SSTI Digest

Two recent reports detail the changing nature of jobs and highlight the importance of digital skills for the workforce. To guard against a greater income divide and ensure a competitive workforce, the studies — one from Brookings and the other from the McKinsey Global Institute — outline policy prescriptions that may ease the transition.

This article is part one of a two part series focused on the intersection between economic opportunity and the economic development practice.  

A lack of economic opportunity could threaten American innovation, according to new research from Stanford economist Raj Chetty and other members of the Equality of Opportunity Project. The authors advocate that in light of empirical research showing the worsening effects of economic segregation and inequality, the economic development community needs to support new strategies and tactics that can deliver “realistic economic opportunity” to more communities across the country. If the future of American inventiveness depends on place-based economic opportunity and exposure to innovation as the study suggests, troubling times may lie ahead.

The United Kingdom government recently released a new industrial strategy that outlines a number of striking commitments. These include a plan to increase R&D spending from 1.7 percent to 2.4 percent of GDP, £406 million for STEM training, £1 billion for network infrastructure and a new £2.5 billion investment fund. Like many similar U.S. state industrial reports, the UK paper clarifies its intention to focus its investments in key sectors, namely: artificial intelligence and data, clean energy, mobility/transportation and the “needs of an aging society.” 

For the first time in five years, federal funding for higher education research and development increased in both current and constant dollars, according to recently released data from the National Center for Science and Engineering Statistics within the National Science Foundation. In FY 2016, universities reported $72.0 billion in total R&D expenditures, a 4.8 percent increase from FY 2015. Of this amount, more than half (54 percent) came from the federal government. Institutionally financed research represented 16 percent, the second largest source of R&D funds at universities in FY 2016.

When TechShop unexpectedly closed its 10 locations around the country on Nov. 15, announcing its intention to file for Chapter 7 bankruptcy, it not only surprised many who were affiliated with the maker space, but raised questions surrounding the larger maker space community. Dan Woods, CEO of TechShop, cited financial reasons for the closing. They had earlier announced the closing of the Pittsburgh shop, but had opened a new shop in Brooklyn, New York, just weeks before the sudden closure. While the future of those facilities is still undetermined, those in the maker space community say the demand for maker spaces has not diminished and they continue to evolve.

Student impact

Venture-backed startups generate nine times the knowledge spillovers (e.g., patenting activity and citations) when compared to that produced by R&D investment of established companies, according to recent research. In Measuring the Spillovers of Venture Capital, researchers from the University of Munich found that, on average, two-thirds of this increase can be traced to more patenting by other companies within the VC-backed company’s spillover pool (e.g., companies with geographic or industry proximity). The companies that most benefited from the knowledge spillover were large, established companies.

Senate Appropriations subcommittees have advanced the remaining FY 2018 departmental budgets: Defense, Homeland Security, Interior, and Financial Services. Unlike the House’s proposal, the Senate would largely maintain FY 2017’s innovation funding. Highlights include level funding for SBA’s entrepreneurial programs — with $6 million for clusters initiatives and $2 million for accelerators — and level funding for the CDFI Fund. Science and Technology funding, while above the administration's request, would decrease by about 8.6 percent for Homeland Security while Defense would see a small increase for applied research but an overall 0.5 percent decrease, according to the American Institute of Physics.

The California Institute for Regenerative Medicine (CIRM) is exploring options for its future as funding provided through its bond issue dwindles. In a meeting earlier this week, two governing board committees of the agency focused on short and long term finances including a proposal to cut clinical awards by $68 million over the next two years, an effort to raise $222 million in private funding, and the possibility of a $5 billion ballot initiative in November 2020, according to the California Stem Cell Report.

Despite concern that America’s entrepreneurial engine is severely damaged, new research from the Information Technology and Innovation Foundation (ITIF) finds that the number of technology-based startups has grown by 47 percent from 2007 to 2016, with wage growth higher than the national average. Because of their high growth potential, the authors suggest that technology-based startups should be the primary focus of entrepreneurship policy. To bolster these types of entrepreneurs, the authors propose recommendations across four main areas: tax reform, regulatory reform, STEM skills, and technology transfer.

While venture capital remains heavily concentrated across a select few metropolitan areas, the geographic distribution of angel investors is widespread, according to new research from the Angel Capital Association, The Wharton School at the University of Pennsylvania, and the John Huston Fund for Angel Professionalism at Rev1 Ventures. Stemming from a survey of 1,659 angels, the largest such project to date, The American Angel paints a demographic portrait of that subset of the investment community in the United States. Nearly two-thirds of the angel investors surveyed by the group were located outside of New York, Boston, and the Bay Area. On average, coastal angel investors made smaller investments than those from other regions – $32,000 compared to $37,000 per investment. Texans, on average, made the largest angel investments at $44,000.

The National Science Foundation (NSF) released a new federal funding opportunity (FFO) for the Innovation Corps-National Innovation Network Teams program (I-Corps Teams). I-Corps team awards provide mentoring and additional funding to promising, NSF-funded researchers at institutions of higher education to accelerate innovation, attract subsequent third-party funding, and increase the commercialization of scientific discoveries. NSF intends to commit $12.75 million to support up to 255 I-Corps teams and proposals are accepted on a continuing basis.

NSF intends to hold a webinar to answer questions about the I-Corps Teams program. Details will be posted on the I-Corps website as they become available.

Last week in honor of Veteran’s Day, the U.S. Department of Agriculture, states, universities, and various nonprofits announced new efforts that are intended to help U.S. veterans succeed as entrepreneurs and launch careers in 21st century STEM-driven fields. From tax credits in Massachusetts to online training in data analytics, efforts will focus on providing veterans with the necessary training, education, tools, capital, and other resources to create a better future for those veterans, their families, and communities across the country.

At the federal level, the U.S. Secretary of Agriculture Sonny Perdue announced the launch of a new website and resources to support veterans interested in opportunities in agriculture, agribusiness, and in rural America. The efforts will focus on the “three Es” – employment, education, and entrepreneurship – by pulling together programs from the department’s 17 agencies that will assist veterans along career and entrepreneurial pathways.