SSTI Digest

Banking regulators recently announced new rules, effective in October, that will allow banks to invest in venture capital funds. These arrangements had been barred by the “Volcker Rule,” which was put in place after over-leveraged banks caused a global financial crisis in 2008. A statement by the National Venture Capital Association praised the change and predicted a “significant impact on entrepreneurial capital formation … particularly in emerging ecosystems.” The deregulatory announcement comes on the heels of two pieces of news that seem to support the Volcker Rule’s original purpose: the U.S. Federal Reserve Board deciding to restrict banks’ capital plans following stress tests; and, conflict-of-interest complaints over SoftBank investments in Credit Suisse’s working capital funds (as well as the firm that manages those funds), which have made loans to four SoftBank-backed companies. Regardless of the implications of the rule change for the broad economy, venture development organizations should be aware of a potential new class of limited partners for their funds.

Just 10 percent of STEM faculty at four-year institutions are from underrepresented backgrounds, according to a new report by the Association of Public and Land-Grant Universities. The report and an accompanying guidebook, which were supported by the NSF INCLUDES grant, look at the lack of individuals from underrepresented backgrounds in STEM faculty positions and outline several key findings and steps for higher education leaders, researchers, and policymakers to bolster diversity in STEM faculty. The findings highlight that not only is there a lack of data on why individuals from underrepresented groups are not prevalent in STEM faculty (i.e. missing where barriers to profession entry may be), but also how support wanes at the post-doctoral and early-career stages compared to levels found in undergraduate programs. This is due to the pervasiveness of the “pipeline” assumption, or the idea that most students follow a single track from undergrad to a professorship, which does not account for the challenges unrepresented minorities may face along this path. Challenges include a lack of role models, mentors, and quality advising; the importance of support during…

The longer the pandemic lasts, the greater the jeopardy to many small businesses. A recent report from McKinsey & Company finds that the sectors most affected by the coronavirus and the least financially resilient include 1.7 million small businesses, employ 20 million workers, and earn 12 percent of U.S. business revenue. Additional research from JPMorgan Chase & Co found that small business revenues dropped as much as 50 percent and cash balances dropped 12.7 percent through April 2020, with Black and Asian-owned businesses suffering larger declines than white-owned businesses. With their roles as employers, economic multipliers and community hubs, the McKinsey report notes that interventions need to give more than immediate relief and help build longer-term resilience. In addition to sectors that are experiencing well-known challenges, like restaurants and hotels, other small businesses in educational services, healthcare, social assistance and retail trade also reported being highly affected. The McKinsey report notes that government leaders could consider additional support to small businesses, including: Providing sector-specific support,…

A new report by the Urban Institute indicates that the Opportunity Zone (OZ) tax incentive program has had varied success throughout the country. An Early Assessment of Opportunity Zones for Equitable Development Projects assesses the effects that OZs have had within low-income communities while also reviewing the types of developments that have benefited most from the incentive. An over-arching finding in the report is that it has been difficult for mission-oriented and community-driven projects to access capital, as investors have instead focused on funding projects that can produce larger, short-term returns, including luxury real estate properties. The authors suggest that policymakers could redesign the program to better incentivize investments that target innovative small business opportunities and equitable community-focused projects.

Since 2005, the One North Carolina Small Business Program has made 423 SBIR/STTR matching awards worth nearly $26 million to more than 250 businesses throughout the state. A new assessment, which updates an earlier report, provides academic rigor to a standard program review. The results indicate that even beyond survey-based attestations to the program’s value, there is a statistically-significant impact of North Carolina’s funding for the competitiveness of recipients. The new assessment is published in the Annals of Science and Technology Policy by John W. Hardin and David J. Kaiser of the North Carolina Board of Science, Technology, and Innovation and Albert N. Link of UNC Greensboro, the editor-in-chief of the publication. The most original portion of the article is an assessment of program data using regression analysis, which provides a more rigorous evaluation of relationships between variables than can be achieved through correlation alone. The regression analysis reveals several clear benefits of the North Carolina matching program. First, while North Carolina has been improving its rate of SBIR/STTR Phase II awards over time, the years since the…

Tulsa Innovation Labs has received a $50 million commitment from the George Kaiser Family Foundation to help develop the city of Tulsa as a technology hub. The funds will go towards assisting the new organization to support local talent, startups and academic innovation. Tulsa Innovation Labs, founded earlier this year, has already begun identifying the most promising areas of growth including virtual health, energy tech, drones, cyber and analytics. The organization intends to define its first phase of initiatives by the end of the year, and with input from university, industry and community leaders’ initiatives will likely include a mix of startup incubation and acceleration, workforce development and academic innovation. In the meantime, the organization has already launched two programs, the Holberton School, a two-year academy that will graduate 500 software engineers each year; and TU-Team8 Cyber Fellowship, a collaboration with the University of Tulsa to support 10 doctoral students each year focusing on turning cyber-related academic research into startup companies.

