SSTI Digest

Leaders in Des Moines, Kansas City, Omaha and St. Louis have teamed up to leverage their respective resources and help build an economic mega-region in the center of the country. The Heartland Civic Collaborative will focus on four main areas of opportunity: transportation, federal advocacy, life science and entrepreneurship. In the coming months, the collaborative plans to begin work on an entrepreneurial metrics dashboard for the participating metros and a map of life sciences research assets. The group also plans to improve the research commercialization pipeline for biomedical and bioenergy research. The initiative’s first event, around transportation futures, will be held next month. Learn more at: http://heartlandciviccollaborative.org.

Many governors around the country have begun laying out priorities for the next legislative session. In the coming weeks, SSTI will review gubernatorial addresses and budget proposals related to economic development. This week, we highlight developments in Arizona, Maryland, Missouri and South Carolina. ArizonaLast week, Gov. Doug Ducey released his $9.5 billion budget proposal for fiscal year 2017 and presented his second State of the State Address. The governor highlighted his office’s work in reducing spending, offered several tax-reduction proposals and pushed for additional funding for the state’s child safety system and a boost for K-12 education. Gov. Ducey also noted that immediately before his address, he signed an executive order creating the Governor’s Council on the Sharing Economy, to help encourage growth and innovation in this emerging economic sector. The council will develop recommendations to help improve the environment for businesses based on ridesharing and other peer-to-peer services. Under the proposed budget, the Arizona Commerce Authority would receive $48.7 million, including $21.8 million from the general fund and…

Several foundations have announced major commitments to fund workforce development efforts focused on expanding the talent pipeline in metros across the country. Each of these efforts is intended to provide high school students and/or young adults with skills and experience necessary to match specific needs of regional industries. These new initiatives also are intended to help at-risk youth from low-income families to obtain and keep well-paying jobs, and to proper evidence-based training as well as address the youth unemployment crisis faced by U.S. metros. JPMorgan Chase & Co.As part of the $75 million, five-year global initiative, JPMorgan Chase & Co. (JPMC) will provide funding to help U.S. states transform how they design and deliver career-focused education. New Skills for Youth is designed to increase dramatically the number of young people who complete career pathways that begin in high school and end with postsecondary degrees or credentials aligned with good-paying, high-demand jobs. In partnership with the Council of Chief State School Officers (CCSSO) and the National Association of State Directors of Career Technical Education Consortium,…

AT&T has announced a new partnership with three U.S. metros to establish a Smart Cities Framework using Internet of Things (IoT) innovations to create solutions for cities. In the first stage of the effort, Atlanta, Chicago, and Dallas will showcase the potential use of sensors and other Internet-connected technologies to improve municipal services. In addition to existing services offered by AT&T, the new framework adds several new services in four categories: infrastructure; citizen engagement; transportation; and, public safety. To help support the new framework, AT&T has formed alliances with Cisco, Deloitte, Ericsson, GE, Georgia Institute of Technology, IBM, Intel, and Qualcomm Technologies, Inc. More information is available at: http://www.prnewswire.com/news-releases/att-launches-smart-cities-framework-with-new-strategic-alliances-spotlight-cities-and-integrated-vertical-solutions-300199022.html.

With the start of the new year, many governors around the country have begun laying out priorities for the next legislative session. In the coming weeks, SSTI will review gubernatorial addresses and budget proposals related to economic development. This week, we highlight developments in Idaho, Iowa and New York. Idaho In his State of the State and Budget Address earlier this week, Gov. Butch Otter emphasized the need for investment in STEM education and building a stronger bridge between the K-12 system and well-paying jobs. To achieve this, the governor hopes to implement the recommendations of a recent educational task force, and to fund a number of STEM-centered initiatives. These include $4 million for the state’s STEM Action Center to fund grants and projects and to match industry contributions. Gov. Butch Otter’s proposed fiscal year 2017 budget includes $25.3 million for post-secondary education to expand research initiatives, workforce development and educational opportunities. Another $10 million would bolster the state’s STEM Education Fund while $99,000 would be provided to prepare students for university computer science…

Throughout the Great Recession, numerous stories from sources like The Wall Street Journal pointed to the idea of the overeducated and underemployed recent college graduate as a symbol of the economic times. While some recent graduates were able to find work in their respective fields, many did indeed struggle. Several recent studies highlight the extent to which new graduates faced underemployment in the years following the Great Recession, how their college majors impacted this probability, and how information influences these college major decisions. Jaison Abel and Richard Deitz, two researchers from the Federal Reserve Bank of New York, examine recent trends among graduates in Underemployment in the Early Careers of College Graduates Following the Great Recession, a December 2015 staff report. Overall, the authors find that from 2011 to 2014, the period following the Great Recession, the underemployment rate for recent college graduates grew to 45 percent, a level not seen since the early 1990s. While many of the underemployed actually worked in fairly well paying non-college jobs that still required elements of knowledge and skill, relatively few recent graduates…

