SSTI Digest

Our German isn't what it should be and online translators weren't as helpful as we'd expected, but we wanted to make readers aware of the size of the investment Berlin is making over the next four years to recruit star faculty to its four research universities and the four local, private research institutions of Fraunhofer Gesellschaft, Helmholtzgemeinschaft, Leibniz Community, and the Max Planck Society. Termed the Berlin International Forum for Excellence, the initiative is intended to strengthen the competitiveness of the region's scientific assets in promising fields of research.

Last week, Premier Ed Stelmach of Alberta introduced a $170 million suite of initiatives to support high-tech economic development in the province. The government hopes that by providing support for commercialization from research to market it can attract high-tech entrepreneurs from other areas. Most of the province's investment will support the creation of the $100 million Alberta Enterprise Corporation to encourage venture capital investment. A press release accompanying the announcement states that the investment will improve access to both seed-stage and venture capital. The corporation is expected to begin activities this winter.
 
Though venture capital investment in Canada increased by 21 percent in 2007 over 2006, investment in Alberta grew by only 3 percent. As in the U.S., the Canadian venture capital activity is largely centered in a few provinces, namely Ontario, Quebec, and to a lesser extent British Columbia. Private capital resources are harder to find in the more rural provinces like Alberta.
 
Another $6 million will support various initiatives intended to draw young people into high-tech entrepreneurship through "technopreneur" programs. These programs will help train young entrepreneurs to bring new technologies to market through successful companies.
 
The remaining $72 million will be dedicated to providing additional services and resources for companies. Efforts to be initiated later this year include:

On June 5, 2008, the government of the Grand Duchy of Luxembourg announced plans for a $200 million five-year molecular medicine initiative that draws on a strategic partnership involving three Luxembourg Public Research Centers (CRPs), the University of Luxembourg and three U.S. research institutes prominent in the field.
 
The U.S. research institutions include:

During the 1990s, especially the mid- to late-part of the decade, many countries experienced booms in their high-tech and venture capital industries. Few, however, grew at the same pace as Israel.
 
Israeli entrepreneurs created eight times as many high-tech companies during the 1990s than in the previous decade and equity investment in Israeli start-ups grew from $50 million to $6.65 billion. The number of venture capital companies in the country jumped from two in 1990 to about 100 in 2000.
 
In "From Direct Support of Business Sector R&D/Innovation to Targeting Venture Capital/Private Equity: A Catching-Up Innovation and Technology Policy Life Cycle Perspective," Gil Avnimelech and Morris Teubal explore this phenomenal growth and how the Israeli government effectively intervened and bolstered the venture capital economy.
 
The paper draws on earlier work by the authors in which they found that Israel's high-tech economy and Innovation and Technologies Policies (ITP) could be divided into a three-phase model. During the first phase, from 1969 to 1984, the nation's government provided horizontal grants to the business sector for R&D in order to build research capacity and spur the initial creation of high-tech companies. Then, between 1985 and 1992, the country significantly increased its R&D grants to leverage the companies that had sprung up in the preceding decades. It also began to expand its science and technology infrastructure and form its first entrepreneurial support programs, such as incubators and research partnerships. By 1993, Israel had built a substantial amount of high-tech activity, but found itself with a surplus of trained but unemployed engineers, due to an influx of Russian immigrants. At that point the government began its targeted development of the venture capital sector.
 
Avnimelech and Teubal use the Israeli experience as a framework to create a three-phase general model of ITP and venture capital development, complete with strategies for each phase and conditions for transition to the next phase. In the first stage, direct government support for business sector research is used to stimulate R&D and create innovative start-ups. In the final phase, the government targets its financial support toward building clusters and venture investment in strategic industries. The second stage is an intermediate phase in which elements of the other phases both exist, but funding is increased considerably over the previous period as high-tech industries begin to emerge.
 
