SSTI Digest

Both the House and Senate are beginning the appropriations process for FY 2019 this month, and early indicators suggest that EDA’s Regional Innovation Strategies program could see an increase over its $21 million for FY 2018. In the House, the relevant subcommittee under Chairman John Culberson (R-TX) and Ranking Member Jose Serrano (D-NY), advanced a bill to fund the program at $21 million — the highest level ever approved by the committee. The new Senate appropriations chair, Senator Richard Shelby (R-AL), was over the subcommittee as it moved the program from $10 million to $21 million. The new subcommittee chair, Senator Jerry Moran (R-KS), has been a champion of the program and noted its importance to Kansas in his opening remarks to Commerce Secretary Wilbur Ross in a budget hearing this morning. SSTI’s Innovation Advocacy Council has been working with organizations across the country as well as congressional offices on the Hill to increase RIS appropriations. A coalition letter signed by 11 innovation-focused organizations earlier this year asked Congress to fund the program at $50 million, and a separate letter signed by 50 RIS awardees…

Earlier this month, the Bureau of Economic Analysis (BEA) published its 2017 estimates on state-level real gross domestic product (GDP). Per-capita gross product is a useful metric because it can show a state’s relative performance against its peers and over time. SSTI has prepared a spreadsheet showing 10 years of real per capita gross product by state, as well as an interactive map showing changes over the 1-year, 5-year, and 10-year periods. As more data becomes available, a future Digest issue will cover this topic at the metropolitan level.    At nearly $160,000 per person, real per capita gross product was highest, by far, in Washington D.C. in 2017. Coastal states like Massachusetts ($66,500 per person), New York ($65,220), Delaware ($63,955), and Connecticut ($62,633), as well as energy-intensive states like North Dakota ($64,911), Alaska ($63,610), and Wyoming ($61,091), ranked highly for real per capita gross product in 2017. In the past year, real per capita gross product grew faster in Western and Midwestern states, but more slowly in rural plains states. West Virginia (3.3 percent increase), Wyoming (3.0 percent increase), and…

Declining enrollments, higher costs and limited state funding continue to challenge higher education institutions, and possible mergers continue to surface as an option to meeting those challenges. In Pennsylvania, a new study sponsored by the Pennsylvania Legislative Budget and Finance Committee identifies options to help ensure the sustainability of the State System of Higher Education, and mergers factor into those considerations. However, in Connecticut a plan to merge the state’s 12 community colleges into one was rejected last month by its regional accrediting authority, the New England Association of Schools and Colleges (NEASC). The Connecticut merger plan was formulated as a way to save money for the struggling community colleges. But the plan was called unrealistic by NEASC, who voiced concerns that it could cause a disorderly environment for students and felt it was actually creating a new college and not just a substantive change. What the future holds for the colleges is uncertain, and the president of the Connecticut Board of Regents is considering closing one or more campuses or raising tuition. In order to more closely study the viability of…

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. Upon changing that policy, Mayo implemented new employee entrepreneurship programs and collaborated with the City of Rochester and the Rochester Area Economic Development Initiative (RAEDI) to develop the Mayo Clinic Business Accelerator. About 20 startups are currently tenants in the space, which offers access to offices, mentorship, legal services and connections to capital. Nearly 60 companies have participated in the accelerator since it opened five years ago, creating 75 new jobs and attracting approximately $40 million in capital.  

A Securities Exchange Commission (SEC) report contains over 20 recommendations for the SEC to consider that would improve small business capital formation. The report, released in April, stems from the 36th annual Government-Business Forum on Small Business Capital Formation – a daylong event held late last year. Its recommendations include issues related to the definition of accredited investors; rules changes that would increase the number of Regulation A+ and Regulation Crowdfunding offerings; and, a revised regulatory regime (based upon the European regulatory regime) to improve peer-to-peer lending.

Money the federal government invests in the Manufacturing Extension Partnership (MEP) program is generating a substantial economic and financial return and powering an additional 219,000 jobs, according to a new study by the W.E. Upjohn Institute. The study of FY 2017 data showed a 14.5:1 financial return for the $128 million invested by the federal government. Each year, an independent firm surveys manufacturers regarding the impact they have achieved from MEP Center services. In 2017, MEP clients reported $12.6 billion new and retained sales of which $3.5 billion is new sales providing an economic stimulus of 27 to 1 (based on the $128 million federal investment). The study looked solely at personal income tax and not business taxes, and provides a conservative estimate of the return. MEP is a federal public-private partnership that provides small- and medium-sized manufacturers (SMMs) technology-based services and is managed by NIST and the U.S. Department of Commerce, and implemented through a network of centers located in every state. MEP centers are not-for-profit organizations that employ a network of more than 1,300 industry experts who work directly with…

