SSTI Digest

Governors in Maryland, Minnesota, and Florida proposed substantial funds to higher education in their budgets this week, with an emphasis on affordable education and expanded research capacity. Maryland Gov. Larry Hogan’s structurally balanced $40.5 billion FY 2016 budget marks the first time in 10 years that the state’s general fund spending would be aligned with available general fund revenues, according to the governor’s office.  Included in Gov. Hogan’s proposed budget allowance is: $10.6 million to support small, minority, and women-owned businesses and $6.3 million to promote small businesses owned by economically and socially disadvantaged entrepreneurs. $12 million in biotechnology tax credits to leverage investment for life sciences companies, $9.4 million to further develop stem cell technology, and $2.5 million, after contingent reductions, in investments and tax credits to promote cybersecurity research. $9 million in research and development tax credits, $8.5 million to create endowed research chairs at universities, and $4.9 million to commercialize research conducted at participating universities through the Maryland…

Within the past month, two of America’s major research universities – the University of California system (first in total R&D expenditures, according to the NSF) and the University of Minnesota-Twin Cities (eleventh in total R&D expenditures) announced new funds to increase the rate at which their students, faculties, and researchers are able to commercialize their ideas into new businesses. While the UC system announced the establishment of a $250 million venture fund, Minnesota announced that it was scrapping a plan for a $70 million investment fund and was pursuing programs that provide early stage seed funding instead. Universities are likely to continue to play a role in providing financial assistance as a means of commercializing university technologies; however, as can be seen in the Minnesota case and in several others throughout the country, a traditional venture capital fund is not the only method to do so. Seeded with money from the University of California endowment, the $250 million venture capital fund within the UC system will be one of the largest in the nation of its kind. The new funding entity, called UC Ventures, will focus…

Minnesota’s economic future may well be rooted in its historic leadership in agricultural production, according to a new report prepared by Battelle, Agbioscience as a Development Driver: Minnesota Agbioscience Strategy. The report includes an assessment of Minnesota’s key capacities and opportunities in agricultural research and a suggested strategy for the state with a specific focus on growing the state’s agricultural bioscience (agbioscience) research infastructure. After interviewing more than 100 researchers and research administrators, the authors identified four agbioscience research platform areas to target: Microbial Agbioscience — the total global market for microbes and microbial products is projected to exceed $259 billion in 2016; Resilient, Efficient & Productive Agricultural Systems; Biobased Industrial Products — Biomaterial demand in the U.S. is forecasted to reach $4.6 billion in 2016; and, Value-Added Food and Health Products. To unlock the potential of the state’s agbiosience industry, the report highlights several recommendations that include: Creating an integrated system for multi-use facilities and…

Investments and policy to support innovation-focused agendas have flourished with the close of the 2014 legislative sessions in several states. Crowdfunding legislation, incentives for attracting talent, higher education affordability, punishing patent trolls, and encouraging greater accountability are some of the areas where lawmakers focused their efforts. States Support Crowdfunding LawsTwo states passed legislation to amend state securities laws in order to allow entrepreneurs to raise capital through crowdfunding platforms. Maine passed LD 1512 last month (see related Digest article) and more recently, a measure (HB 2023) was passed in Washington that enables businesses to raise up to $1 million through crowdfunding websites. The law stipulates that contributions must come from residents and businesses in the state. At least five other states have passed similar laws, and a related bill is making its way through the Alabama legislature. Enhancing Incentives for Job CreationNebraska lawmakers passed LB 1114, a measure that extends for another five years the Business Innovation Act, a program that offers technical assistance and R&D grants to…

University-focused initiatives that help bring new technologies and products to market help drive regional economic development and encourage an entrepreneurial culture on campuses. To create stronger connections with the private sector, eliminate barriers between universities and the innovation community, and better support industry needs, some higher education institutions are honing in on entrepreneurship and commercialization activities. A November report from the Brookings Institution on university technology transfer delves into economic factors that have led to the organic emergence of a new model for technology transfer, including pressure on universities to be more responsive to market forces. This “nurturing startups model” incentivizes faculty to partner with local business incubators and capital investors to commercialize their research and technologies, the author says. The report also finds that only a few universities have been able to generate significant revenue from technology transfer activities and concludes with recommendations for government to better support these efforts. At the same time, the latest licensing activity survey…

Recent court decisions regarding high-speed Internet competition and net neutrality have put U.S. broadband competitiveness on uncertain terrain. Despite two decades of publically supported high-speed data infrastructure efforts, many rural areas still lack access and even densely populated areas remain underserved.  New statewide efforts in Kentucky, Minnesota and Iowa have been announced to improve broadband services and boost economic competitiveness. In addition, Google has announced that it will expand its ultra-fast fiber services to nine more cities across the country. Last month, a court challenge to Federal Communications Commission’s (FCC) net neutrality rules ended with the rules sent back to the FCC for revision, according to a report by Ars Technica. Net neutrality rules had been put in place to prevent anti-competitive actions by communications companies, such as blocking or slowing down particular sites. Yesterday, the FCC announced that it will not challenge the decision, but will regulate anti-competitive behavior on a case-by-case basis. At the same time, Comcast’s proposed acquisition of Time Warner Cable, if approved, could…

