Support for small companies has long been a pillar of federal and state policies meant to drive business formation, job creation, and the resulting spillover economic benefits for regional economies. The debate remains, however, about whether smaller or larger businesses play an outsized role in the nation’s economy.

Private sector investment into research and development (R&D) is a critical component of innovation, new product development, and regional economic vitality. As a substantial performer and funder of R&D in the United States, the strength of private industry’s R&D activity in a region can provide an indication of the region’s capacity for developing and bringing innovative technologies to market.

An SSTI analysis of business R&D employment data from the National Science Foundation’s recently updated 2019 Business Enterprise R&D (BERD) Survey finds that nationally in 2019, R&D employment at private businesses accounted for 8.6 percent of total employment. The states where the business R&D employment shares of total employment were the greatest in 2019 were Washington (20.9 percent); Massachusetts (19.3 percent); California (17.7 percent); New Hampshire (14.7 percent); and Michigan (12.7 percent).

Business research and development (R&D) intensity — private sector R&D expenditures as a percentage of total gross domestic product (GDP) — is an indicator of how interested businesses are in creating new products and processes. This edition of Useful Stats expands upon previous SSTI analyses of business R&D and applies the more standardized measure of “R&D intensity” to provide additional context on the private sector’s activities within states.

This edition of SSTI’s Useful Stats begins a series of articles examining recently updated Gross Domestic Product (GDP) data for 2020, identifying changes in GDP per capita during the first year of the economic impacts from the Covid-19 pandemic, and setting the stage for future articles diving deeper into the impacts of the pandemic on local economies.

As total Higher Education Research & Development (HERD) expenditures increased nationally and in most states from 2019 to 2020 despite the COVID-19 pandemic and global recession, HERD intensity also increased. HERD intensity is an indicator of the relative importance of R&D spending by colleges and universities to regional economies, and is calculated as HERD expenditures as a percentage of total gross domestic product (GDP).

While the overall U.S. venture capital market has drawn headlines for record-breaking total investment levels in 2021, the story has been far different for smaller deals. Data currently suggests a decline in deals under $1 million, and only modest growth for deals under $5 million. The final data may tell a slightly different story,[1] but the level of activity at the smaller end of the spectrum is clearly quite different than what is driving market coverage.

This edition of Useful Stats presents an SSTI analysis for the number of SBIR/STTR awards from 2011 to 2020 (the most recently available complete data), examining which agencies make the most awards in each state and how each state’s composition of awards compares to the national profile.

Between 2017 and 2021, 23 percent of proposals submitted to NASA for Phase I SBIR/STTR funding were approved (1,887 awards from 8,360 proposals). The acceptance rate for Phase II proposals, which are generally encouraged or discouraged based on Phase I outcomes, was 58 percent (791 of 1,359 approved).

In fiscal year 2021, the nationwide success rate of applicants for National Institutes of Health (NIH) Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) Phase I awards decreased slightly from FY 2020. This continued a downward trend over recent years. The success rate for NIH SBIR/STTR Phase I was nearly 13 percent (647 of 5,132 approved) in FY 2021, a decrease from nearly 14 percent (636 of 4,684 approved) in FY 2020 and from nearly 16 percent for all proposals submitted over the past decade.

Over the past four fiscal years, there have been 1,977 initial public offerings (IPOs) completed by companies headquartered in the U.S., according to PitchBook, yielding more than $549 billion in capital invested. These companies are located in 45 states, D.C., and Puerto Rico. Almost 20% of those companies are no longer publicly held, having been returned to private ownership, been acquired, merged or gone out of business.

This edition of Useful Stats takes a high-level look at the United States’ change in Real Gross Domestic Product (RGDP, which is GDP adjusted for inflation) on a per capita basis for each of its counties, boroughs, parishes, etc. (hereon referred to as “counties”). Looking at RGDP per capita allows for an inflation adjusted, population standardized metric for comparing counties over time.

Most R&D expenditures are concentrated across just a handful of states, according to recent NSF data on how research and development is funded in the United States.  In 2011, nearly two-thirds of all research and development expenditures came from private sources. In the wake of the nation’s federal stimulus package that saw an upswing in government spending on research and development, most states are beginning to rely more on innovation that stems from R&D conducted and paid for by private sources rather than the federal government.

Federal investment in research and development appears to be falling far short of the ambitious goals set by Presidents Bush and Obama in the early part of the century. Though federal R&D spending grew by 22.5 percent from fiscal years 2002 to 2012, commitments declined substantially in 2011-12, following the spike in funding through the Recovery Act. By 2012, R&D expenditures were at their lowest levels since 2004.

Federal funds for science and engineering at American universities grew steadily from 2001 to 2008, jumped in 2009 and 2010 due to the American Reinvestment and Recovery Act (ARRA), and more or less returned to its original trajectory in 2011, according to survey data from the National Science Foundation (NSF). Federal S&E funding in most states followed a similar pattern. A few states, including Minnesota and Delaware, managed to sustain their level of federal S&E support after the Recovery Act funds ceased.

With the hopes of better understanding which policy environments encourage and support innovation, new research  from the C.D. Howe Institute, a Canadian public policy thinktank, examines which sectors and provinces drive Canadian patent intensity.

U.S. venture capital investment hit $48.3 billion in 2014, its highest level since 2000, according to data from the National Venture Capital Association (NVCA) and PricewaterhouseCoopers (PwC). Investments jumped 61 percent over the previous year in terms of dollars. Deals were up as well, but by a more modest 4 percent to 4,356 deals in 2014, indicating the growth of deal size and the presence of a number of “megadeals.” NVCA also noted that investments were dispersed throughout the country, with 160 U.S. metros receiving some venture capital.

Following the massive uptick in venture capital activity last year, California has solidified its place as the epicenter of investment activity, according to data from PricewaterhouseCoopers (PwC) and the National Venture Capital Association (NVCA). Since the beginnings of the industry, Silicon Valley has dominated the venture capital landscape. Due to California's large overall population and economy, however, Massachusetts has outperformed the state in terms of per capita investment and venture dollars as a share of state GDP.

California-based companies received about 56 percent of all U.S. venture capital dollars in 2014, the state's highest share of venture activity since the dot com boom of the early 2000s. Over the past 15 years, investment activity has steadily become more concentrated in California and a few other states. In 2009, about 67 percent of all deals and 74 percent of venture capital dollars flowed to the top five states. By 2014, those states' share of venture dollars grew to 80 percent, according to NVCA/Pricewaterhouse Coopers data.

In FY 2013, the federal government obligated $25.9 billion for science and engineering research and development (S&E R&D) at colleges and universities, a decrease of $1.6 billion from FY 2012 (5.7 percent). Eight states (California, New York, Maryland, Pennsylvania, Massachusetts, Texas, North Carolina, and Illinois) each received more than $1 billion in funding during FY 2013, though each state also experienced a decrease from their FY 2012 total.

A total of $30.8 billion for science and engineering (S&E) was given by federal agencies to 1,073 academic institutions across the United States in FY 2012, according to new research from the National Science Foundation. Although these obligations are 2 percent less than they were the year before, commitments to science and engineering increased more than 9 percent from 2007 to 2012. During that same time, per capita commitments to academic S&E decreased 7 percent.

In fall 2013, 21 federally funded research and development centers (FFRDCs) in the U.S. employed 2,613 postdoctoral researchers in 2012, down 6.4 percent from the previous year, according to a recently released InfoBrief from the National Science Foundation. Postdocs, who help government agencies meet their research and analytic needs and in turn receive relevant training and experience, are more than 75 percent male and more than 50 percent international, according to the brief.