University R&D and Venture Capital Rise, While Business Growth Declines in Maine

Three recent reports from Maine provide insight into the challenges of fostering an innovative economy in a rural state. Overall, the research suggests that Maine has done well in its efforts to support startups, but could do more to help those startups expand and find new markets. By encouraging innovation-based businesses to expand to markets outside of Maine and by offering mentoring services, the state could overcome the stagnation that can occur when companies and states focus on local markets.

Over the past decade, Maine has increased its level of university research and development (R&D) from 35 percent to 70 percent of the U.S. average, according to a report from Maine's Office of Innovation. This growth in academic R&D investment reflects the state's focus on the University of Maine System, which received almost 70 percent of Maine's total investment in R&D in FY09/10. In 2010, Maine's universities increased their number of spin-off companies and their total number of research investments. The number of patents and licenses generated by university research, however, continued to fall well below the U.S. average.

The authors suggest that additional funding for the state's entrepreneurship and business development efforts, such as those managed by the Maine Technology Institute, could help provide the education, mentoring and advisory services needed to help university spinoffs and other companies expand. Maine should also pursue new ways to create industry-led networks that could connect companies to market opportunities and lead to new collaborative research efforts, according to the report.

Read the "Maine Comprehensive Research and Development Evaluation 2010: A Report to the Maine Office of Innovation, Department of Economic and Community Development" at: http://www.maine.gov/tools/whatsnew/attach.php?id=208204&an=1.

The 2011 edition of Maine's Innovation Index identifies several areas of strength for the state's innovation economy beyond its R&D investments. The annual report tracks Maine's ranking amongst the states in 24 innovation indicators. Maine continues to rank highly in nonprofit R&D performance, federal R&D obligations, gross state product growth, 8th grade math and science skills, higher-ed enrollment among young people and classroom connectivity. Indicators in which Maine has improved over the last five years include: federal R&D obligations, venture capital investments, Ph.D. scientists and engineers in the labor force, gross state product growth and educational attainment.

Read the "2011 Maine Innovation Index" at: http://www.maine.gov/tools/whatsnew/attach.php?id=204253&an=2.

A third report, "From Business Assistance to Market Expansion: Helping Maine Firms Succeed in National and Global Markets", examines the performance of Maine firms through the lens of exports, particularly exports from high-tech businesses. It also features cases studies of Maine entrepreneurs that have found success in the national and global economy. The authors found that Maine businesses have not developed large markets outside of the state, to the detriment of the state's economy. This lack of focus on external markets may be contributing to stagnating growth rates among Maine's technology firms. To address this issue, the authors recommend increasing state marketing efforts outside of Maine (specifically on behalf of technology and innovation-based sectors), incorporating market expansion into the state's ongoing technology development initiatives, and creating a Maine Diplomats program to make international connections.

Read "From Business Assistance to Market Expansion: Helping Maine Firms Succeed in National and Global Markets" at: http://www.maine.gov/tools/whatsnew/attach.php?id=204253&an=3.