SSTI Digest

On May 16 of last year, the Securities and Exchange Commission (SEC) finally allowed both accredited and non-accredited investors to engage in regulation crowdfunding. Under the new SEC rules, startups and other private companies could offer equity in return for capital to help support business growth. As of May 2017, total contributions under the regulation crowdfunding into startups and small businesses are over the $40 million mark with an average investment of $833 per investor. Using data from the Crowdfund Capital Advisors, Catherine Yushina from Crowdfund Insider highlighted several data points about the first year of regulation crowdfunding: States with the most activate crowdfunding investors are California ($15.7 million committed), Texas ($5.4 million committed), Massachusetts ($3.1 million committed), New York ($2 million committed), and Oregon ($1.2 million committed); Approximately 79 percent of the successful companies were founded by teams of two or more; and, Teams of five founders had the highest average raise at $408,000 while individual founders raised $353,000. In Women & Minorities in Regulation Crowdfunding: High Success Rate Despite Low…

Adults in Tennessee seeking to return to the classroom will have a new option for free tuition at community colleges, part of an expansion of the Tennessee Promise scholarship program. The newly passed and expanded Tennessee Reconnect legislation extends eligibility for free tuition to persons who have been out of school for longer periods of time or who may have never attended college. It is part of Gov. Bill Haslam’s “Drive to 55” focus, where he hopes to increase the percentage of the state’s adults equipped with a college degree or certificate to 55 percent; it is currently closer to 30 percent in Tennessee. In his press release on the program, Haslam said, “In Tennessee, we’ve determined that the best jobs plan is an education plan.” The Tennessee Reconnect Act establishes a last-dollar scholarship for adults, available once other grants and scholarships have been exhausted. The governor has touted that the plan will not cost taxpayers anything, as it is being funded through the lottery for education account, and will cost approximately $10 million once fully implemented. Slated to begin in 2018, the state’s network of…

In an unexpected twist, the FY 2017 budget passed earlier this month by Congress has more dislikes than likes for evidence-based program and policy design, despite being embraced strongly by both Presidents Donald Trump and Barack Obama. Masked under a variety of different nomenclatures – performance contracting, social impact bonds, pay for success, for example – evidence-based programming incorporates rigorous metrics to assess the effectiveness of public policy toward meeting its goals and basing expenditures accordingly. The largest initiative testing its merit in federal funding outlays was the Social Innovation Fund, housed within the Corporation for National and Community Service (CNCS). Congress eliminated the entire $54 million for the program, which had supported dozens of pay for success pilot programs across the country. In the conference report that accompanied the final budget bill, Congress also chastised the U.S. Department of Education for applying pay for success principles without explicit approval from Congress: “There is significant concern about the Department's allocation of resources available…

In a market economy, what people are willing to pay determines something’s value. Airline tickets are a good example. For most of the major airlines, the price to purchase a seat the day of a flight seems to be some multiple of how much the airline thinks they can get away charging versus any drive to actually see the seat used.  This supply-demand principle falls apart though with valuations set for startup companies funded by equity investors, such as angels or venture capitalists.  In the risk capital business, a number of possible factors influences a startup company’s value – most tied to future markets, comparables, or dreams of big exits.  Recent research from the University of British Columbia and Stanford University suggests just how surprisingly risky – and overly optimistic – this approach is. Will Gornall and Ilya Strebulaev of UBC and Stanford, respectively, reveal their research in a new working paper, Squaring Venture Capital Valuations with Reality. They find unicorn companies – the approximately 200 startup companies for whom venture backers estimate are worth more than $1 billion each – are…

The Economic Development Administration is seeking applications through June 23 for the 2017 Regional Innovation Strategies program. Through SSTI’s work with Congress, a record $17 million is available this year. Along with increased funding, the notice of funding availability includes a few changes from previous years. More information will also be available in a webinar SSTI is hosting with EDA on May 22 at 3 p.m. EDT. EDA is providing two separate funding opportunities: i6 Challenge ($13 million) – strengthening initiatives to improve the transformation of ideas into new products, solutions, businesses and jobs; and, Seed Fund Support Grant Competition ($4 million) – supporting efforts to plan, form, launch or scale seed funds investing in high growth and innovation-focused startups. The i6 Challenge awards are largely unchanged from last year. However, the available funding for Seed Fund Support has doubled and will now provide awards of up to three years and $300,000. A new rule from the FY 2017 budget will also affect this year’s Regional Innovation Strategies funding. The omnibus requires that 10 percent of awarded funds…

SSTI continues its reporting on actions taken by state legislatures to invest in economic growth through science, technology, innovation and entrepreneurship. This week, we look at the budgets passed and signed by governors in Iowa, New York and North Dakota, finding mostly level and some increased funding for innovation programs in Iowa and New York – including free tuition at in-state colleges for qualifying residents – while North Dakota is looking at decreased funding for programs. Iowa Iowa recently passed a budget for FY 2018. Within the Economic Development Authority, the High Quality Jobs Fund, which provides funding for innovation programs, maintained funding of $15.9 million. However, a decrease in the authority’s available reserves leaves the innovation funding expected to decrease by two-thirds to $5.5 million in FY 2018. Two new programs, STEM scholarships and a mentoring partnership, receive $1 million and $93,000 in new funding, respectively. At the Board of Regents, the Agricultural Experiment Station ($29.9 million), Center for Biocatalysis and Bioprocessing research and tech transfer facility ($724,000), University…

