Bipartisan Infrastructure Law included $8 billion for four regional clean hydrogen hubs that will be designed to create jobs to expand the use of clean hydrogen in the industrial sector and beyond.

While the information collected through the RFI will not be published and is not a binding commitment to develop or pursue the project or ideas discussed, partnerships are already being announced in anticipation of the funding. Among states that have announced interest are:

A recent study found that merit aid awards increased four-year bachelor’s degree completion rates for students – especially among students that were unlikely to pursue the four-year program in the absence of financial aid. A team of researchers from the National Bureau of Economic Research assessed the marginal effects that merit aid from the Susan Thompson Buffett Foundation (STBF) has on students attending public colleges in Nebraska. The research also showed that the projected lifetime earnings of the students outweighed the costs of funding merit aid for low-income, people of color, urban, and first-generation college students in Nebraska.

Continuing a streak lasting at least 10 years, the federal government was again the top funder of Higher Education R&D (HERD) in 2020. However, new SSTI analysis shows that the federal share of HERD funding has continued to decline nationally and in most states over the 10-year period from 2011 to 2020. This edition of SSTI’s Useful Stats provides an analysis of HERD funders by state in 2020, and an examination of 10-year trends for the period from 2011 to 2020 in HERD funding by source. 

A team of researchers recently assessed the relationship between angel investing and venture capital (VC) for startups. Although they found some variation in the performance of companies based on their share of angel and VC financing, there was no clear indication that angel investing provides any unique value for a startup.

The research addressed three questions. First, the research analyzed if there are notable differences in the added value to startups when they utilize angel versus VC financing. Second, the research assessed if angel financing and VC financing are substitutes or complements to each other. The last question that the research sought to answer was if the order of angel and VC financing across deal rounds for a startup, referred to as the financing sequence, is related to the probability of a successful exit for the startup.

Workforce development efforts in Maryland gained national attention this month as Gov. Larry Hogan announced the launch of a new initiative to formally eliminate the four-year college degree requirement from thousands of state jobs, substituting relevant experience, training, and/or community college education for the degree.

“Through these efforts we are launching today, we are ensuring that qualified, non-degree candidates are regularly being considered for these career-changing opportunities,” the governor said in a press release accompanying the announcement. “This is exactly the kind of bold, bipartisan solution we need to continue leading the nation by giving even more Marylanders the opportunities they need to be successful.”