SSTI Digest

EDA’s Regional Innovation Strategies program — which makes i6 challenge and seed fund support awards — has released its notice of funding opportunity for FY 2018. Applications are due August 29. SSTI hosted a free webinar featuring EDA’s Office of Innovation and Entrepreneurship on June 14.*

EDA has $21 million available to award in 2018, thanks to the support of a bipartisan group of congressional champions and the outreach of organizations throughout the country coordinated by SSTI’s Innovation Advocacy Council.

The FY 2018 notice of funding opportunity is largely similar to the FY 2017 notice, but i6 awards can now request a maximum of $750,000 in federal support. Of course, all potential applicants are encouraged to review the opportunity in detail.

NIST’s Manufacturing Extension Partnership program launched a new Policy Academy focused on manufacturing this week. Funded by NIST MEP and organized by SSTI and  the Center for Regional Economic Competitiveness (CREC), the Policy Academy is designed to help states build upon existing strategies, leverage available resources, and spur creative new ideas about how to address major challenges or leverage opportunities around the manufacturing sector. Through a customized and collaborative experience, the Policy Academy will help teams of four-to-ten members representing a cross-section of policymakers and practitioners from relevant state agencies and stakeholder groups to identify best practices, partnerships, and policies to strengthen the manufacturers in their states.

The request for proposals, which can be downloaded here, covers the first of two academy cohorts, with up to four states selected. The first cohort will be from states selected from the 15 states that are not holding gubernatorial elections in 2018 (Delaware, Indiana, Kentucky, Louisiana, Mississippi, Missouri, Montana, New Jersey, North Carolina, North Dakota, Puerto Rico, Utah, Virginia, Washington, and West Virginia). The second cohort, in 2019-2020, will be selected from the remaining states. For additional information regarding eligibility and how to apply, contact Jonathan Dworin at SSTI.

Six years after the passage of the Jumpstart Our Business Startups Act of 2012 (JOBS Act), SSTI continues to examine the impact that the legislation has had on startup capital. In previous weeks, SSTI has looked at Regulation A+ offerings and equity crowdfunding (also known as regulation crowdfunding or Reg CF). This week, we look at SAFEs (simple agreements for future equity), an early stage, equity agreement that has gained  popularity due, in part, to the JOBS Act streamlining companies’ ability to raise capital privately. A future story will focus on their use for TBED organizations.

Noting that we have reached a point in time where STEM “influences every aspect of our education, work, and community life,” STEMconnector, a professional services firm, has released a new report that examines the current state of the field, identifies gaps and makes recommendations for action and investment. State of STEM highlights “five critical gaps” in the STEM workforce: a fundamental skills gap; belief gap; postsecondary education gap; geographic gap; and, demographic gap. The interaction of these gaps throughout the STEM ecosystem creates an overall opportunity gap for students and job seekers, a workforce development challenge for educators and a business imperative for employers, the report states.

Congress so far has ignored administration budget requests that call for reducing U.S. investment in research and development.  Science and innovation advocates interpret the legislative branch’s decision as good for many reasons. Authors Nicholas Bloom, Charles I. Jones, John Van Reenen, and Michael Webb add another reason in their NBER working paper Are Ideas Getting Harder to Find? They find U.S. productivity, measured as cost per meaningful innovation across a number of key sectors, is decreasing at an average rate of 5.3 percent annually. Prevailing economic growth projections may be optimistic, they conclude, because the projections do not incorporate ever-increasing prices for R&D outcomes.

Myriad data point to a decline in the number of new American business starts, but there have been fewer indicators of whether this overall trend was also true for firms with high growth potential. Recent research now provides evidence that these high growth firms are also becoming rarer. To the extent that high growth firms occur with less frequency, equity investors will have a harder time making successful investments that achieve positive returns — a reality that seems to be indicated by the several-year trend toward a lower rate of exits for venture capital funds.