The authors contend certain conditions should be met to begin the transition to phase three policies, which include intervention in the venture capital industry. The conditions include:

The Canadian Government this week released its budget for the 2008-2009 fiscal year, which includes several new TBED-related initiatives and increases in funding for a few existing programs. The government plans to leverage its relatively strong fiscal position by providing tax relief and paying down the national debt, while providing $606 million for workforce development and $440 for research over the next two years. Major science and technology (S&T) initiatives in the 2008 budget include:

Earlier this month, three universities - Stanford University, the University of Texas at Austin and the University of California, Berkeley - announced partnerships with the King Abdullah University of Science and Technology (KAUST), a graduate-level research university set to open in Saudi Arabia by September 2009. Each of the U.S.-based universities will assist with the development of the following initiatives within specific academic fields of study at KAUST:

Venture capitalists invested almost $2.5 billion in China in 2007, according to a new report from Dow Jones VentureSource. That figure is a 5 percent increase over the 2006, and the highest since 2001, despite a decrease in the number of deals. Though investment is not growing quite as quickly as it is in the U.S., where venture investment rose by 8 percent last year, China is becoming a key global market for venture investment.

 

The decrease in the number of deals appears to be a sign of a maturing venture capital industry, according to the VentureSource report. Though seed and first-round investments still constitute 61 percent of the country's venture deals, more investors are looking at companies in their second round of financing or later. Fifty percent of total investment went to these later-stage companies. Second-round investment dollars increased by 15 percent over the previous year. Deal size may be decreasing as firms devote more money to investment in relatively mature companies.

 

The Chinese business, consumer and retail sector experienced the greatest gains in investment, up 83 percent over 2006. The most popular industry segment within that sector was consumer/business services, which accounted for 61 percent of total Chinese venture investment. Several high-tech sectors, such as energy and information technology, suffered modest decreases. Investment in information technology, the second largest sector, decreased by 9 percent.

 

In contrast, in the U.S., investors flocked to deals in research and technology-intensive sectors. Last year brought record investments in biopharmaceuticals, medical device and energy-related companies in the U.S., while investment in the business, consumer and retail sector dropped nearly 20 percent. The largest gains occurred in the information services segment, which includes Web-based tools for businesses and consumers. Information services investment surged by 44 percent, unlike in China where investment in the sector shrunk by 1 percent.

 

China, however, is not alone in the growth of its business, consumer and retail sector. In Europe, investment in that sector jumped by 33 percent, though venture investment overall only grew by 2 percent. Like China, the most active segment of that sector was business and consumer services, which more than doubled.

 

More information is available at: https://www.venturesource.com/

The following overview is a synopsis of selected recent announcements from research parks across the nation, including new tenants, groundbreakings and tools for financing start-up companies.

                       

The chemical company BASF announced in January a $1 million contribution to the Brazosport College Foundation for construction of a new process technology center at the school’s planned Science Technology Corridor. The new facility will include analytical labs and classrooms for curriculum supporting the petrochemical, energy and nuclear energy. The BASF center groundbreaking is expected this summer as the first phase of the Science Technology Corridor, which will also include a health professions and science technology complex with laboratories, classrooms and department offices for health professions programs.

 

Tuesday marked the groundbreaking ceremony for the Bio-Research and Development Growth Park at the Donald Danforth Plant Science Center in Missouri, a $36.1 million, 118-square-foot multi-tenant research park that will house start-up life sciences companies. The buildings located within the research park will house wet laboratory and office space and will provide companies with direct access to the intellectual capital of Danforth Center scientists, according to a news release. The project is slated for completion in March 2009, according to an article in the St. Louis Business Journal.

 

Mann Research Center is planning to develop a six-building life sciences complex at the Florida Center for Innovation at Tradition in St. Lucie. Preliminary plans call for a mixture of medical office, R&D, corporate office, and support retail space, according to the South Florida Business Journal. The innovation center is a 120-acre research park set to open in 2009. 

 

Georgia Gov. Sonny Perdue announced that the state is pursuing the creation of a research park on a 115-acre parcel of the Fort McPherson property, which is being closed under the federal government’s Base Realignment and Closure Act. The science and technology research park would be located in close proximity to universities and research institutions. The state is currently awaiting approval from the Army.

