SSTI Digest

The Minnesota Department of Deployment and Economic Development (DEED) has launched a new loan program for entrepreneurs with high-tech products or services. The loans are similar in size to microfinance options increasingly available to new bricks-and-mortar establishments, but flexible payment options and innovation-focused criteria are intended to make Minnesota Innovation Loans for Entrepreneurs (MILE) uniquely appropriate for tech-based economic development.

The debt provided through MILE is generous to entrepreneurs. There is no interest on the loan, and repayments do not start until year two, escalating through the four-year term. Loans may be $20,000-$50,000 and must be equally matched by another source.

A change in policy at the Mayo Clinic has “single-handedly sprouted a startup ecosystem in Rochester, as med-tech startups, accelerators, co-working spaces and a venture capital ecosystem have flourished in the area over the last half decade” according to new research by Maddy Kennedy of the The Minneapolis/St. Paul Business Journal.

Prior to 2013, Mayo researchers were able to form companies and receive a portion of royalties, but they were not allowed to hold leadership positions. This offered little incentive for faculty and researchers to venture outside their labs.

Due to the effectiveness of employer-sponsored training program, U.S. states are working to build partnerships with industry partners that leverage public resources to help develop a 21st century workforce that addresses specific industry needs. Over the last month, partnerships have been announced between states and key industry leaders including AGCO, CVS, Tesla, and the U.S. Chamber of Commerce Foundation. Some of those collaborations are detailed below.

For hundreds of years, libraries have helped drive American innovation by serving as a trusted resource and providing information to a wide range of individuals. As libraries continue to implement their own initiatives in this space, policymakers across the country have recently turned to them as a way to level the playing field around workforce development and entrepreneurial support.

Research from the Information Policy and Access Center at the University of Maryland finds that nearly 100 percent of libraries offer broadband connectivity, and more than one-third offer small business development resources (36.5 percent) and workspace for mobile workers (43.7 percent). In recent years, libraries are increasingly focusing their efforts on fledgling entrepreneurs, according to the American Library Association’s Office of Information Technology and Policy.

As governors and state legislatures continue their negotiations over state budgets, SSTI has reviewed the latest to be signed. The process has proved difficult in more than a few states, with New Mexico having to overcome several stalemates and still facing shortages while in Oklahoma three-fourths of the state agencies are seeing decreased funding due to the state’s $900 million shortfall.

Colorado

Gov. John Hickenlooper signed Colorado’s FY 2018 budget. While the state increased spending by 4 percent overall, few of the state’s investments for innovation were adjusted from the previous year. The Colorado Office of Economic Development and International Trade received a substantial cut of $8 million, leaving the office with $51.0 million for FY 2018. Within the office, the advanced industries incentive programs received approval to spend up to $14 million (reduction of $1.5 million) pending the availability of funds, while small business development centers ($94,144), Leading Edge grants ($75,976) and Rural Jump Start ($80,983) all received level funding.

More than half of the country’s governors have delivered their state of the state addresses. Last week’s addresses tended to relate to the national election and the incoming administration, with some governors heralding the change and others pledging to try to reach a bipartisan understanding while standing firm on issues they believe in, like climate change in California. Although TBED issues may not have been at the forefront of the addresses, science, technology and especially innovation and higher education continue to receive attention. This week we zero in on comments delivered by governors in California, Hawaii, Illinois, Massachusetts, Minnesota, Montana and Utah.

California

SSTI has reviewed another mix of state budgets as governors across the country continue to release their proposals. Some states, like California and North Dakota, are seeing cuts in the amount of money designated for TBED-related work, while others like Minnesota are in a more favorable fiscal situation and continue to fund such initiatives. Still others, like Rhode Island, are proposing new initiatives.

California

A month after a federal court ruled that high-speed Internet service can be defined as a utility, four states have announced commitments to expand high quality, reliable broadband services to rural areas and other underrepresented groups. Two Midwest states, Wisconsin and Minnesota, will provide funding to help support projects that improve access to broadband and spur economic prosperity. California and Virginia are exploring strategies to improve their respective state’s broadband networks.

A bipartisan group of 17 governors signed the Governors’ Accord for a New Energy Future – a joint commitment to support the deployment of renewable, cleaner and more efficient energy technologies and other solutions to make the U.S. economy more productive and resilient as well as spur job creation in member states. The multi-state effort will work to implement clean energy policies and initiatives in four areas: clean energy, clean transportation choices, a modern electrical grid, and plan for a new energy future. Although the accord doesn’t provide specific efforts, senior advisors to participating governors are expected to convene shortly to discuss initial steps to pursue their shared priorities and commitments according to solarindustrymag.com.

Recently announced programs in the St. Louis and Minneapolis-St. Paul regions offer startups and major corporations new chances to connect and work together. Pioneered by Illinois’ Corporate Startup Challenge, these types of programs seek to build bridges between important components of the innovation ecosystem: revolutionary new products and services and established market leaders.

Last month, Minnesota Gov. Mark Dayton signed the MNVest bill – an intrastate securities exemption that allows Minnesota-based companies and entrepreneurs to raise money through equity crowdfunding. To qualify for the exemption, businesses must show evidence of several requirements including being organized under state laws and that its principal office is located in Minnesota. Companies can raise capital from both accredited and non-accredited investors from across the state. In any 12-month period, a company cannot raise more than:

Up to $2 million if the business provides prospective purchasers with audited or reviewed financial statements; and, Up to $1 million if the financial statements are not audited or reviewed.

The exemption allows accredited investors to invest an unlimited amount (up to the maximum investment of $2 million) in companies using the state rules. However, non-accredited investors are capped at $10,000 per transaction.

Over the past few months, SSTI has followed proposals issued by governors in their budget requests, State of the State Addresses, Inaugural Speeches and other events. Now that many governors have signed spending bills, the SSTI Digest will check on the status of these proposals, and examine the state of technology-based economic development funding in the states. This week, we review actions in Kansas, Michigan and Minnesota.

KansasGov. Sam Brownback signed House Substitute for SB 112, a $15 billion budget for fiscal year 2016.

Under the approved budget, a total of $2.7 million is appropriated for the Department of Commerce's Innovation Growth Program, and $358,568 will be available for Technology Innovation and Internship Grants. Note that SB 112 includes allocations for both fiscal years 2016 and 2017, though legislators will meet again next year to set actual FY17 levels. The figures listed above are evenly split between FY16 and FY17 to match releases from state officials.