SSTI Digest

After considerable growth in the number of startups raising a first round of venture capital financing between 2009 and 2014, there has been a geographically widespread contraction, according to new research from Ian Hathaway at the Center of American Entrepreneurship, a D.C. based advocacy group. In America’s Rising Startup Communities, Hathaway explores the geography of first venture capital financing across U.S. metropolitan areas over the last eight years, finding that just 10 metro areas account for more than two-thirds of all first financings. From 2009 to 2017, the number of startups receiving a first financing increased by 84 percent, and more than one-third of regions saw an increase in deals.

On July 31, OMB Director Mike Mulvaney distributed a memo outlining eight priority R&D subjects and five practices for leveraging R&D resources more effectively. The White House intends for the memo to serve as guidance in the development of budget submissions from the executive departments and agencies for FY 2020.  Basic and applied research are to be emphasized in the agency R&D plans, which would be a shift from data on recent trends released by the National Science Foundation the day before the Mulvaney memo. NSF found that the development side of R&D in the FY 2017 federal R&D obligations, passed in May of the first year of the Trump administration, increased by 7 percent from the year prior, while research expenditures actually declined by 3 percent.

The research priorities for FY 2020, according to the new OMB memo, should be:

The emerging blockchain industry has recently caught the attention of some state political leaders and economic development officials as a potential driver of economic growth as well as a potential solution to improve government services. To support economic growth, states are working on creating flexible regulatory sandboxes to allow blockchain-based startups to test their products. The states also hope to position themselves as destinations for startup growth in the nascent industry. Other states have started to adopt blockchain technologies to assist in the provision of services to their citizens.

Blockchain regulatory sandboxes

Due to the emergent nature of blockchain technology and its potential impact on the financial, insurance, and legal services industries, several states are working to develop the regulatory framework to protect consumers while allowing the industry to grow. Recent announcements include:

After a record-long delay, President Donald Trump this week announced his intent to nominate a director for the White House Office of Science and Technology Policy — Kelvin Droegemeier, who is the current secretary of science and technology for the state of Oklahoma. The announcement has generated excitement within the science and tech community, and C. Michael Carolina, executive director of the Oklahoma Center for the Advancement of Science and Technology (OCAST) called Droegemeier the “perfect choice.”

President Donald Trump signed the Strengthening Career and Technical Education for the 21^st Century Act, a reauthorization of the Perkins Act, on Tuesday, giving states greater control over setting their own goals for career and technical education (CTE), a change from the current law that requires states to get program goals approved by the secretary of education. And while there is a slight increase in overall spending for career education grants, it is still lower than historical funding levels for Perkins. 

The Perkins Act is a $1.2 billion program that was last overhauled by Congress in 2006 and was due for reconsideration in 2016, but got bogged down in partisan disagreements. The new bill is a bipartisan compromise that allows states to set their own goals for career and technical education programs without the education secretary’s approval, requires them to make progress toward those goals, and makes other changes to federal CTE law.

NASA has indicated it is facing broad, workforce-related challenges that can have a negative impact on programs over the long run; over half of its workforce is more than 50 years old, for instance. One recent announcement from its Minority University Research and Education Project (MUREP) may be a small step to help address some of those challenges.  MUREP’s Innovations in Space Technology Curriculum (MISTC) program has awarded $1.4 million total to five minority-serving colleges to help develop their STEM courses that will contribute to the preparation, training and development of NASA's future workforce.

The U.S. Small Business Administration recently announced its intention to award up to seven contracts for entities to lead regional innovation cluster initiatives. While two of the awards are partially set-aside for qualified small business, the remaining five are being competed full and open, meaning any entity is eligible. Each contract will be for a base year and four option years, with a base-year price not-to-exceed $500,000. An overview webinar will be held by the Program Office on Aug. 8, 2018, beginning at 4:00- p.m. EDT, and a link to this webinar will be provided on the solicitation’s FedBizOpps page.  Proposals are due Friday, Aug. 24.

New Jersey, long considered a state-leader in technology-based economic development prior to the Great Recession, has committed to reinvesting in its innovation economy. In addition to the legislature overwhelmingly approving a bill to reconvene the New Jersey Commission on Science and Technology — the state’s primary technology-based economic development organization — Gov. Phil Murphy also announced several other initiatives to support innovation and entrepreneurship in the state.

The House and Senate have agreed to the John S. McCain National Defense Authorization Act for FY 2019. As anticipated, the legislation addresses many small business and innovation policies. Changes relevant to tech-based economic development affect SBIR, advanced manufacturing, and partnerships with defense labs.

Industry-led “innovation hubs,” additional funds for risk capital, and a proactive talent strategy are among the recommendations included in Ohio BOLD: A Blueprint for Accelerating the Innovation Economy, a new strategic plan conducted by Columbus-based TEConomy Partners on behalf of the Ohio Chamber of Commerce Research Foundation. Developed as a way to inform a new gubernatorial administration of the Chamber’s priorities, the plan identifies opportunities around four platforms: next-gen manufacturing, future health, smart infrastructure, and data analytics.

SSTI board member Bruce Mehlman, a former George W. Bush administration official and founder of Mehlman Castagnetti Rosen & Thomas, recently published a midterm election presentation that has been discussed by numerous DC publications. Mehlman included an analysis of the last 10 senatorial midterm elections (see slide 15). The results suggest that incumbent senators of a different party than the president are very likely to win reelection, even in states carried by the president. Translating this to the 2018 midterms: Democrats hold 10 seats in states won by President Donald Trump. Based on this historical analysis, the party would have a 61 percent chance of carrying all 10 seats.[1] Meanwhile, Mehlman’s presentation states that seats held by the same party as the president face significantly lower odds.

Nearly a month after the start of the new fiscal year, Massachusetts legislators have approved an FY 2019 budget. Science and innovation stakeholders may find it worth the wait. Included in the $42 billion budget are new funding for a precision manufacturing initiative that will fund multiple, local activities ($2.7 million) and $500,000 for registered apprenticeships. A wide range of programs received at least twice as much funding as in FY 2018, including: MEP ($2 million in FY 2019); John Adams Innovation Institute ($2.5 million); Microlending grants ($300,000); Massachusetts Growth Capital Corporation technical assistance program ($2 million); Massachusetts Biomedical Initiative Inc. ($500,000); and, University of Massachusetts Innovation Commercialization Seed Fund ($500,000).