 

A bill introduced in the Hawaii Legislature calls for the creation of a high technology park on the island of Oahu to be managed by the Hawaii High Tech Development Corporation. The purpose of the technology park is to support Hawaii’s technology and defense-related industries, which are expected to grow significantly in the coming years with an estimated 176,000 vacant jobs by 2012, 51,000 of which are expected to be newly created positions.

 

Technology start-ups in Louisiana could get a boost in working capital from the Louisiana Technology Park and the state’s economic development department. The research park’s executive committee recommended last month that the board of the Research Park Corporation, the nonprofit organization that operates the tech park, establish a business and industrial development corporation (BIDCO) to provide short term loans to technology companies, The Advocate reports. The BIDCO would use $1 million in research park funds matched with $1 million in state funds from the Louisiana Economic Development Corporation to finance the loans, with a return of 16-25 percent, according to the article.

 

Louisiana Tech University selected a designer last month to begin the planning phase for a $25 million research park. Half of the funding for the park, dubbed Research Campus, was approved during the 2007 legislative session within the supplemental appropriations bill, and the other half is a line of credit from the state bond commission. The park will target companies in cyberspace protection, nanotechnology, biomedical engineering, and micromanufacturing.

 

The University of Nebraska-Lincoln (UNL) unveiled a model of the proposed Nebraska Innovation Park, modeled after the Centennial Campus at the University of North Carolina. The university wants to build the research park on land currently occupied by the Nebraska State Fair. The proposed research model would link the UNL-City and UNL-East campuses and includes public and private technology development space to encourage entrepreneurs to work with UNL research faculty, according to a UNL press release.

 

Construction began last month on a 1.1 million-square-foot multi-tenant high tech research park located at Picatinny Arsenal in New Jersey. The park will feature laboratories and office space for high tech, defense and academic tenants.

 

Last month, EDS, a global technology services company, announced plans to locate a national software solution center within the Purdue Research Park. EDS will occupy 45,000 sq. ft. of a new 78,000-square-foot Innovation Center slated to open in 2009. The company plans to create 200 software engineer and business analyst positions by 2010. The Indiana Economic Development Corporation and the city of West Lafayette played a critical role in recruiting the company, offering $300,000 in training grants and another $1.5 million in additional incentives.

 

A new €300 million science park at Emersons Green in Bristol is in the final stages of planning. The SPark is a 70,000-square-foot innovation center that will act as a hub for developing and supporting young science-based companies, according to South West England Regional Development Agency. The 10-year project, which will provide dedicated space for science and technology companies in southwest England, is expected to create around 6,000 new jobs.

 

Using up to $60 million in funds from a federal omnibus bill, the University of Mississippi announced it will spend $7.3 million to begin construction on the Mississippi Biotechnology Research Park, reports The Clairon-Leger. The first building, which is slated for completion in three to four years, will house laboratory and office space for biotechnology companies. Mississippi State will receive another $7.3 million to expand its Thad Cochran Research, Technology and Development Park with a 30,000-square-foot building, according to the article.

Earlier this month, the Canadian Minister of Industry announced the establishment of 11 new Centres of Excellence for Commercialization and Research (CECRs) to pursue multidisciplinary work in the areas of environmental science, natural resources and energy, health and life sciences, and information and communication technologies. This $163 million investment joins a $105 million investment last year that created seven other CECRs across Canada.

 

The CECR initiative is a component of Canada’s Science and Technology Strategy (see the May 21, 2007 issue of the Digest) and is administered by the Networks of Centres of Excellence (NCE) program. Organizations that are eligible for CECR funding are nonprofit corporations formed by universities, research organizations, private firms or other nongovernmental parties. The average grant size for each CECR was around $15 million, to be distributed over 3-5 years.