Even though the total amount invested by venture capitalists (VCs) grew for the fourth straight year to nearly $77.3 invested, Pitchbook analysts contend that 2014/2015 was the peak of the VC industry for the foreseeable future. While high valuations drove up the total amount invested, the number of deals plummeted during the second half of 2015 according to new data from Pitchbook.  In addition to insights from Pitchbook, other analysts contend that the declining trends of 2015 should remain through 2016. U.S. VCs invested approximately $77.3 billion and closed nearly 8,100 rounds of investment in 2015, according to the 2015 Annual U.S. Venture Industry Report from PitchBook. While this marks the second straight year of strong VC numbers, a combined $145.3 billion invested in 2014 and 2015, Pitchbook researchers contend that VC financing peaked sometime in 2014 or early 2015. The second half of 2015, however, started a decline that may last well into 2016 and potentially beyond. While the peak was driven by a tide of massive unicorn-birthing rounds and relentless upward march of valuations, the decline in VC activity was a manifestation of investor concerns about…

In the days leading up to his final State of the Union Address, President Obama hinted that in lieu of the usual wishlist of policy proposals he would lay out his take on the issues that will define American public life over the next few decades. These issues took the form of four big questions, the first two of which directly relate to the work of tech-based economic development professionals. First, what are the building blocks needed to ensure that all Americans have access to opportunity and security in the new economy? Second, how do the U.S. and the world best employ technology to solve the biggest challenges facing mankind? Though there were few specific policy ideas, the White House has provided information on ongoing projects and accomplishments related to all four questions asked by the president at: https://www.whitehouse.gov/blog/2016/01/12/back-work-what-comes-after-presidents-final-state-union-address.

As top tech-hubs like California’s Bay Area become increasingly unaffordable, a new Jones Lang LaSalle report finds evidence that secondary markets will continue to experience accelerated industry growth. According to the 2015 Technology Office Outlook report, markets such as New York, San Francisco, and Silicon Valley, had the greatest startup momentum (as measured by access to capital, innovation, and top talent), but were also the most expensive. These prices have made secondary and tertaitry technology markets look considerably more attractive, the report finds. The report, which is released annually, seeks to understand the locations where the real estate costs are the highest – and where costs are growing the fastest. By analyzing the areas that technology companies are leasing space and expanding, the report also identifies high-opportunity markets where firms can find both value and access to talent. Within primary tech hubs, the fast growth of the technology industry has bred highly competitive leasing conditions. This is particularly true in places such as Silicon Valley, San Francisco, and New York, while still a factor in regions such as…

In late 2015, the U.S. Securities and Exchange Commission (SEC) released two rule changes that may shape the future of equity investments in startups and small businesses. The two new rules directly address issues related to the accreditation of investors – an important element of the angel investment ecosystem that has long driven early stage investments in startups. In December, the SEC released a report on proposed changes to the definition of accredited investors. In November, the SEC released its rules for Title III of the JOBs Act that allows startups to raise equity from both accredited and non-accredited investors through a publicly solicited crowdfunding campaign. The new rules will allow equity crowdfunding to go into effect in May of 2016. On December 18, the SEC also released a new report on the Accredited Investor definition. The proposes changes may include revising the financial thresholds requirements for natural persons to qualify as accredited investors and the list-based approach for entities to qualify as accredited investors. Potential changes include: Leave the current income and net worth thresholds in place, subject to investment…

The Indianapolis-based Lilly Endowment announced three grants totaling $42 million to boost regional development efforts in 11 counties located in Southwest-Central Indiana with a focus on research and development, workforce and education, and efforts to enhance quality of life. The recently formed Regional Opportunity Initiatives will receive $25.9 million to implement an education and workforce plan as well as a regional opportunity fund for quality-of-place investments. The Lilly Endowment awarded $16 million to the Central Indiana Corporate Partnership Foundation to establish an Applied Research Institute near the Naval Surface Warfare Center, Crane Division. To address societal challenges faced by rural communities, Indiana University Foundation will receive $126,000. In December, Gov. Mike Pence and the Indiana Economic Development Corporation Board of Directors approved up to $126 million state matching funds to support the implementation of regional development plans in North Central, Northeast and Southwest Indiana through the Indiana Regional Cities Initiative. Each of the eligible regions will receive up to $42 million in matching funds to advance talent attraction…

Around the world, entrepreneurship education continues to permeate schools, nonprofits, economic development organizations, and college campuses. At the root of this momentum is a belief that entrepreneurship can be taught to anybody, regardless of their innate skills. This Recent Research article presents new conclusions that suggest individuals can learn entrepreneurship by being exposed to other entrepreneurs. In other words, both nature and nurture contribute to the likelihood one becomes an entrepreneur. In Learning Entrepreneurship From Other Entrepreneurs, Luigi Guiso and Fabiano Schivardi of the Einaudi Institute for Economics and Finance in Rome, and Luigi Pistaferri from Stanford University, examine the extent to which individuals are able to learn entrepreneurship from other entrepreneurs. Through their analysis, the authors find that people that grew up in Italian provinces with a high density of firms are more likely to choose an entrepreneurial job as an adult, even when accounting for the density of firms in their current location. Furthermore, conditional on becoming entrepreneurs, individuals exposed to an environment of dense firms in their youth also…