In 2017, 122 companies filed Regulation A+ (Reg A+) offerings and raised over $236.5 million collectively, building upon the early promise shown when the rules went into effect two years ago. Reg A+ is a less complicated and shorter process for a company going public than the traditional initial public offering (IPO) process. The 2017 Reg A+ offerings averaged $18.2 million each, according to a recent report by Amit Singh from the Stradling law firm, and include both Reg A+ Tier 1 and Tier 2 offerings. However, as the SSTI Digest recently reported about  equity crowdfunding, startups and other small businesses have been slow to adopt this new source of capital. Touted as a “game changer” by its proponents because it allowed companies to more easily raise money from non-accredited investors and market their mini-IPO over the internet, Singh contends he was surprised that there have been so few offerings. At its core, Reg A+ allows U.S.-based companies to gauge their offerings’ appeal in the marketplace and raise up to $50 million over a 12-month period in growth capital from both accredited and non-accredited investors with significantly less…

The majority (75 percent) of all high school students were enrolled in a STEM course during the 2015-16 school year, according to the newest Civil Rights Data Collection (CRDC). For the first time, the CRDC includes new categories of data on STEM course taking, showing that some higher level math and science courses are offered at fewer high schools. That figure is even more pronounced at the approximately 5,000 high schools with high black and Latino enrollment (i.e. schools with more than 75 percent black and Latino student enrollment), where higher level mathematics and science courses are offered at a lower rate than the overall population of all high schools. This difference is greatest with respect to advanced mathematics (offered at 65 percent of all high schools compared to 55 percent of high schools with high black and Latino student enrollment), Calculus (50 percent vs 38 percent), and Physics (60 percent vs 51 percent). However, there was only one percentage point difference in offerings of Algebra I, Geometry and Biology between all high schools and high black and Latino enrollment schools. The data show that 86 percent of all high schools…

One of our partner organizations, the National Association for Community College Entrepreneurship (NACCE), recently opened their registration for their annual conference, NACCE 2018 The Entrepreneurial Ecosystem Revolution. The conference features keynotes from engaging entrepreneurs that have innovated in areas ranging from 1980’s rock and roll memorabilia to one of the co-developers of Amazon’s Alexa. Panels and breakout sessions featuring NACCE members from across the U.S. will share best practices for entrepreneurial leadership and experiential teaching across academic disciplines.

One of this year’s most important books on economic development tells a story that those involved in the field need to know and might not necessarily want to hear. In Coping with Adversity: Regional Economic Resilience and Public Policy, authors Harold Wolman, Howard Wial, Travis St. Clair, and Ned Hill seek to understand why some metropolitan areas are resilient in the face of economic hardship, while others are not. This commentary will summarize the authors’ findings and provide insight into what their findings might mean for the broader economic development community. To understand regional economic resilience, the authors of Coping with Adversity employ both quantitative and qualitative analyses through the lens of product portfolio theory. This theory offers that, just as businesses have a portfolio of services and products with their own distinct life cycles, so do regional economies. The traded sector of a regional economy is a mix of infant, rapidly growing, mature, and declining products. Some regions — particularly high-skill, high-income places — may have success in innovating around these product cycles, allowing new products or…

Last year, the National Institutes of Health (NIH) considered multiple strategies to address the implicit bias toward researchers with ‘proven track records’ during its existing grant making process. While previous research studies have found similar concerns about the current grant making process, two recent studies from the University of Cambridge propose that grant-making organizations consider implementing a lottery system to allocate grant awards to alleviate bias and improve outcomes.  

In 2017, 25.7 percent of all angel capital group deals went to a founding team with at least one female founder, up from 17.0 percent in 2016, according to the Angel Resource Institute’s (ARI) HALO Report: 2017. The report also found a sizeable increase in the number of deals made for companies that included at least one minority female founder – 5.5 percent in 2017 (1.0 percent in 2016). The HALO Report: 2017 is based upon data collected from angel groups as well as individual angel groups across the country. To collect the data, ARI uses both survey responses and PitchBook online resources. In total, the study’s database includes 3,617 deals made by angel groups. ARI, however, excluded deals with first-time investment rounds greater than $4 million to avoid skewing the data. ARI also excluded deals made by individual angel investors outside of groups in 2017 – they report that 1,499 such individual angel investor deals were made. ARI and researchers from Florida Atlantic University (FAU) also found that geographic diversity of deals increased in 2017 especially due to increased deal activity in Texas (8.7 percent in 2017; up from 5.9…