Angel capital has long played a vital role in state and regional innovation economies, but recent trends in investment capital have pushed angel investment to the fore. As the supply of seed stage venture capital declines in many parts of the country, angels have stepped in to bridge early stage funding gaps for technology startups. The proliferation of angel investors and groups over the last few years has outpaced the recovery of the venture capital industry since early 2009, according to data from the PricewaterhouseCoopers/National Venture Capital Association Moneytree Survey and the University of New Hampshire Center for Venture Research. In the midst of these changes, many states have stepped up their efforts to attract and incentivize angel investment. Recent initiatives in Minnesota, Florida, Kentucky and West Virginia seek to book seed and early stage capital by working with angel investors. Minnesota Gov. Mark Dayton recently announced the creation of a new $6.7 million Angel Loan Fund to augment the state’s Angel Tax Credit. Both initiatives operate with federal support through the State Small Business Credit Initiative (SSBCI). The new loan program will…

A recent report by the Association of University Technology Managers (AUTM) dubbed American universities the “unsung heroes in the economic recovery.” Through licensing and startup activity, universities and other groups earned more than $2.6 billion total income from royalties and other sources in FY12 alone, according to the report highlights. Research universities often garner more attention for their role in product and company development. Such is the case at the University of Washington and University of Minnesota, where officials posted a record number of spinoffs from university technology over the past year. At the University of Washington, officials announced 17 startups were formed in the past fiscal year based on university technology – the school’s most productive year for startup formation. The pace is faster than expected with nearly double the amount of companies created on average in each of the previous five years. University of Minnesota technologies were used to launch 12 startup companies in FY13, breaking the university’s previous record of nine. Over a seven-year period, 52 companies have been created under…

During this year’s legislative sessions, several states looked toward creating, providing support for or redesigning programs that help incentivize businesses to hire and mentor student interns. In an effort to spur rural internships, Minnesota lawmakers approved a new tax credit program to support internships for students in greater Minnesota. In North Dakota, lawmakers committed $1.5 million to their Operation Intern program, while Nebraska lawmakers updated their Intern Nebraska grant program to provide students with a high-quality internship experience. Rhode Island Gov. Lincoln Chafee signed a bill that will allow high school students (16 years and older) to engage in pre-apprenticeship, apprenticeship and internship experiences during school hours in approved manufacturing career and technical programs. In an effort to spur rural internships, Minnesota lawmakers approved a new tax credit program to support internships for students in greater Minnesota. As part of the state’s Omnibus Tax Bill (HF 677), the program would reward companies for hiring college interns by paying up to 40 percent of the intern’s salary, up to $2,000 per person. The…

Over the last week, several states have announced/passed new programs focused on increasing the capital available to spur small business growth and innovation. Officials from New Jersey announced the state's new angel tax credit will take effect July 1. In Arizona and Wisconsin two bills await gubernatorial approval that would rework the Arizona R&D tax credit program and establish a $75 million venture capital fund in Wisconsin. Meanwhile, the Minnesota state legislature did not approve an additional $5 million for its popular Small Business Investment Tax Credit. ArizonaIn Arizona, a bill (House Bill 2342) seeking to expand the state's research and development (R&D) tax credit awaits the signature of Gov. Jan Brewer. Administered by the Arizona Commerce Authority, the reform is intended to help small, innovative companies with little to no cash flow by providing a refund for R&D activities. To be eligible for the R&D credit, the company would have 150 or less employees and perform research and development in one of several target industries. In exchange for the refund, the state gets to discount its research and tax obligation by…

Amid the economic uncertainty surrounding fiscal cliff negotiations, and what it means for states, some governors are erring on the side of caution when it comes to funding recommendations for the upcoming year. At the same time, several state budget officers are projecting significant revenue shortfalls in the current fiscal year or biennium as a result of lower than expected tax collections. States could lose an estimated $7.5 billion in federal funding if the automatic spending cuts take effect for 161 grant programs, according to a recent analysis by the Associated Press. States with heavy defense spending, such as California, Texas and Virginia could also take a hit with $33.6 billion in cuts slated for military and defense contractors. In the coming months, governors from across the nation will present their State of the State addresses — a key time to unveil new and expanded TBED programs. But for some states, shoring up budgets and preparing for worst case scenarios is the top priority. Following is a synopsis of recent news announcing budget deficits throughout the states and possible short- and long-term solutions from state officials.…

While election night's main focus was on the presidential race, the importance of ballot measures for states and metros is growing as public services and budgets are being severely trimmed. A recent article in The New Republic reports on a new trend where states are embracing ballot measures as a potential source of dedicated funds for targeted investments in regional economic growth and development. Aside from California Gov. Jerry Brown's victory in raising taxes on top earners to help fund education and balance the budget, most state measures to increase taxes were defeated by voters. This includes extending a one-cent sales tax increase in Arizona, a cigarette tax increase in Missouri and implementing a 1 percent sales tax increase in South Dakota — all of which were slated to fund education. Voters were more supportive of borrowing to invest in higher education infrastructure, but rejected measures to improve teacher standards and build new revenue streams for universities. The only energy issue on the ballot appeared in Michigan and failed to garner enough voter support. Measures to provide more state authority for providing economic…