This week’s release of the Annual Survey of Manufacturers (ASM) from the Census Bureau provides the most detailed statistics on the U.S. manufacturing sector and provides a snapshot of where the sector stood prior to the pandemic. Based on the 2018 summary statistics, the Census Bureau offers the following preliminary insights which can also be seen in the image below. Transportation Equipment had the greatest total value of shipments (more than $1 trillion) and was the first manufacturing subsector to surpass the $1 trillion mark; Transportation Equipment had the greatest total payroll (over $106 billion) and the greatest number of employees (1,563,273); Food manufacturing had the second greatest total value of shipments ($787 billion); Food manufacturing had the second greatest number of employees (1,498,491) and the fourth greatest annual payroll (nearly $69 billion); Chemical manufacturing had the third greatest total value of shipments ($765 billion); and Fabricated metal product manufacturing had the second greatest annual payroll ($77.6 billion) and the third greatest number of employees (1,400,643) [Source: U.S. Census Bureau] The summary statistics…

With efforts underway to return people to jobs, the time is ripe to rethink our approach to the workforce. Instead of returning to the way things were, now is the time to re-think the kind of country we want to have says Carl Van Horn, founding director of the Heldrich Center for Workforce Development at Rutgers University. Van Horn and Jane Oates, president of WorkingNation, presented their ideas for workforce recovery and lessons learned from the Great Recession during a Federal Reserve Bank of Atlanta Center of Workforce Development webinar yesterday. Van Horn and Oates discussion built on ideas in a paper that is part of a series titled Leading Workforce Resurgence. Their paper acknowledges that while there is much that is still unknown and too difficult to predict about the economy, they hold that it is not too early to consider how the nation could respond to the crisis and avoid repeating the shortcomings of policy responses during and after the Great Recession. It is clear that the depth of the economic and workforce damage for COVID-19 is greater than during the Great Recession, which had an uneven and gradual recovery, the authors say. During the…

The NIH’s High-Risk, High-Reward Research program (HRHR) has the potential to overturn fundamental paradigms, but historically the applicant and awardee pools have not fully represented the demographic and geographic diversity across the U.S. biomedical workforce, says the NIH’s deputy director for extramural research. Those concerns, and others about bias in the peer review process, have led to a new approach — the HRHR program is going to anonymize the review of the Transformative Research Award applications. It is hoped that the new process, which will anonymize the identity of applicant institutions and investigators until the last phase of the award’s three-phase review process, will focus on the merit of the research and limit potential unconscious bias and encourage applications from investigators who otherwise may not have applied because of perceived bias. Another report from scholars at the University of Washington and detailed in the Chronicle of Higher Education earlier this month, showed that Black researchers applying for funding from the NIH receive lower scores than their white counterparts, with those lower scores translating into fewer grants…

The Massachusetts Technology Collaborative (MassTech) — the state agency responsible for strengthening the commonwealth’s position as a leading hub for innovation and entrepreneurship — recently released the 2019 edition of its annual report, The Index of the Massachusetts Innovation Economy, which includes an updated list of the 10 leading technology states  and a detailed special analysis on entrepreneurial ecosystems. As a globally recognized center of science- and technology-based innovation, communities across the U.S. can learn from Massachusetts’ successes as well as from the challenges the state faces in further strengthening its entrepreneurship ecosystem.

The National Academies of Sciences, Engineering, and Medicine recently released its report on the state of the U.S. National Nanotechnology Initiative (NNI) — authorized by the 21st Century Nanotechnology Research and Development Act of 2003 to coordinate the nanotech-related R&D activities of 26 federal agencies — finding that although the U.S. has maintained a strong program it is increasingly challenged by international competitors. Specifically, the report names China as the primary contender for the U.S.’ spot at the top and attributes its success to strong Chinese leadership and commitment to substantial investment in the field. Looking toward the future, the authors reevaluated the NNI’s stated goals, identified three priorities to ensure the NNI vision can be carried out moving forward, and conclude with five key recommendations needed to meet these priorities and carry out the NNI vision.

State innovations in the development and implementation of clean energy programs have received national attention with the announcement of the 2020 State Leadership in Clean Energy Award winners. Presented by the Clean Energy State Alliance (CESA), the awards recognize state and municipal programs’ accomplishments in the clean energy field. Many of the 2020 award recipients represent the role innovation plays within the clean energy sector, including New York State Energy Research and Development Authority’s work with offshore wind development, Energy Trust Oregon’s Inclusive Innovation Project that builds new partnerships with local communities to help with the installation of solar energy, and the California Energy Commission’s funding of clean energy solutions for the state’s vast agricultural sector. More information about the 2020 State Leadership in Clean Energy Awards, including a schedule of webinars focusing on each award recipient, is available on CESA’s website.