SSTI Digest

SSTI recently examined the investment histories of 31 Venture Development Organizations (VDOs) across 20 states to quantify their impact and help to characterize how the broader technology-based economic development (TBED) community supports long-term innovation-driven economic and financial returns. Our top-level findings showed that  VDOs have invested in 4,600 companies,  VDO-backed companies employ 323,000 people and pay nearly $29 billion in annual wages,  companies supported by VDO investments have gone on to raise $25 billion, and  the median deal size for VDOs is $260,000. 

The U.S. National Science Foundation (NSF) Directorate for Technology, Innovation, and Partnerships (TIP) is inviting comments regarding the proposed collection of information for its Breakthrough Innovations Initiative application. According to the notice in the Federal Register, published on Sept. 19, 2025, they are launching this initiative “to enable researchers, innovators, and entrepreneurs to apply unconventional approaches to create game-changing technologies and translate discoveries into tangible applications and products.”

The National Science Foundation (NSF) National Center for Science and Engineering Statistics (NCSES) has recently updated 35 of its over 50 indicators covering education, R&D, and workforce, among other important topics. These indicators are available in two forms: the Science & Engineering Indicators and Science and Engineering State Profiles. Each of the more than 50 indicators are available in the Indicator tool, where users can select any statistic to display on a state-level map broken down by quartiles, as well as in various charts and a downloadable data table.

Like the broader metric of R&D intensity, the prominence of R&D value added in a state’s economic output has shifted within several states over the past decade. Does it matter? For sustaining a state’s innovation competitiveness, it may, and subsequently it is important to know for many state and regional TBED initiatives. Proximity to the conduct of R&D has been well documented in empirical research to support strong regional innovation economies. Subsequently many TBED policies are designed to increase and maintain R&D activity within those boundaries as well as ensure the localized spillover effects are maximized. Determining where R&D activity is thriving and the size of its value added to the state’s GDP, particularly manufacturing-related R&D, may help inform those policy decisions. SSTI explores the latest data on state R&D value added in this Useful Stats article.

Large federal slice of patent pie looming? In an exclusive interview with Mike Allen on The Axios Show, U.S. Commerce Secretary Howard Lutnick floated the idea that the federal government should receive “half the benefits” of federal R&D, referring to a direct share of the financial returns from patents stemming from R&D funded by the federal government.

As the end of the fiscal year approaches, Congress is again at a critical juncture in reauthorizing the SBIR and STTR programs. With only two hearings (one each in the House and Senate Small Business Committees) held so far this year on the topic, Congressman Roger Williams (R-TX), Chairman of the House Committee on Small Business, introduced H.R.5100 on September 3 to extend the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs, set to expire on September 30, 2025, for one year, “as is.” The bill passed out of committee on September 10.

As attention-grabbing as AI might be for the media and large investors (see previous SSTI analysis of AI investment), economic growth through innovation in life sciences and biotechnology is a priority for many state and regional TBED initiatives. The venture capital market recognizes that as well. In fact, Pitchbook estimates the broad biotechnology sector (comprising life science, pharma, health care, devices, etc.) captured 14% of all deals so far in 2025, making it the second largest investment group after info tech this year to date.

Understanding the composition of local economies requires looking beyond broad statewide or national trends. County-level data reveals the unique mix, or lack thereof, of industries and businesses in each area. Policy makers, by identifying which sectors drive employment and business activity within a locality, can influence the impact and design of regional innovation strategies to reflect local realities and potential.  

The U.S. Bureau of Labor Statistics’ Quarterly Census of Employment and Wages (QCEW) allows examination of county-level employment and establishment counts across all private sectors at the 2-digit NAICS level. In this article, SSTI uses annualized private sector data for all provided 2-digit NAICS sectors at the county level for 2015 and 2024.

Conventional TBED wisdom for decades has been that small businesses generate more innovation in the United States. All big tech companies started as scrappy little companies in their respective eras of IT’s rapid growth. But there remains a long-running debate about whether large firms with financial resources and R&D capacity have an innovation advantage over smaller but more agile firms. Understanding the arguments for each side is important for policymakers and business leaders as they seek ways to support small and medium-sized enterprises and leverage the innovative capacity of larger corporations. In their paper, Firm Size and Innovative Performance: A Meta-Analysis Across 25 Years of Evidence, Federico Bachmann and Rodrigo Ezequiel Kataishi provide a comprehensive meta-analysis that synthesizes 25 years of research to clarify this relationship.  

As federal funding for science research decreases, it may be tempting to think that philanthropy might be able to fill the gap. However, a recent study from the Science Philanthropy Alliance illustrates that it cannot replace the robust funds that government allocation once contributed.