SSTI Digest

One of the recurring characteristics of entrepreneurs, based on numerous biographies and case studies, is a driven self-confidence that may border, in some circles, as excessive or even narcissistic. Closer scrutiny, of course, shows there is no such thing as the “self-made” person, but entrepreneurship still is described often as a heroic, lone-wolf quest. Is it paradoxical to advocate for and even expect mentoring and “how to” entrepreneurship training to work? Wouldn’t “real” entrepreneurs leading promising startups succeed without the advice? A recent working paper describes an experiment that attempted to address this issue. Rodrigo Wagner, an assistant professor with the University of Chile, explored the effectiveness of mentoring by comparing, through a randomized controlled experiment, the longevity of two sets of high-growth entrepreneurial ventures. Wagner specifically set out to measure if written feedback on a startup’s initial business plan correlated with the survivability of the venture. He found the answer might be yes, at least for the panel of 88 companies participating in Startup Chile’s accelerator…

In Moneyball: The Art of Winning an Unfair Game — a New York Times bestseller by Michael Lewis from 2003 – the author focuses on the successful approach of Major League Baseball’s (MLB) Oakland Athletics and its general manager Billy Beane’s use of an analytical, evidence-based, sabermetric approach to assemble a competitive baseball team. Conventional wisdom of the time focused on traditional scouting and non-advanced statistics. While Beane and the Athletics were early-movers in the infusing of innovation, science, and technology into the industry of sports, others have rapidly caught up and are making large investments in companies and partnerships. In 2014, venture funding for sports tech startups reached almost $1 billion – an increase of 30 percent from 2012, according to Tech Crunch. In addition to the investments made by venture capital firms, CIO.com reports that pro sports franchises, leagues, and others businesses are turning to startups to spur in innovation in industries such as analytics, big data, biometrics, sports performance and sports sciences. In addition to the goal of increasing competitiveness, a 2015 study from…

A mixture of success and trepidation accompanied 2016 legislation introduced in  several states to create, extend, or recapitalize angel tax credit programs. While legislation in Arizona’s legislature failed due to a lack of support, angel tax credit bills in Kansas and Tennessee passed easily with broad support from their governors, lawmakers, and the public. In North Dakota, the state’s angel tax credit program faces an unclear future due to concerns about transparency and oversight. To stimulate investments in West Virginia’s startup community, Gov. Earl Ray Tomblin signed legislation allowing non-accredited investors to make equity investment in state-based businesses. Arizona Attempts to resurrect the Arizona Angel Investment Tax Credit Program, which expired in 2014, languished in the state legislature after proponents failed despite support from the Arizona Commerce Authority (ACA) and the Arizona Technology Council.  SB 1139  included a $7 million allocation to recapitalize the tax credit, which had been a $20 million angel tax credit program established in 2006 and overseen by the ACA. The legislation would have allowed…

Because they focus on attracting mature firms through relocation incentives, job creation strategies at the state level are often misguided, according to the Center on Budget and Policy Priorities. Despite this, many metropolitan regions are increasingly focusing their efforts on attracting and retaining the high-growth firms responsible for an oversized share of job growth and economic output.  While considerable research has focused on the important role that startups and high-growth firms play in the national economy, relatively little has been done to apply a regional lens to this phenomenon. New research, tracks high-growth firms over a multiple-year period to assess how their changing operations can inform regional economic development. In The Role of Entrepreneurship in U.S. Job Creation and Economic Dynamism, researchers from the University of Maryland and the U.S. Census Bureau assess the importance of startups and young firms as contributors to job creation and productivity growth. The authors note that while startups account for approximately 10 percent of firms and more than 20 percent of firm level gross job creation,  high-growth firms –…

The latest Angel Resource Institute (ARI) survey of returns for nearly 250 angel investments reveals the number of projects failing to breakeven during their liquidity events is up sharply since before the Great Recession – nearly 35 percent more are losing money for their angels than ARI found in a 2007 survey.  In 2007, 52 percent of liquidity events failed to reach 1x, while that figure has grown to 70 percent in 2016. Add to that, angel investors are holding companies in their portfolios 12 months longer on average, 4.5 years in 2016, than they did in the first study. A third strike for the faint of heart might be the internal rate of return dropping five points, down from 27 percent in 2007 to 22 percent in 2016.  Do these trends provide insight on how best to advise crowd funding participants? A portfolio approach would be the first takeaway for nascent investors because those same angels in the new survey saw an average 2.5 times return on their total investment from all of their liquidity events when viewed in aggregate, as portfolios. Approximately 10 percent of angels’ individual investments on average saw exit multiples of 5x or greater…

