SSTI Digest

Angel group valuations and deals continued to rise through the third quarter of 2015, according to the most recent HALO Report, a publication of the Angel Resource Institute at Willamette University in Oregon. While median angel-only round sizes were $500,000 in both the first and second quarters of 2015, the third quarter saw this amount increase 45 percent to $725,000. Through the third quarter, median seed pre-money valuations increased to $4 million, a 33 percent increase from 2015, and the highest valuation in the Halo Report to date. Other notable findings in the report include:

While many states have begun negotiations on budget plans for FY17 and beyond, Pennsylvania has made some progress on FY16 spending. Gov. Tom Wolf signed a partial budget that funded many agencies and programs related to economic development, but that did not include higher education funding and other operations. In the coming months, SSTI will review gubernatorial addresses and budget proposals related to economic development. This week, we highlight developments in Hawaii, New Mexico, Pennsylvania and Virginia.

Hawaii

Gov. David Ige released his $13 billion proposed fiscal year 2017 supplemental budget in late December, building on the biennial budget passed last year. The governor’s office is touting $729 million in infrastructure and economic development spending and another $248 million for education. The boost for infrastructure spending would support improvements to airports in Kona and Honolulu, and the modernization of Honolulu harbor. Most of the new education funding would support capital improvements, but $4 million is provided for the operating costs of the University of Hawaii’s Cancer Center.

The U.S. Department of Commerce's National Institute of Standards and Technology (NIST) plans to fund up to two new institutes within the National Network for Manufacturing Innovation (NNMI). NIST's solicitation will be the first in which the funding agency has not predetermined the industry of focus for the institute, however, the agency is particularly interested in topics deemed critical by the President's Council of Advisors on Science and Technology (PCAST) Advanced Manufacturing Partnership. These include manufacturing robotics and biopharmaceutical manufacturing. NIST plans to release the solicitation for the institutes in January 2016. Designees will receive up to $70 million total over five to seven years. Learn more at: https://www.commerce.gov/news/press-releases/2015/12/nist-issues-notice-intent-fund-new-manufacturing-innovation-institutes.

As recently reported in the SSTI Digest, Congressional leaders were able to reach an agreement on federal spending that averted a government shutdown. The FY16 omnibus appropriations legislation and an accompanying bill related to tax provisions were signed by President Obama on December 18. After several years of sequestration spending caps and mostly flat funding for TBED-related programs, the new agreement will bolster funding for many science and economic development initiatives, as well as extend a number of tax credits for small and high-tech businesses. In this article, SSTI takes a closer look at the changes for research and entrepreneurship funding delivered by the deal.

The National Telecommunications and Information Administration (NTIA), located within the U.S. Department of Commerce, announced that their closing deadline to submit nominations for the Digital Economy Board of Advisors has been extended to January 12, 2016. The Department of Commerce’s new Digital Economy Agenda was unveiled in November and focuses on four key objectives: promoting a free and open Internet worldwide; promoting trust online; ensuring access for workers, families, and companies; and, promoting innovation.  The board, which will consist of 15-20 members appointed by Secretary of Commerce Penny Pritzker, will serve two-year terms and help to further develop the Digital Economy Agenda.

This week, congressional leaders reached a deal on spending that would prevent a federal government shutdown. The omnibus appropriations bill would fund the Economic Development Administration’s (EDA) Regional Innovation Program at $15 million, an increase of $5 million over the previous year. The Regional Innovation program is SSTI's highest legislative priority because of the flexible funding it provides for regional innovation activities. 

Recent doctoral recipients who enter the private sector are more likely to go to firms with high payrolls per worker and other business characteristics associated with high productivity, according to a new report – Wrapping it up in a person: Examining employment and earnings outcomes for Ph.D. recipients. Published in a recent edition of Science, the authors found that 38 percent of federally and non-federally funded doctoral recipients enter the private sector within one year of graduation – approximately 57 percent remained in industry and four percent enter the public sector.  

Around the country, states are beginning to feel the fiscal impacts of falling oil prices.  In FY 2016, eight states enacted FY 2016 budgets below their FY 2008 levels, largely as a result of challenges associated with their oil and gas industry, according to the Fiscal Survey of States report by the National Association of State Budget Officers (NASBO). Similarly, a quarterly update of gross domestic product (GDP) by the U.S. Bureau of Economic Analysis finds that mining subtracted from growth in 49 states during the second quarter of 2015.

New York Gov. Andrew Cuomo announced $2.25 billion in economic and community development awards as part of the fifth installment of the state’s Regional Economic Development Council (REDC) Initiative. Of this total, $1.5 billion over the next five years will go to the three regions (Central New York, Finger Lakes, and the Southern Tier) that were selected as the winners of the Upstate Revitalization Initiative. While the proposals receiving awards vary greatly across region, several TBED-related initiatives are seeded through the governor’s funding.

The National Governors Association’s (NGA) Center for Best Practices launched the 2016 Policy Academy on Scaling Work-Based Learning – a pilot program in six states that blends work experience and applied learning to develop youth and young adults’ foundational and technical skills to expand their education, career and employment opportunities. The goal of the program is to connect 16- to 29-year-olds with middle-skills career opportunities in STEM-intensive industries such as advanced manufacturing, health care, information technology and energy. The six states that will take part in the 18-month pilot program include Indiana, Iowa, Montana, New Hampshire, Utah, and Washington.  Read the press release: http://www.nga.org/cms/home/news-room/news-releases/2015--news-releases/col2-content/states-look-to-increase-career.default.html. 

A number of governors around the U.S. have already begun rolling out budget proposals for the next legislative session. This week, SSTI examines gubernatorial spending recommendations related to research, commercialization, STEM education and entrepreneurship in Alaska, South Dakota and Utah. See our previous article on proposals in Florida and Wyoming.

AlaskaGov. Bill Walker released a $4.8 billion budget plan for fiscal year 2017, along with details of his administration’s plan to achieve long-term financial stability. The state’s budget would again be streamlined to address a $3.5 billion deficit resulting from the decline in oil prices and production, but Gov. Walker has also proposed a more extensive set of structural adjustments. Under the New Sustainable Alaska Plan, the state would reduce spending, restructure the Alaska Permanent Fund, institute the first personal income tax in more than 30 years, and pursue a natural gas pipeline project.

Australian Prime Minister Malcolm Turnbull announced a suite of new policies and investments aimed at catalyzing the nation’s economy through science, innovation and entrepreneurship. The National Innovation and Science Plan would fund university research, invest in K-12 and university STEM programs, limit the financial risks of entrepreneurship, invest in technology commercialization programs, and introduce a new class of visa for entrepreneurs. The changes would also enable equity-based crowdfunding and provide tax credits for early stage investment. Learn more…