SSTI Digest

The circular economy, a phrase meant to redefine economic growth beyond the current “take-make-waste” extractive industrial model, is gaining attention around the world as a way to produce more positive environmental and social benefits. Over the past few months, three cities have announced efforts to promote circular economy startups. In New York City, a contest will offer a $500,000 prize to the best idea and business plan that seeks to repurpose the city’s recyclables and manufacture a product to sell to the local market. The City of Phoenix and Arizona State University announced four companies will participate in an incubator affiliated with the Resource Innovation and Solutions Network (RISN). Last fall, public sector partners and the university-based Austin Technology Incubator (ATI) collaborated to launch a new Circular Economy Incubator in the region.

U.S. companies spent 18 percent of their research and development dollars outside of the United States in 2013, according to data recently released by the NSF. The $73 billion in foreign R&D is concentrated in the information industry, pharmaceuticals, semiconductors, and automobiles and parts. Those four industries accounted for 52 percent of all foreign R&D performance by U.S. companies, while those same industries were less concentrated in the U.S., representing 45 percent of the total domestic R&D performance. The United Kingdom and Germany are the two countries receiving the largest amount of foreign R&D performance by U.S. companies, with Europe as a whole representing nearly half of the total. The Asia and Pacific region accounted for another 31 percent, with India and China being the two largest locations in the region for foreign R&D performance. Data are from the Business R&D and Innovation Survey (BRDIS), cosponsored by the National Center for Science and Engineering Statistics within the National Science Foundation and by the Census Bureau.

A recently released report finds evidence that Canada’s tech sector – when properly defined – plays an important role in the nation’s economy. In The State of Canada’s Tech Sector, authors Creig Lamb and Matthew Seddon develop a definition of the tech sector based on those industries employing an oversized share of technology occupations. Ultimately, they suggest that the sector is responsible for $117 billion (88.9 billion USD) in economic output, roughly on par with finance and insurance and construction as a percent of total GDP (7.1 percent).

Around the world, accelerator programs continue to multiply, prompting the need for continued research on what they are, how they operate, and how they can be evaluated. The Global Accelerator Report 2015, recently released by Gust and Fundacity, highlights the global development of the accelerator industry and includes details on how accelerators are funded and insights into the industry’s future. The report, which examines accelerator programs in five regions, includes several ways to characterize the global industry, including profit structure, monetization sources, corporate partnerships, and exits. A separate analysis, as featured in CB Insights, suggests the importance of follow-on funding as a measure to evaluate accelerator programs.

When Canadian Prime Minister Justin Trudeau released his administration’s proposed 2016 budget in late March, SSTI covered the significant funds it would allocate for science, research, and technology-based economic development, as well as the country’s plan for a national innovation agenda. To guide this forthcoming agenda, the Canadian government recently announced six priority areas of action, as well as its intent to conduct a series of engagement efforts that collect additional insight from the public. Central to their plan is the launch of a fully interactive website that will provide Canadians with the ability to offer their own views on how Canada can best support innovation and to vote on ideas that others presented. 

Montreal Mayor Denis Coderre launched Capital Intelligent Mtl – a 100 million CD (77.3 million USD) investment fund aimed at smart city startups and established businesses offering solutions to urban challenges that also will spur job creation in Montreal. The new public-private partnership will backed by 23 founding organizations including venture capital firms, financial institutions and corporations that have pledged over 100 million CD in private capital to establish the fund. In addition to the over 100 million CD from private sources, the city will commit 400,000 CD (309,000 USD) for the administration of Capital Intelligent Mtl through to 2018 with the intent of ensuring the coordination of the group's activities. While the management team of Capital Intelligent Mtl will oversee the day-to-day operations of the investment fund as well as pre-quality companies for investment, partners will be included in the final review of all investments. Capital Intelligent Mtl can make investments of up to 5 million USD (3.9 million USD) into individual companies. Read the press release…

One of the recurring characteristics of entrepreneurs, based on numerous biographies and case studies, is a driven self-confidence that may border, in some circles, as excessive or even narcissistic. Closer scrutiny, of course, shows there is no such thing as the “self-made” person, but entrepreneurship still is described often as a heroic, lone-wolf quest. Is it paradoxical to advocate for and even expect mentoring and “how to” entrepreneurship training to work? Wouldn’t “real” entrepreneurs leading promising startups succeed without the advice? A recent working paper describes an experiment that attempted to address this issue.

New Canadian Prime Minister Justin Trudeau released his administration’s 2016 proposed budget last week which, if passed, would allocate significant funds to scientific research and technology-based economic development. Throughout 2016 and 2017, the Canadian government will continue to develop an Innovation Agenda that fully describes their intentions, though the goal of developing an innovative and clean economy is one of the key pillars of the proposed budget. In total, C$2.3 billion (1.8 billion USD) would go toward strengthening science and research, while an additional C$334 million (257.2 million USD) would help to support business growth and innovation.

Australian Prime Minister Malcolm Turnbull announced a suite of new policies and investments aimed at catalyzing the nation’s economy through science, innovation and entrepreneurship. The National Innovation and Science Plan would fund university research, invest in K-12 and university STEM programs, limit the financial risks of entrepreneurship, invest in technology commercialization programs, and introduce a new class of visa for entrepreneurs. The changes would also enable equity-based crowdfunding and provide tax credits for early stage investment. Learn more…

Over 150 heads of state met in Paris this week, the largest group of leaders ever to attend a UN event in a single day, to address global climate change and the need for policies and technologies that will set the world on the path to a low-carbon, climate resilient future. Two major initiatives were rolled out to spearhead the global cooperative effort, according to an Associated Press report.  First, twenty major economic powers, representing 80 percent of global clean energy research and development spending, pledged to double their investments in clean technologies. Second, Bill Gates announced the Breakthrough Energy Coalition, an effort driven by private investors to support early stage technologies emerging from the contributing countries. In the leadup to the event, the U.S. Department of Energy Advanced Research Projects Agency (ARPA-E) announced $125 million in investments for transformative energy projects.

Across the globe, the proliferation of innovation-led economic development is typically viewed in an urban context. Despite cities receiving the bulk of the attention, researchers have begun to focus on how to leverage best practices in rural economic development. Just as is the case in nearly all economic development scenarios, practitioners and policymakers working in rural areas benefit from a better understanding of local strengths and opportunities, according to new research from the United States, Canada, and the European Union.

In an effort to increase the proliferation and participation of venture capital firms across the 28-nation European Union, changes are needed at the institutional level, according to the capital markets union plan unveiled last month. The plan, which was presented by EU Financial Services Commissioner Jonathan Hill, seeks to standardize rules across the EU, create tax incentives for venture capital investment, and create a pan-European fund-of-funds to invest public money in EU venture capital projects.