SSTI Digest

With final passage and signage pending at the time of publication, the federal budget for FY 2018 provides relatively strong support for innovation economies. The Regional Innovation Strategies program is funded at $21 million, MEP at $140 million and the National Science Foundation at $7.8 billion, increases for all organizations. Other notable innovation programs receiving at least level funding are SBA’s cluster and accelerator programs, DOE’s ARPA-E, NASA science and the National Institutes of Health. Numerous stakeholders weighed in with Congress to preserve these priorities over the administration’s FY 2018 request — and FY 2019 faces the same challenges.
 

An earlier SSTI analysis detailed the Bureau of Labor Statistics labor force participation projections, revealing a continuing downward trend in the number of workers despite a growing population. Additional research papers released in February from economists at the University of Maryland as well as the Kansas City Federal Reserve Bank explores the reasons behind the trend, finding that trade and robots have had a significant impact, and suggests that some prime-age workers may not be coming back.

In a working paper published in the National Bureau of Economic Research, Katharine G. Abraham and Melissa S. Kearney review evidence regarding the role of various factors to try to explain the falling employment rate among prime-age U.S. adults over the period 1999 to 2016. During that period, the overall employment-to-population ratio for those 16 and over fell by 4.5 percentage points.

U.S. Secretary of Energy Rick Perry is calling on Americans’ competitive spirit to help solve critical water issues. Perry led a roundtable discussion last week on the use of federal prizes and challenges to drive innovation in dealing with water issues such as alternative water supplies, reducing water treatment costs, greater efficiency in usage, and advancing market-based solutions that incentivize innovation and cooperation. The roundtable, which included government and industry representatives along with experts from the U.S. Department of Energy’s Argonne National Laboratory and Idaho National Laboratory and others, was a first step toward launching a potential grand challenge. DOE has released an RFI to solicit input from the public and may use the information it gathers to develop challenges and prize competitions to address key water issues. Comments to the RFI are due by May 14, 2018.

Across the country, companies reported nearly $300 billion in self-funded and self-performed domestic R&D in 2015, according to recent data from the National Science Foundation’s Business R&D and Innovation Survey (BRDIS), with nearly one-third of this total ($95.0 billion) coming from California. Businesses in Wyoming, Washington D.C., and Utah reported the greatest increase in self-funded and self-performed R&D from 2010 to 2015.

Wyoming Gov. Matt Mead has approved legislation that will help promote economic diversification through innovation in a state that has relied heavily on a relatively small number of resource-based industries. Mead recently signed multiple pieces of legislation that comprise ENDOW (Economically Needed Diversity Options for Wyoming), a 20-year initiative focused on diversifying and growing the state’s economy. Notable bills include Senate File 118, which will establish a dedicated organization to support Wyoming’s entrepreneurs and provide funds to innovative startups, and Senate File 119, which will establish a dedicated fund for workforce training in economic sectors considered a priority for the state.

Sen. Jerry Moran (R-KS) was one of several legislators who participated in SXSW, including on a panel that also featured Ben Johnson of BioSTL representing SSTI’s Innovation Advocacy Council. Moran promoted the Startup Act — his legislation that SSTI has helped inform — saying the goal of the bill’s improvements to the Regional Innovation Strategies program is to, “Increase the opportunity… to get dollars to organizations across the country that promote entrepreneurship and innovation to bring this opportunity to every American.”

Valuations of venture backed companies and the number of unicorns are rising based on the leading nationwide surveys, but closer examination of the data reveals not all startups are seeing the effect. The median valuation for female-founded companies, for example, was lower in 2017 (approximately $11 million) than it was in 2007 (approximately $15 million), according to research from PitchBook’s Dana Olson. In comparison, the median valuation for male-founded startups has increased by approximately $8 million between 2007 (approximately $21 million) and 2017 (approximately $29 million). Olson also found that, across all industries, a much higher percentage of VC-backed, male-founded companies (35 percent) received at least one round of follow-on funding than female-founded companies (2 percent). With regard to exits, male-founded startups are acquired more than 11 percent of the time, while less than 0.5 percent of female-founded startups ever reach the same milestone.

The last of the governors’ state of the state addresses for this year have been delivered, and New Jersey’s governor presented his first budget address. SSTI has continued to review the addresses for news on TBED initiatives and presents excerpts of their addresses concerning such initiatives below. Louisiana’s governor is focused on addressing a fiscal cliff while preserving education gains in the state. New Jersey’s governor laid out a vision embracing green energy in the state and growing high school STEM-focused programs. And New Hampshire’s governor touted the state’s fiscal strength and said he would continue to build momentum on STEM initiatives with a new partnership for an annual robotics competition.

Between 2010 and 2015, job and establishment growth was substantially lower in U.S. counties where broadband is less available and technologies are less likely to be adopted, according to new research from the Purdue Center for Regional Development. To measure county-level digital divide, authors from the center developed the Digital Divide Index (DDI), which factors in demographics, jobs, and other establishment trends in the U.S. Notably, the index is comprised of two parts to make it more useful to policymakers and practitioners: an infrastructure score and an adoption score. Each of these scores are comprised of four measures as a way to differentiate between the mere presence of broadband in a community and factors that may predict its adoption. The authors suggest that broadband efforts should be rooted in a local context; for some areas, it may make more sense to improve broadband infrastructure, while for others, more effort should be placed on increasing digital literacy or exposure to technological benefits.

Citing national security concerns, the Trump administration made headlines this week when they ordered that chipmaker Broadcom stop pursuing its $117 billion bid for its largest competitor, Qualcomm. While the current role of the federal government has captured attention, it is worth noting the contributions of federal and higher ed technology commercialization policies– themselves innovative at the time – to both companies’ origins: Qualcomm’s roots trace back to an SBIR award, while Broadcom is the result of a UCLA spinoff and generous entrepreneurial leave granted by the institution.

The Government Accountability Office identified eight trends having strong effects on both the federal government and society as a whole, and those included in the science and tech section of the report are suggested to be critical to the country’s competitiveness. The trends are part of the larger 2018-2023 strategic plan for the office, whose mission is to ensure that Congress is aware and informed, and to help improve the performance and ensure the accountability of the federal government. The trends analysis outlines the current situation, key uncertainties and implications of each trend. In the area of science and technology, the GAO identified five emerging technologies that may transform society: genome editing; artificial intelligence and automation; quantum information science; brain/augmented reality; and cryptocurrencies and blockchain.

In a shift from its past economic development efforts, the U.S. Department of Commerce FY2018-2023 strategic plan would move the department to focus almost exclusively on being a commercial services entity. The plan’s points of emphasis are on streamlined permitting and regulations, with direct government activity primarily reserved for common good services — e.g., economic data, cybersecurity and IP protection. References to activities providing direct support for businesses and regional economies are ranked as lower priorities or nonexistent. EDA is left out of not only the descriptions of how the department’s bureaus will contribute to strategic objectives, but also out of the list of offices comprising the department.