SSTI Digest

High-growth firms are often conflated with all other firms. Unfortunately, this tendency makes it extremely difficult to differentiate those with a higher likelihood of significantly impacting the economy and innovation. While reports like the Global Entrepreneurship Monitor (GEM) have found increasing rates of entrepreneurship over the past decade, barring a drop at the onset of the pandemic, new U.S. Census Bureau data on high-growth firms reveals the opposite for the number of high-growth firms, with steady, significant decreases in the number and share of high-growth firms across the nation.

While some college computer engineering profs may be advising their students not to worry about artificial intelligence derailing their salary projections and long-term career options, it would appear businesses are getting on with deploying the latest AI advances as quickly as possible to see what improvements might be made for the firms’ productivity rates and bottom lines. A recently released working paper from Germany’s Fraunhofer Institute for Systems and Innovation Research (Fraunhofer ISI) reports on an early analysis of AI adoption in the innovation research process. The authors’ preliminary conclusion?  “AI is currently used more for competitive differentiation, but in 15 years it can become the standard as a so-called basic technology and thus a factor critical to competition.”

The national picture of how 46 states, Washington, D.C., Puerto Rico, and the U.S. Virgin Islands chose to allocate $7.9 billion approved so far by the U.S. Treasury to spend through the nation’s second go at the State Small Business Credit Initiative (SSBCI) is getting clearer. Equity and venture capital programs—often important financing tools for high growth and innovation-oriented companies—have garnered approximately $2.9 billion, across 79 equity/venture capital programs, based on a Treasury-generated list of all programs and allocations and SSTI analysis of press releases. The remainder of the total approved is distributed across 110 credit support programs.

Information on the geographic distribution of innovation and entrepreneurship is not easy to tease out of many federal statistical data sets, leading regional policy often to be based on trends in all business starts or life span and size—ignoring the fact that some firms have greater impact on regional economic growth than others. The U.S. Census Bureau is well aware of the challenge and, earlier this week, released an experimental data set that allows for an examination of state-level long-term trends in the change in high-growth firms and establishments across the nation.

As part of the CHIPS & Science Act, Congress created the Tech Hubs program to help more regions become leaders in key technology sectors through substantial investments into regional consortia. It authorized spending $10 billion on the program from FY2023 through FY2027. But appropriations for the program are not keeping up with the vision that was embraced by strong bipartisan majorities in both chambers. For FY2023, Congress appropriated $500 million for the program, and it followed that up with only $41 million for FY2024. The need for the program has not changed. If you believe the program should receive funding in line with the vision Congress laid out in the CHIPS & Science Act, we invite you to join us and let Congress know by signing a letter that will strongly voice support for the program. Read the full letter and sign on today.

Earlier this week, the White House announced a series of actions being undertaken by federal agencies to focus on women’s health.  Both NIH and ARPA-H announced new funding opportunities centered around women’s health, while the White House and other agencies took action without indicating any funding associated with that funding.

Many federal funding programs have the potential to support technology-based economic development (TBED) initiatives, even when technology and innovation aren’t their explicit focus. This is the case with the Appalachian Regional Commission (ARC). SSTI recently sat down with Christy Johnson, ARC program analyst, to learn how three of ARC’s funding opportunities can support TBED activities in the Appalachian region.

The Office of Advanced Manufacturing at the National Institute of Standards and Technology (NIST), an agency of the U.S. Department of Commerce, intends to announce an open competition for a new Manufacturing USA institute. The expected competition, according to the notice of intent (NOI), will seek to establish a Manufacturing USA institute “focused on the use of artificial intelligence to improve resilience of U.S. manufacturing.”

Editor’s note (April 4, 2024): This article has been updated to reflect relevant programs included in the second of two FY 2024 omnibus appropriations bills.

From the Securities and Exchange Commission (SEC) to the Department of the Treasury, the White House budget, and Congress, various stakeholders across the federal government have proposed multiple regulations in the past several weeks that would affect the venture capital industry in general and, in some cases, venture development organizations. We offer a brief roundup of these issues.

The White House published its FY 2025 budget this week. As Congress will ultimately produce its preferred budget, the president’s release like those of previous Administrations serves as more of a messaging document outlining a vision and priorities. For tech-based economic development (TBED), the message is that Congress has provided ample tools but needs to continue to fund them.

The real gross domestic product (GDP) of private industries has steadily increased nationwide from 2018-2022, with an average percentage increase of 2% each year, or 9% total, despite a drop from 2019-2020 due to the pandemic. However, the same cannot be said across all private industries; of the 14 broad industries captured by U.S. Bureau of Economic Analysis (BEA) data,[1] eight have grown while six decreased over the five-year period from 2018-2022.