Last week, SSTI examined the geography of “America’s Seed Fund,” the SBIR/STTR awards, on a state-by-state basis. A look at how the more than 25,500 awards were distributed at the regional level over the five-year period from 2013 to 2017 yields additional insight. The metropolitan areas with the largest concentrations of SBIR/STTR awards include knowledge hubs with large universities and access to federal R&D, such as Boston, Los Angeles, and Washington D.C. Smaller regions with a large federal R&D presence, like Huntsville, Alabama, Santa Maria, California and Dayton, Ohio also rank highly.

Compared to venture capital, the geography of SBIR/STTR deals is considerably less concentrated. Overall, less than half (44.2 percent) of the SBIR/STTR award dollars distributed between 2013 and 2017 went to the top 10 metropolitan areas. The top 10 metropolitan areas represent approximately 80 percent of all venture capital dollars, according to CityLab.

The President’s Task Force on Apprenticeship Expansion released a new report focused on “strategies and recommendations to promote apprenticeships, especially in sectors where existing apprenticeship programs are insufficient.” A key element of President Trump’s federal workforce development agenda, apprenticeships are seen as an effective tool for addressing the skills gap confronting U.S. employers and a pathway to a well-paying careers for American workers. The report includes recommendations across five areas related to apprenticeships including: education and credentialing; attracting business to apprenticeship; expanding access, equity, and career awareness; and, administrative and regulatory strategies to expand apprenticeship. While proponents of apprenticeships were supportive of several recommendations proposed within the report, the task force also faced criticism due to proposed cuts to other Department of Labor programs to pay for the expansion of federal funding for apprenticeships, and push back and questions from those in higher education.

State economic growth relies on the availability of a workforce capable of filling open positions. But increasingly around the country, one of the top concerns of employers is finding the right talent to fill these roles. Beyond corporate strategies in hiring, states are increasingly developing new initiatives to keep their pipeline of talent flowing. SSTI has found a variety of new initiatives being considered around the country, from foundation support for scholarships for credentials in high-demand fields in New Hampshire to pending legislation to support, with state funding, a Pathways in Technology Program (P-Tech) in California.

Alabama

This June, the Innovation Growth Lab's (IGL) third global annual conference will explore future innovation, entrepreneurship and small business policies. The summit, happening in Boston June 12-14 at Harvard Business School and MIT, includes more than 50 world-leading experts and participants from over 20 countries coming together as part of a global community at the forefront of innovation. Discussions will range from how to accelerate economic growth and make it more inclusive to support for local startup ecosystems and how to increase innovation and productivity in small businesses. There will also be a range of capacity-building workshops on new policy tools and methods led by organizations such as NASA, the SBA, the World Bank, Harvard Catalyst, and others. Registration is still open and more information is available here.

Several recent articles covered in the National Bureau of Economic Researchers (NBER) Digest suggest that current understanding of policies surrounding wages, clusters and labor concentration may warrant revisiting. In one piece of academic research, a historical argument of shared productivity gains with employees is challenged, while another article shows a loss of bargaining power for employees in concentrated labor markets.

Industry consolidation slowing wage growth, productivity

The SBIR/STTR program, which dubs itself as “America’s Seed Fund,” is one of the broadest forms of early-stage capital available to small technology companies. During the five-year period from 2013 to 2017, the 11 federal agencies participating in the SBIR/STTR program distributed 25,524 awards. Using charts, maps, and a downloadable spreadsheet, this Digest article looks at trends in SBIR/STTR awards by state over the period, including the companies with the most awards and states where SBIR/STTR awards outnumber VC deals. A future article will look at awards by metropolitan area.

Federal agencies with extramural R&D budgets exceeding $100 million are required to allocate 3.2 percent of their R&D budgets to the SBIR/STTR program. The U.S. Small Business Administration, which oversees the SBIR/STTR program, releases data on individual awards across agencies. SSTI has collected this data and compiled it by state. The interactive graphic below displays the data by award type (SBIR/STTR), phase, agency, and year.