The Kauffman Foundation released a new report analyzing entrepreneur development in St. Louis and Kansas City. Entrepreneurial Ecosystem Momentum and Maturity, The Important Role of Entrepreneur Development Organizations and Their Activities, by Ken Harrington, proposes a framework that names a four-step entrepreneur development process from problems and ideas to customer-funded venture that feeds into higher-stage venture development and, ultimately, economic development. Under this framework, Harrington explores how entrepreneurship is supported in each community by organizations such as KCSourceLink and BioSTL. Findings include that community-led initiatives provide the bulk of entrepreneurship activities and that most participants in these activities are in the startup stage of their idea’s development. Harrington argues that entrepreneur development needs to be better understood and that resources should be dedicated to support new metrics and greater funding as means to improve the ultimate economic development outcomes that benefit a regional economy.  In his analysis, greater connectivity across entrepreneur communities, refined asset mapping and more…

Every state and the District of Columbia experienced real GDP growth in the fourth quarter of 2016, according to the latest estimates released by the U.S. Bureau of Economic Analysis. The positive news means only energy-dependent Alaska, North Dakota and Wyoming saw real GDP fall over the year compared to the end of 2015. Experiencing growth of more than 5 percent between 2015 and 2016 were the District of Columbia, Nevada, Utah and Washington. if("undefined"==typeof window.datawrapper)window.datawrapper={};window.datawrapper["2zbdD"]={},window.datawrapper["2zbdD"].embedDeltas={"100":530,"200":452,"300":426,"400":426,"500":400,"600":400,"700":400,"800":400,"900":400,"1000":400},window.datawrapper["2zbdD"].iframe=document.getElementById("datawrapper-chart-2zbdD"),window.datawrapper["2zbdD"].iframe.style.height=window.datawrapper["2zbdD"].embedDeltas[Math.min(1e3,Math.max(100*Math.floor(window.datawrapper["2zbdD"].iframe.offsetWidth/100),100))]+"px",window.addEventListener("message",function(a){if("undefined"!=typeof a.data["datawrapper-height"])for(var b in a.data["datawrapper-height"])if("2zbdD"==b)window.datawrapper["2zbdD"].iframe.style.height=a.data["datawrapper-…

Could Jill Watson be the typical graduate assistant of the future? Watson was Georgia Tech’s first AI teaching assistant that fooled some in the computer science class into thinking the assistant they were dealing with in an online forum was human. New methods of teaching and training are being explored to handle the growing needs of filling middle-skilled jobs, according to several recently released reports. A new report from the Pew Research Center focuses on whether workers will be able to compete with artificial intelligence tools and whether capitalism itself will survive. Two other reports released last month by the National Skills Coalition stress workforce training through work-based learning policy and surveys all the states for the effectiveness of such programs, and provides policy recommendations by revisiting a November report. The new Pew report, The Future of Jobs and Jobs Training, begins by asserting that “massive numbers of jobs are at risk” as smart, autonomous systems continue to infiltrate the workplace. Solutions evolving from conversations surrounding the topic include changes in educational learning environments to help people…

On April 27, Federal Communications Commission (FCC) Chairman Ajit Pai released a Notice of Proposed Rulemaking (NPRM) that would impact net neutrality in the U.S.. The Restoring Internet Freedom act, which will be voted on at the May 18 FCC meeting, would end the utility-style regulatory approach intended to preserve net neutrality. Pai’s office contends that the FCC 2015 decision to subject internet service providers (ISPs) to Title II utility style regulations reduces the incentive for innovation in the industry and threatens the open Internet it is purported to preserve. The NPRM highlights several changes including reinstating the information service classification of broadband Internet access service and “returning to the light-touch regulatory framework.” In 2015, the FCC contended that subjecting ISPs to Title II utility style regulation was necessary to protect consumers from unfair business practices such as ISPs blocking or degrading internet traffic.  As with all NPRMs, the FCC will hold a 60-day open comment period for the public to address the entire proposal as well as specific elements of the changes. Shortly after TV talk show…

In a recent Digest article, SSTI covered research highlighting the oversized role that offshoring multinationals had in manufacturing employment decline from 1983 to 2011. During this time, deindustrialization and manufacturing unemployment had a profound impact on community approaches to economic development. Larger metropolitan areas like Pittsburgh, PA, Roanoke, VA, and Greenville, SC, have received considerable acclaim for their ability to restructure their economies around new and innovative technologies. Less covered, however, are the smaller rural or rust belt regions that are seeking to leverage higher education, community partnerships, an increasingly skilled workforce, and innovative technologies to become more competitive in a 21st century economy. Faced with the closure of a plant operated the Robert Shaw Corporation and the loss of hundreds of jobs, the Southern Missouri city of West Plains developed partnerships with Missouri State University-West Plains, the West Plains School District and the South Central Career Center to create the Greater Ozarks Center for Advanced Technology (GOCAT). Funded with a $225,000 grant from the Delta Regional Authority and a…

Congress has passed a budget for FY 2017 that largely continues support for federal innovation programs and R&D investments. Among the highlights are $17 million for Regional Innovation Strategies (a $2 million increase over FY 2016), level funding of $130 million for the Hollings Manufacturing Extension Partnership and $5 million for SBA’s clusters program. In reviewing dozens of line items, offices that had received significant cuts in the White House’s skinny budget appear to receive some of the largest funding increases (such as the Appalachian Regional Commission, Community Development Block Grant and ARPA-E). However, with the exception of multi-billion dollar increases for Department of Defense R&D, many increases are rather small in terms of overall dollars. This is, at least in part, a reflection of non-defense spending caps rising by only $40 million for FY 2017, limiting the availability of new funds. In this context, science and innovation gains are particularly impressive, with a five percent overall increase for federal R&D that particularly benefits NASA and NIH. The following tables provide a more detailed breakdown of innovation-…