Todd Connor, CEO of Bunker Labs, begins his pitch in front of a Startup Week event in Columbus, Ohio with a compelling statistic. In the six years following WWII, 50 percent of returning veterans started their own businesses. Today, only 6 percent of post-9/11 vets do the same, despite surveys showing four times that number would like to do so.  What has changed to lead to such a contrast and entrepreneurship gap? Connor, himself a U.S. Navy vet leaving service in 2004, attributes the opportunity shortfall to the declining roles of VFW and American Legion halls as aggregating points for the veteran community to network and support each other. In June 2014, he opened Bunker Labs inside Chicago’s bustling 1871 co-work/incubation/innovation hub to test his theory that vets would start businesses again with their own community space paired with experienced mentors and financial resources. After its first 18 months, Connor can tout some solid outcomes to suggest he is right: veterans working in the Chicago headquarters of Bunker Labs have started companies drawing in $6 million in revenues, creating 136 jobs, and attracting $16M in early stage investments.…

Are you interested in influencing the design and development of national policy solutions to challenges in the innovation economy? The U.S. Department of Commerce is seeking applications for membership on the prestigious National Advisory Council on Innovation and Entrepreneurship (NACIE), which advises the secretary on fundamental issues affecting state, regional and university based innovation initiatives. NACIE Membership requires a two-year commitment, and applications are due June 1. 

SSTI’s 2016 Annual Conference is November 1-3 in Columbus, Ohio. The agenda will cover the entire innovation ecosystem, including accessing capital, supporting entrepreneurs, developing clusters and expanding R&D. We would appreciate your help identifying specific session topics. Provide your input by responding to this brief survey by May 18—and you will be entered to win a free registration for an SSTI webinar. Take the survey...

To mark the 10th anniversary of the SSTI Excellence in TBED awards program, we have made some exciting changes to the categories. Since last year, we have combined some categories with the intent of better reflecting the ever-evolving field of tech-based economic development and added a new category to reflect burgeoning activity in a new area. Starting this year, the previous categories – Expanding Research Capacity and Commercializing Research – will be combined into the new category – Building Prosperity Through Science & Technology: “Initiatives that build economic prosperity by expanding S&T research capacity and/or promoting the conversion of research into technologies and products with high commercial potential. Initiatives appropriate for this award category may include but are not limited to: commercialization programs; centers of excellence programs; university-industry partnerships; initiatives to expand research facilities; eminent scholar recruitment efforts; or, technology transfer activities.” The categories of Building Entrepreneurial Capacity and Increasing Access to Capital also have a new home…

While the first quarter of 2016 was slow for venture capital investments in the United Kingdom (UK), recent weeks have seen significant new developments in both financing and converting technologies from six UK universities into the marketplace.  The goal of these new funding initiatives is, in part, to improve the survival rate of small- and medium-sized businesses (only 45 percent of all UK startups survive beyond the first five years). The UK announced £180 million (260.8 million USD) in funding focused on clean energy activities in the Midlands region of the country. The UK Department of Treasury will commit £60 million (86.9 million USD) of public money to unlock an additional £120 million (173.9 million USD) in private sector co-investment from both national and international companies. The funding will help support commercialization efforts that transition energy technologies from the region’s six major universities (Aston University, the University of Birmingham, Leicester University, Loughborough University, the University of Nottingham and the University of Warwick) through a newly formed public-private partnership with industry…

Vice President Joe Biden announced a $100 million competition to expand tuition-free community college programs that connect young Americans to in-demand jobs. To support a growing trend of free community college programs, America’s Promise Job-Driven Training grants (America’s Promise Grants) will provide federal funding for the creation and expansion of regional and sector partnerships between community colleges, local industries, other training providers, employers, and, the public workforce system targeted at in-demand middle and high-skilled jobs across the country. The program will be launched in early summer by the Department of Labor and will be supported by funds from H-1B visas. In the last year, nearly 30 new free college programs have been launched including statewide programs in Oregon, Minnesota, and Rhode Island, according to the press release. The intent of the program is to prepare individuals for well-paying jobs in key regional industries such as manufacturing, IT, health care, cybersecurity and energy. Read the announcement…

The United States Department of Agriculture (USDA) announced last month the availability of more than $11 million in grants to support rural broadband through its Community Connect grant program, which seeks to help fund broadband deployment into rural communities where it is not yet economically viable for private sector providers to deliver service. For FY 2016, the minimum grant amount is $100,000, while the maximum award is $3 million. Additional information can be found here. Meanwhile, the Department of Commerce’s National Telecommunications and Information Administration (NTIA) has released new materials to help communities realize the importance of broadband and develop roadmaps for its broader implementation. The NTIA originally developed BroadbandUSA to provide technical assistance, regional workshops, guidance and resources as a way to help assist communities hoping to expand their broadband capacity.  Late last month, BroadbandUSA released Planning a Community Broadband Roadmap, a new toolkit to help communities determine their broadband vision and goals, analyze existing community resources and needs, and develop tactical plans. Featuring best…