 

Four of the 11 new centers are based in Vancouver:

Transforming as many small and medium-sized enterprises (SMEs) as possible into globally competitive firms is a challenge, as most TBED practitioners know. The complexity of combining all of Europe into a single market makes the work even more daunting.

 

To simplify the process for SMEs in more than 40 countries, the European Commission recently launched a consolidated Enterprise Europe Network. The network consolidates the older Euro Info Centres and the Innovation Relay Centres.

 

According to promotional materials, assistance services offered by the network include a business partner search within technology and business cooperation databases and access to information on funding opportunities. Network experts will provide “individual on-site visits to companies to assess their needs and a broad range of promotion and information material. Representatives of the network can also help businesses understand EU law, how it applies to their business and how to make the most the internal market and EU programs.”

 

In addition, the network is intended to help with some of the most pressing needs for innovation and technology-related SMES, such as commercialization, marketing, intellectual property and technology transfer.

 

Network activities will be conducted by a pool of 4,000-plus experts housed at 600 local contact points. “Most partners in the network are operated by consortia of qualified regional organisations such as chambers of commerce, regional development agencies and university technology centres," the network’s website explains.

 

More information is available at: http://www.enterprise-europe-network.ec.europa.eu

Brenda Wyland will join the Research & Technology Park Inc. at North Dakota State University as the incubator manager, effective Feb. 1, 2008.

By creating Ontario’s Regional Innovation Networks (ORIN) three years ago, the provincial government experimented with how to establish customized systems-specific, but network-integrated approaches to strengthening and supporting regional innovation. The early successes of the 12 Regional Innovation Networks (RIN) scattered across the vast province are described in a November report, The Critical Role of Regional Innovation Networks in Ontario’s Economy, and the result of the $13 million initiative of the Ontario Minstry of Economic Development is a potential model for other states and provinces to consider.



A longer explanation is required, however, to substantiate that conclusion.

 

First is to identify the problem of plenty. One now can walk into nearly every major city in the U.S. or Canada and find a vast collection of organizations, programs and tools designed to support employment growth and business competitiveness.

 

While most may be serving particular audiences well, there is ample opportunity for duplication of services, rivalry and competition for limited financial support from sponsors or public agencies. Additionally, potential clients can become confused or discouraged navigating the alphabet soup of TBED and economic development agencies.

 

The problems can become exacerbated by competition among neighboring cities, suburbs vs. central cities, rural areas vs. metro areas, and state vs. state. As each reader knows, these artificial political boundaries have little to do with how we live our lives. We easily drive across these barriers to partnership for economic growth to go to work, do our shopping and enjoy recreational opportunities.

 

Second is the need to redefine and focus on collaborating regions. Knowledge and innovation are even more immune to the petty designs of our antiquated political system of townships, counties and even cities. Research has shown that the economic benefits of a particular business or university, as well as the knowledge generated within these institutions, spills over into the surrounding region. While the World Wide Web may eventually minimize the localized effect of spillovers, the ORIN project demonstrates regions – specifically learning regions that display some competence or record at innovation – should be the unit of study and strategy for state and provincial TBED efforts.

 

The Critical Role of RINs points out regionalism, alone, is not a panacea. The ORIN project grew out of the findings from a series of regional cluster studies conducted across Ontario in 2003-2004. The paper points out the studies found “extreme program, policy, and communication silos among regional institutions and government offices of economic development and business attraction. The result was a disconnected and in some cases competitive business support infrastructure incapable of growing the provincial economy or promoting innovation.”

 

The challenge for the Ontario Ministry of Economic Development was to break through the silos and improve province-wide accessibility to the resources already in place to support commercialization and innovation.

 

Third is to establish a systems approach to TBED. The solution is a systems approach toward a specific goal – in Ontario’s case, commercialization and innovation support – that can be adapted to the unique qualities of each particular region’s opportunities and weakness, yet integrated to draw on the strength of the larger network.  

 

The concept of a regional innovation system is based on the idea that the innovation capacity of people within a specific geographic area is dependent on the presence and health of all of the elements necessary to foster, nurture and sustain: