SSTI Digest

Every year, manufacturers from around the nation gather on the first Friday in October to open their shop doors to students, prospective employees, teachers, and community leaders. Manufacturing Day (MFG Day) is meant to inspire the next generation of manufacturers and showcases the many career opportunities that exist in today’s modern manufacturing space. Last year, more than 325,000 people participated in MFG Day and over 3,000 events were held nationwide. However, MFG Day 2020 is shaping up to be a bit different than years past.

As the shock of the first wave of the coronavirus pandemic settled and the extent of the economic impact began to become clearer, states are developing creative and long-term plans and programs to breathe life back into their economies. States initially focused federal funds from the Coronavirus Aid, Relief and Economic Security (CARES) Act towards the urgent public health needs of responding to the unfolding crisis and to mitigating the impacts of mandatory business closures. Commerce has gradually resumed, yet unemployment remains high, job creation slow, and states face continued revenue shortfalls months after the outbreak. States are increasingly using novel and impactful ways to leverage CARES Act funding to speed the recovery, and to fortify their economies in a persistent environment of uncertainty over the virus.

Government investment in R&D within the health, defense, and energy sectors can provide both immediate and long-term benefits in the form of employment, income, and federal and state tax revenue. A new report released by Breakthrough Energy explores these benefits, while also studying the effects that an increase in public R&D spending could have throughout the nation.

The report notes that if the nation increased R&D spending to 1 percent of GDP by 2030, compared to 0.62 percent in 2018, that the investment would support 3.4 million U.S. jobs overall, and add “$301 billion in labor income, $478 billion in economic value, and $81 billion in tax revenue.” By increasing the government’s R&D investments, Breakthrough Energy believes that the U.S. will have a stronger chance of securing long-term economic health while also being better positioned to tackle growing threats such as climate change.

The Appalachian Regional Commission (ARC) has opened a new virtual training hub — the Appalachia Nonprofit Resource Center — to help the region’s nonprofits as they navigate the COVID crisis. Teams from regional nonprofits are invited to apply for dedicated technical assistance coaching focusing on long-term operational sustainability during the COVID crisis, and slots for 120 organizations are available. Topics include: short-term financial management; long-term financial management; mission and operations; and fundraising. 

SBA efforts to reign in abuse of the Small Business Innovation Research and Small Business Technology Transfer (SBIR/STTR) program continue, yet companies that seem to use SBIR awards as a primary revenue stream rather than a means to creating future revenue paths through new product and process innovations persist, based on SSTI’s review of award data. Known as “SBIR mills” many of these companies appear to be clustered geographically in specific metropolitan areas, many of which house major federal labs or research centers, the analysis of SBIR data reveals.  This suggests, from a policy perspective, that the federal agencies could be doing much more to curtail the mills and redirect awards into companies more consistently focused on turning innovation into products, profits and jobs.

The data reveals the extent of abuse by the small number of SBIR mills among all awardees is not insignificant: awards made to potential mills account for more than 21 percent of all awards made during the period from 2009 to 2019.

The U.S. Small Business Administration announced 24 organizations as recipients of the 2020 Federal and State Technology partnership (FAST) program grant awards. The awards of up to $125,000 focus on “specialized training, mentoring, and technical assistance for R&D-focused small businesses.” The FAST program grants one-year funding to organizations that work to partner with other in-state groups.

Eleven states are holding gubernatorial elections this year with nine incumbents seeking reelection, two of which are facing off against their lieutenant governor. Only one governor, Steve Bullock in Montana, is term-limited and unable to seek reelection. In Utah, Gov. Gary Herbert is stepping down from the position he has held for 10 years. While many of the races this year will reflect referendums on the current governor’s response to the COVID-19 pandemic, many of the candidates have announced their innovation and economic development initiatives. In the final stretch of the gubernatorial race, here are some of the candidates’ innovation-related policies, positions and prior accomplishments.

Delaware

A recent report by PitchBook indicates that angel investing is seeing fewer unique participants and a greater share of activity from groups than individuals. The same report provides an analysis of startup outcomes based on whether the company began with an angel or venture capital (VC) round and finds companies with angel backing initially look stronger but have a more mixed record over the long-term.

Angel investing has been robust the past decade, with about $3 billion invested each year since 2014. While angel participation by deal value has been static, the total VC market has doubled, bringing angels’ share of the market down from four percent in 2014 to two percent last year.

The Central Intelligence Agency is launching CIA Labs, a federal lab and in-house research and development arm intended to drive science and technology breakthroughs surrounding intelligence challenges. It establishes the CIA as a research partner for other federal labs, academia and industry in disciplines including artificial intelligence and biotechnology, quantum computing, advanced materials and manufacturing. Its research areas include:

This week, the U.S. Economic Development Administration (EDA) announced the 2020 Build-to-Scale awards. In this round, nearly $35 million was awarded to 52 organizations to support regional strategies advancing entrepreneurship and innovation. Through the end of 2019, funded organizations had worked with more than 6,200 startups, facilitating $1.6 billion in investment and the launch of more than 9,000 products, according to EDA. SSTI has been a proponent of the Build-to-Scale program, which had not received any federal appropriations prior to the creation of SSTI’s Innovation Advocacy Council.

Please join us in congratulating the member organizations receiving or participating in funded projects this award cycle, including: BioSTL, Emory University, Invest Nebraska, Iowa Innovation Corporation, MassVentures, New Orleans BioInnovation Center, University of South Dakota, University of Utah, and Valleys Innovation Council. The full list of 2020 awardees is available, below.

2020 Venture Challenge

Many of the most successful technology, life science and advanced companies in the country received financing in the form of an equity investment during their rapid growth and scaling stages of development.  Whether viewed as valiant, villains or vultures, the presence of individuals and firms willing to provide capital to companies when they have few physical assets or revenues is strongly associated with healthy regional innovation economies. As a result, considerable policy attention has been focused by states on increasing the amount of risk capital flowing to local startups.

The objective is simple: high wage, innovation-driven economic development. State policy makers want those entrepreneurial companies to grow jobs and wealth within their boundaries. Approaches vary – and achieve considerable variation in their degrees of success – but one of the most widely implemented are angel investment tax credits, found in 31 states in the study discussed below.

The Lab-to-Market (L2M) subcommittee of the National Science and Technology Council’s Committee on the Science and Technology Enterprise is launching a $325,000 prize competition to highlight successful examples of innovation ecosystems, particularly existing resources that support underserved communities or remarkable responses to the pandemic environment. There are three categories for applicants with an informational webinar scheduled for Sept. 25, before the portal opens on Sept. 30.

The prize competition will also recognize impactful ideas for using prize funds to develop strong connections and support within the R&D innovation ecosystem. The three categories in the competition are: