SSTI Digest

One year from now, at least one-third of the states will have a new person sitting in the governor’s chair due to the retirement or term-limit of 17 current governors. The number of new governors could be higher than the guaranteed 17 new governors because there are 36 gubernatorial seats up for grabs. For those questioning the import of a large new class of governors, one does not need to look beyond the last two major waves of new governors — 2010 when 26 new governors came into office and 2002 when 20 new governors did — to see the impact that large classes of governors can have not just on their individual states, but the field as a whole. Governors elected in 2010 for the first time included Governor Bill Haslam of Tennessee, whose advocacy for the Tennessee Promise program helped lead to the current wave of proposals for free tuition, Governor Sam Brownback of Kansas who slashed taxes and eliminated two of the country’s largest tech-based economic development programs largely on ideological grounds, and Governor Andrew Cuomo of New York whose regional approach to economic development influenced a number of states. The 2002 elections…

Most of the baker’s dozen of fourth quarter exits SSTI reviewed for publicly-sponsored venture investments reveal local employment likely to remain in place after the deals close, regardless of the deal structure. During the past three months, companies that 20 venture development organizations (VDOs) had invested in participated in at least 10 acquisitions, with seven resulting in operating subsidiaries under the new parent firm. Also in the mix for the quarter are one initial public offering (IPO), one sale of intellectual property and one leveraged buyout. Several of the deal structures suggest that regionally-based funds might have made the difference for those startups making it all the way to exit. Reaching that coveted milestone can be a tricky path, as we discover in some of the stories below. SSTI gleaned the information from Crunchbase, Pitchbook and company websites. Diion Technologies acquired Magaw, developer of a video laryngoscope system on Dec. 28, 2017, for an undisclosed amount. Based in Fort Worth, Texas, Magaw had 51 employees at the time of acquisition and is expected to continue as an operating subsidiary of Diion. Exiting investors in the…

A range of equity-based strategies to support scale-up programming for small-scale manufacturers are among the findings of a recent report from the Urban Manufacturing Alliance (UMA). In Making, Scaling and Inclusion, UMA found that the economic development field is hungry for strategies that remove employment barriers and build the talent of low-income and economically disadvantaged communities to drive economic growth in their cities and the report offers guidance for building equitable innovation economies.

Eligible small businesses who have not previously won an SBIR/STTR award from the NIH are able to apply for help through a pilot initiative, the Applicant Assistance Program (AAP). The primary goal of the AAP is to increase participation in the SBIR program by businesses that are owned or controlled by individuals who are traditionally underrepresented in the biomedical sciences. The pilot is aimed at helping small R&D businesses and individuals successfully apply for Phase I SBIR/STTR funding from the National Cancer Institute (NCI), National Institute for Neurological Disorders and Stroke (NINDS), National Heart, Lung and Blood Institute (NHLBI).

The executive council of ENDOW, an economic development initiative started by Wyoming governor Matt Mead, has announced its preliminary recommendations to diversify and grow the state’s economy, including statewide programs to support tech-based economic development that total more than $36 million. Notable among the recommendations are $6 million for a proposed Wyoming Research and Innovation Fund that provides matching funds as a way to leverage federal R&D opportunities and $5 million to develop a new organization called Startup:Wyoming, which would administer the Fund and provide support to entrepreneurs throughout the state.

