SSTI Digest

Because a research base that generates new knowledge is a key pillar of a technology-based economy, an important strategy in technology-based economic development is the expansion of research capacity. While states may go about addressing this in a variety of ways (e.g., R&D tax-credits, university-industry partnerships, recruiting eminent scholars), Florida drew national attention when it took a different approach last decade, allocating more than $450 million to attract nine research institutes through its Innovation Incentive Program (IIP). Recently, one of those attracted institutes, the San Diego-based Sanford-Burnham Prebys Medical Discovery Institute – which received approximately $367 million in state and local incentives to open an Orlando location – announced that it was having discussions with the University of Florida to exit the state and turn the Florida operations over to the university.

When Canadian Prime Minister Justin Trudeau released his administration’s proposed 2016 budget in late March, SSTI covered the significant funds it would allocate for science, research, and technology-based economic development, as well as the country’s plan for a national innovation agenda. To guide this forthcoming agenda, the Canadian government recently announced six priority areas of action, as well as its intent to conduct a series of engagement efforts that collect additional insight from the public. Central to their plan is the launch of a fully interactive website that will provide Canadians with the ability to offer their own views on how Canada can best support innovation and to vote on ideas that others presented. 

This week, the White House is celebrating its third National Week of Making – an important part of its Nation of Makers initiative that seeks to expand opportunities for students and adults to engage with the maker movement. In addition to numerous commitments and announcements made at federal agencies, several other projects rooted in strong partnerships were announced. These include the distribution of a million microscopes to children from around the world by Foldscope Instruments, the investment in 100 new makerspaces by Google and Chevron, and the release of the Maker City Playbook.

Much of the media coverage on the latest NASBO Fiscal Survey of States, suggests the Great Recession is finally behind the states as aggregate general revenue funds finally surpassed fiscal 2008 levels. But unlike the federal government, there are 50 individual state budgets and they tell very different stories, influenced by the economics, demographics, tax structures and politics of the particular state. For instance, while the aggregated stats sound rosy, a majority of states, 29, still reported 2016 general fund expenditures below the 2008 levels before the Great Recession really hit state revenues.  SSTI’s monitoring of state fiscal conditions reveals recent monthly revenues for a growing number of states – in months after the NASBO spring survey was conducted – are not meeting intake expectations. This might suggest FY 2017 revenue and spending forecasts may slow even more than NASBO’s reported 2.9 percent and 2.5 percent, respectively.

President Obama announced  the creation of the new Smart Manufacturing Innovation Institute (Smart MII) – a $140 million public-private partnership to develop smart sensors for use in advanced manufacturing. Headquartered in Los Angeles, CA, the Smart Manufacturing Leadership Coalition (SMLC) – a consortium of nearly 200 partners from academia and industry as well as nonprofit organizations – will lead the Smart MII. The Smart MII is the ninth MII awarded by the Obama administration. The president also announced five additional MII competitions, which are intended to invest nearly $800 million in combined federal and non-federal resources to support transformative manufacturing technologies in four areas:

When employees discover potentially significant inventions during their line of work, they can decide whether to leave their company and form a new startup around the idea, or to transfer the knowledge to the parent firm and attempt to gain financial compensation through a spinoff.  As seen in the 2016 summary report from Failure Aversion Change in Europe (FACE) Entrepreneurship, the two main fears for entrepreneurs are financial security and losing a stable, professional job. Recent research also suggests that granting employees extended leaves of absence with guaranteed options for returning increases the likelihood of entrepreneurship.  Coupled together, these results prompted SSTI to further review the relationship between corporate-leave policies and entrepreneurship.

In addition to several new moonshot R&D initiatives and other joint research efforts, several universities recently have announced public-private partnerships that will build multi-million dollar, world-class R&D facilities. Whether it is on-campus facilities in Akron and Pittsburgh or off-campus facilities in Boston, Iowa City, and South Bend, IN, these new facilities are intended to build a 21st century workforce, launch startups, and cultivate R&D partnerships between universities and industry.

Montreal Mayor Denis Coderre launched Capital Intelligent Mtl – a 100 million CD (77.3 million USD) investment fund aimed at smart city startups and established businesses offering solutions to urban challenges that also will spur job creation in Montreal. The new public-private partnership will backed by 23 founding organizations including venture capital firms, financial institutions and corporations that have pledged over 100 million CD in private capital to establish the fund. In addition to the over 100 million CD from private sources, the city will commit 400,000 CD (309,000 USD) for the administration of Capital Intelligent Mtl through to 2018 with the intent of ensuring the coordination of the group's activities. While the management team of Capital Intelligent Mtl will oversee the day-to-day operations of the investment fund as well as pre-quality companies for investment, partners will be included in the final review of all investments. Capital Intelligent Mtl can make investments of up to 5 million USD (3.9 million USD) into individual companies.

On June 3, the Department of Commerce’s Economics & Statistics Administration (ESA) released Digital Matching Firms: A New Definition in the 'Sharing Economy' Space. In the new report, the ESA provides the first government definition of digital matching firms (e.g., Uber, Lyft, AirBnb, Homeway) – companies that use Internet and smartphone-enabled apps to match service providers with consumers, help ensure trust and quality assurance via peer-rating services, and rely on flexible service providers who, when necessary, use their own assets. In addition to defining digital matching firms, the report provides an initial assessment of its size and scope of the digital matching firms (gathered from several publically available sources) including:

Ohio Gov. John Kasich signed a bill (HB 233) last month that authorizes cities and villages to create Downtown Redevelopment Districts (DRDs) that can address innovation districts and/or historic rehabilitation. The DRDs permit tax abatements of up to 70 percent of increased assessments in conjunction with payments in lieu of taxes (PILOTs) or a redevelopment charge that functions as a special assessment tax. In the case of innovation districts, these charges may be used to fund loans or grants to technology businesses—specifically including R&D and technology transfer activities—or to incubators or accelerators in the district. To qualify as an innovation district, the area must include access to a high-speed broadband network capable of download speeds of at least 100 GB/S.

In an attempt to support their respective  innovation economies, several countries have announced new national investment strategies and other entrepreneurial support efforts that help startups access the capital necessary to move their business from an idea to a sustainable businesses. Efforts include a fintech focused-fund in Ireland, expansion of existing programs in two Oceanian countries, and a partnership between two of Asia’s largest economies.

New Zealand

Federal obligations for science and engineering research and development to universities, colleges, and nonprofit institutions increased by 5.7 percent from FY 2013 to FY 2014, according to recently released data from the National Science Foundation’s (NSF) Survey of Federal Funds for Research and Development. For the fourth consecutive year, the states with the largest federal obligations for science and engineering R&D to universities, colleges and nonprofit institutions in FY 2014 were California ($3.9 billion), New York ($2.2 billion), and Maryland ($1.8 billion). Between FY 2013 and FY 2014, 38 states and the District of Columbia saw an increase in federal obligations for science and engineering research and development at these organizations. An Excel sheet that shows the obligations for each state from FY 2006 to FY 2014, plus comparisons between three specific time periods can be found here.