SSTI Digest

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).

For the first time, the Chinese venture capital (VC) market has surpassed the U.S. VC market in total dollars invested in Q2 of 2018, according to Crunchbase. Driven by mega rounds and strong corporate VC, Chinese startups were able to raise more VC money in Q2’18 than their American counterparts. The strong Q2 for Chinese’s firms was driven by a very strong April. Chinese companies attracted approximately $15.6 billion that month. In comparison, U.S. companies attracted an average of U.S. $9.4 billion per month in Q1’18. In total, Chinese firms attracted approximately 47 percent of all reported VC dollars invested in Q2’18. If this trend continues, 2018 may become the year of the Chinese VC market.

The public holds an overwhelmingly positive view of public spending on higher education in the U.S., and they believe American colleges and universities benefit both society-at-large and individual graduates, according to a new research brief from Teachers College, Columbia University. Researchers looked at three related issues through an online survey of adults: Americans' views towards public investment in higher education; perceived contributions of higher education to American society (a public good) and to graduates (a private benefit); and, attitudes towards public spending on 2‐ and 4‐year institutions.  

(Figure 2.2 above from: Americans views of higher education as a public and private good. New York: Teachers College, Columbia University)

Help inform decisions on the direction of federal R&D's role in innovation! Please complete this 10-minute survey by July 25 to share your ideas of current and future practices affecting R&D direction and tech transfer options with the federal labs.

A summary of the survey results will become part of a report that will be shared with the National Institute of Standards and Technology on our field's perceptions of federal tech transfer efforts. More information is available at here.

The U.S. Department of Energy has launched a new Lab Partnering Service (LPS) that provides an online, single access point platform for investors, innovators and institutions to identify, locate and obtain information on the department’s 17 national laboratories. The new tool is intended to provide industry with a more efficient way to harness technical expertise and intellectual property housed at DOE’s labs.

The LPS gives energy investors and innovators direct access to the expertise, research and capabilities across all 17 labs. Users of the new service will be able to submit inquiries to the technology transfer office at each lab.

The LPS has three main components that should reduce barriers to partnering with the labs: access to national lab researchers that will allow investors and innovators to connect with subject matter experts and receive technical assessments; direct access to pre-validated, ready to license technologies; and, a dynamic online search and visualization database tool for patents associated with DOE laboratories.

After 20 years of a program that had supported innovation in the state of Kentucky, the governor said he wanted to consolidate the funding to support entrepreneurs and become more strategic in the state’s efforts. This month, the state unveiled a new program — Regional Innovation for Startups and Entrepreneurs (RISE), a strategy that unites each area’s most powerful economic drivers, prioritizes commercialization and promotes rapid scaling.  The new strategy is designed to decrease duplication of efforts and get investments more directly to entrepreneurs, said Brian Mefford, the executive director of KY Innovation.

In last week’s Digest, SSTI looked at several macro venture capital (VC) trends, this week’s Useful Stats article focuses on regional trends as well as provides downloadable VC stats by state by quarter from Q1 of 2016 to Q2 of 2018. The data includes median VC deal size, VC deals, and VC dollars invested.

While the five West Coast states (Alaska, California, Hawaii, Oregon, and Washington) continue to dominate the VC landscape with approximately $17 billion invested over 751 deals in Q2 of 2018, the New York City MSA has seen an increase in its share of VC deals (12.8 percent through Q2 of 2018) – up from 11.4 percent for 2017, according to the 2Q 2018 PitchBook-NVCA Venture Monitor. These findings highlight the long-standing trend that the U.S. VC market remains concentrated on the coasts with approximately 71 percent of deals and nearly 88 percent of VC dollars going to the West Coast states, the Mid-Atlantic states, and the New England states. The map below from the 2Q 2018 PitchBook-NVCA Venture Monitor provides a regional breakdown of both deals and dollars.

North Carolina and Tennessee are implementing new initiatives to get students in their states the help they need to either complete degrees or training that will help improve workforce development in those states. North Carolina’s governor recently added a new line of grants dubbed “Finish Line” grants, to help students that are struggling with non-academic problems complete community college. And Tennessee is rebranding its Tennessee Pathways program, employing regional coordinators to work in nine economic regions of the state to lead the alignment of local education institutions and employers.

North Carolina Gov. Roy Cooper announced the Finish Line Grants program to help community college students who face financial emergencies. The program will help students pay for course materials, housing, medical needs, dependent care and other unforeseen financial emergencies. Students receive a maximum of $1,000 per semester.

The 36|86 Entrepreneurship Festival, being held Aug. 29-30 in Nashville and powered by Launch Tennessee, is one of the Southeast's largest gathering of entrepreneurs, innovators, VCs and ecosystem builders. Join your peers to hear from Fortune 500 leaders, startup founders, and top VC's from around the country. Agenda highlights include impact investing, opportunity zones, startup ecosystems done right and going to market right the first time. More information and registration is available here.