The Republican tax plan passed Congress this week. The legislation, which is part tax cut — $1.5 trillion over 10 years — and part reform — replacing multiple deductions and credits with overall lower rates — will affect the U.S. economy for years to come. Education, employment, capital access and business investment are likely to be directly affected as soon as next year, and, if state budgets hold any value as predictors, regional innovation economies will be particularly affected through future reductions in federal spending. What the bill does for innovation The bill’s final, direct impacts on education, science, tech and innovation are more limited than those presented in earlier drafts. Deductions related to higher education affordability remain intact, as do the R&D tax credit, along with most economic development credits, and the ability of startup employees to defer taxes on equity grants. There are several changes likely to affect universities and new businesses:[*] Private universities with at least 500 students and an endowment of more than $500,000 per student will pay a 1.4 percent excise tax;[#] Deductions for…

This past summer Ohio joined a growing number of states that allow community colleges to offer four-year degrees when it enacted legislation allowing community colleges, state community colleges, and technical colleges to apply to offer applied bachelor’s degrees. If approved, the programs will join a growing number of applied baccalaureate degree programs being offered by community colleges across the country. The trend has met with resistance from some higher education institutions, while students and employers voice their support.

States enacted cautionary budgets for 2018 with general fund spending projected to grow 2.3 percent in fiscal 2018, the lowest increase since 2010, according to the most recent NASBO survey. The National Association of State Budget Officers (NASBO) released its Fiscal Survey of the States showing caution on the part of policymakers following two years of sluggish revenue growth and spending pressures. Meanwhile, the survey finds most states are forecasting moderate improvements in their general fund revenue collections in fiscal 2018 (median growth rate of 3.2 percent) and that most states are continuing to strengthen their reserves. The budgetary process was strained this year with a number of states calling special sessions to deal with their plans and 11 states starting the fiscal year without a fully enacted budget. New funds were directed mainly to K-12 education and Medicaid. The survey also found that: 26 states enacted general fund spending increases below 2 percent in fiscal 2018, including 15 states with spending declines; General fund revenues grew 2.3 percent in fiscal 2017, with collections coming in below original budget projections in 27 states…

Expenditures for R&D from state government agencies increased by 17.3 percent from FY 2011 to FY 2016, reaching $2.3 billion, according to data from the Survey of State Government Research and Development, a survey sponsored by the National Science Foundation’s National Center for Science and Engineering Statistics (NCSES). Nearly two-thirds of this total – 64 percent – came from just five state governments (California, New York, Texas, Florida, and Ohio).

Estimates indicate that R&D expenditures in the United States reached $510 billion in 2016, marking the first time this total has eclipsed the half-trillion mark, according to recently released National Science Foundation data. The majority of R&D expenditures and performance comes from the private sector. From 2011 to 2016, R&D growth kept pace with the economy as a whole, and R&D intensity – measured as R&D expenditures as a share of gross domestic product – was essentially flat. The analysis finds, though, that federal expenditures on R&D decreased during this period.

Due to their positive impact on entrepreneurship (31 percent of VC-backed founders are immigrants) and innovation (76 percent of patents from top 10 U.S. patent-producing universities had at least one foreign-born author) in the United States, many institutions of higher education are working to understand the opportunities, challenges, and gaps that exist in supporting international students from their first year of study through graduation, the job search process, and entry into the labor force. Institutions of higher education are seen as uniquely positioned to enhance international students’ employability as they provide access to work experience as well as cultural acclimation to increase the likelihood those individuals will remain in their host country after graduation.

Gov. Andrew Cuomo announced more than $755 million in economic and community development funding awarded through Round VII of the Regional Economic Development Council initiative. The Regional Councils were established in 2011 as a community-based and performance-driven approach to economic development. Each of the 10 regions of the state must develop strategic plans tailored to their region. Each region also competed for designation as a “top performer,” to receive up to $20 million in additional Empire State Development grant funding. The most recent announcements, including the five top performers are: Central New York: Top Performer Awardee | $86.4 million supporting 112 projects Mohawk Valley: Top Performer Awardee | $85.5 million supporting 101 projects Capital Region: Top Performer Awardee | $85.0 million supporting 110 projects Mid-Hudson: Top Performer Awardee | $84.8 million supporting 113 projects Long Island: Top Performer Awardee | $84.3 million supporting 98 projects Western New York: Regional Council Awardee | $68.8 million supporting 112 projects Southern Tier: Regional Council Awardee | $67.3 million…