SSTI Digest

This week’s 2025 off-year elections resulted in two new governors, solidified legislative Democratic majorities in New Jersey and Virginia, and the approval of significant ballot measures in California and Texas. While the gubernatorial campaigns centered on affordability and tapped into an electorate’s concerns about state and national economies, they also kick off speculation on the 2026 midterms.  

Disaster relief is not directly within the purview of technology-based economic development organizations. Nonetheless, disasters frequently impact the partners and constituents of TBED organizations and exacerbate the social determinants of economic growth. Therefore, teams of people from TBED organizations frequently choose to step up and step out of their economic development sphere and engage in societal recovery from disasters.

College is often the time when students discover which career path they want to pursue, through coursework, internships, and hands-on experiences. New research examining state minimum wage increases, however, shows how budget pressures can disrupt access to these formative opportunities and ultimately affect who enters STEM careers.

Just 19% of the approximately 25,000 census tracts potentially eligible for Opportunity Zone (OZ) designation are “More likely to attract OZ investment, with larger impact,” per the Urban Institute’s new OZ Designation Tool. The majority (68%) of potentially eligible tracts were found to be “Less likely to attract OZ investment,” while the remaining 13% were determined likely to attract capital regardless of OZ designation. Breaking the data down further, this article showcases state-level aggregations of the percentage of potentially eligible tracts across each categorization to paint a picture of which states stand to benefit the most from the OZ program based on the count of tracts likely to receive investments.

As the first group of Tech Hub awardees approaches the end of their first year of implementation funding, hubs are gathering their consortia to share progress and chart next steps. As part of SSTI’s work with the Technology-based Economic Development (TBED) Community of Practice, program director Casey Nemecek attended the annual consortium meetings for two hubs in October: the Sustainable Polymers Tech Hub and the Nevada Tech Hub.

The U.S. Department of the Treasury (Treasury) recently issued three new FAQs for the State Small Business Credit Initiative 2.0 (SSBCI) program. These FAQs clarify and reiterate the timeline for the end of the Capital Program, and the deadlines by which participating jurisdictions must request disbursement of any remaining allocated Capital Program funds.

Note: The research careers for this year’s triple winners support the underlying arguments for public involvement in technology-based economic development. Well-designed and sustained public-private regional innovation initiatives—the work of SSTI and its member organizations—can make a positive difference for local competitiveness.

As states strive to strengthen their science, technology, innovation, and entrepreneurship programs during an uncertain federal funding period, many are developing strategic plans that provide a roadmap for doing so. SSTI has recently seen examples of plans from West Virginia, Arizona, and California.

The Q3 2025 investment data is in, and trends of fewer deals and more dollars continue. With CrunchBase pointing to a record share of funding going to rounds larger than $100 million, SSTI continues to review the deals in PitchBook under that size to uncover trends masked by the high end of the market to uncover trends masked by the high end of the market.

With federal R&D investments unlikely to keep pace with inflation or international competition based on the administration’s budget request, cuts to existing research grants, and Congress’s inability to pass a budget, business R&D investments become more critical for sustaining the competitiveness of regional innovation economies. Trends evident in new data released by the National Science Foundation point to areas of potential concern or need for state TBED policy attention and potential adjustment: business R&D is growing even more concentrated geographically, and for many areas of the country business investments likely are not growing at a sufficient pace to maintain the regions’ innovation capacity. 

In 2023, just four states comprised 54% of the nation’s domestic business R&D expenditures, a sharp increase from being less than 45% in 2014, SSTI analysis of new Business Enterprise Research and Development (BERD) survey data reveals. The consolidation of BERD expenditures in the top states may lead one to think that less R&D is occurring outside of the largest states, but this is not the case; 24 jurisdictions doubled BERD expenditures in the past decade, with all but one state increasing total expenditures. Adjusted for inflation, however, reveals a more modest nine jurisdictions doubled their business R&D activities, while all but five increased. These trends and more are explored in this edition of Useful Stats.

In a Digest article published May 8, 2025, SSTI outlined how the proposed White House 2026 discretionary budget proposal, which aims to cut non-defense discretionary funding by 22.6%, could impact TBED programs. In that article, we laid out some specifics of how the cuts were anticipated to affect key U.S. research-funding bodies. In a recent report from The Information Technology & Innovation Foundation (ITIF), Meghan Ostertag, compares four scenarios to estimate a variety of potential losses to the U.S. from 2026 to 2035 that would result from reduced federal R&D spending levels, with the second through fourth scenarios presented as benchmarks compared to the first scenario. The scenarios are described below. 

Long concentrated geographically, venture capital also is growing more concentrated in a small number of larger deals, as SSTI has reported in recent Digest issues. In fact, deals under $100 million—not a small figure in itself—have fallen by 71% according to SSTI’s analysis of PitchBook data. Even more troubling is evidence showing deals under $100 million are moving to later-stage investment and away from early-stage companies. The trend, SSTI believes, should be of concern for nonprofit venture development organizations as well as TBED policy makers and regional stakeholders working to keep their local economies competitive through innovation-driven entrepreneurship. This shift in private capital market behavior may have negative impacts on company survival rates, downstream economic growth opportunities, and the long-term competitiveness of U.S. industry.