SSTI Digest

While the headline above may be one of the most boring written in the SSTI Weekly Digest’s history, any recipient of federal grant funding should be aware that changes are coming to the Uniform Grants Guidance that governs federal grants, effective October 1. The guidance “sets the foundational requirements for agencies in making grants and providing other forms of Federal financial assistance, such as cooperative agreements and loans,” according to the White House. The changes will apply only to awards after October 1. Among the changes the White House is touting are directions to agencies to make grant announcements as “clear and concise as possible,” reduce unnecessary compliance costs, remove barriers to entry, and ensure assistance serves intended communities, including supporting programs for Tribal nations. Some of the specific details will be of interest to grant recipients. Among the details that may be of greatest interest to Digest readers: The equipment threshold is raised to $10,000 (2 CFR 200.1); The single audit threshold is increased to $1 million (2 CFR 200.501); The de minimis indirect cost rate will be raised to 15% (2 CFR 200.414(f)); and…

Why the U.S. Economy Needs More Consolidation, Not Less, a recent paper from the Information Technology & Innovation Foundation (ITIF), explains from an economics perspective the advantages of scale economy for improving an industry’s overall efficiency and productivity. Not all industries see significant economies of scale as firms grow, ITIF research points out. In fact, one in four sectors in the 938 NAICS industries do not, ITIF reports, suggesting—but not discussed, that some public policies designed to improve the performance of these small business-oriented sectors may be beneficial. Policy recommendations included in the report are intended to discourage the federal government from refining regulations governing mergers, acquisitions, and potential monopolizing effects from increased consolidation in those 710 sectors where increased consolidation yields greater efficiency and corporate receipts. Many advocates for innovation-driven entrepreneurship and TBED may wince at the mention of consolidation as a positive, perhaps forgetting that mergers and acquisitions present the dominant exit strategy for startup innovation-focused companies within the portfolios…

The Securities and Exchange Commission is seeking candidates to fill a limited number of vacancies on the agency’s Small Business Capital Formation Advisory Committee, which provides advice and recommendations to the Commission on rules, regulations, and policy matters relating to small businesses. The committee advises and consults with the Commission on rules, regulations, and policies as they relate to: Capital raising by emerging, privately held small businesses and publicly traded companies with less than $250 million in public market capitalization; Trading in the securities of emerging companies and smaller public companies; and Public reporting and corporate governance requirements of emerging companies and smaller public companies. Members of the public interested in serving on the committee should promptly email a letter of interest to smallbusiness@sec.gov with applicable information about their relevant experience. The deadline for submissions is June 14, 2024.

The National Institute of Standards and Technology (NIST) has issued a Notice of Funding Opportunity (NOFO) seeking proposals to establish and operate a CHIPS Manufacturing USA institute focused on digital twins for the semiconductor industry. The CHIPS for America Program anticipates up to approximately $285 million in funding will be awarded to the institute. Digital twins, as defined in a press release from the U.S. Department of Commerce, are “virtual models that mimic the structure, context, and behavior of a physical counterpart.” The institute’s funded activities are expected to include, but not necessarily be limited to operational activities to run the Institute; basic and applied research related to semiconductor digital twin development; establishing and supporting shared physical and digital facilities; industry-relevant demonstration projects; and digital twin-related workforce training, according to the press release. Dr. Eric Forsythe, director, and Dr. Michael McKittrick, deputy director of the CHIPS Manufacturing USA Program, will provide a briefing on details of the NOFO on May 8, 2024, at 4:00 p.m. ET. Webinar participants must register in…

AlphaLab Health, an accelerator program developed by Innovation Works (IW) and Allegheny Health Network (AHN) for life-sciences startups in the Pittsburgh region, has received a $10 million grant from an anonymous donor. The grant establishes the AlphaLab Health Revolving Investment Fund, which will support startups in the accelerator program. According to a press release from AlphaLab Health, the investment returns generated by the fund will create a “permanent, self-sustaining source of revenue that will be reinvested into future AlphaLab startups.”  “AlphaLab Health is central to our ongoing commitment to supporting life sciences companies in Southwestern Pennsylvania,” said Innovation Works’ Chief Executive Officer Ven Raju. “The unique partnership between AHN and IW brings to bear the resources and know-how of a large integrated health system with that of a leading venture development organization to help early-stage life sciences companies in the region. The grant will help to bolster the life sciences cluster, from spawning innovative technologies and therapies that have the potential to save lives to catalyzing significant…

New House appropriations committee chair Tom Cole (R-OK) has announced a rule that nonprofits are not eligible for “community project funding” (i.e., earmarks) from the Department of Housing and Urban Development’s Economic Development Initiative in the FY 2025 appropriations bill. In FY 2024, this account provided $3.3 billion to public and nonprofit organizations, and CQ Roll Call reports that nearly $800 million of the House’s projects went to nonprofits. The rules for FY 2025 also maintain the ban Cole’s predecessor, Rep. Kay Granger (R-TX), placed on all earmarks in the Labor-Health and Human Services-Education funding bill. At this point, the Senate does not seem likely to conform with the House’s change—the Senate has not published a change to its guidance and did not follow the House’s restrictions in FY 2024.

While the growth of female-founded and co-founded companies has increased at a faster rate than those of male-founded and co-founded and mixed gender founded companies, it is still a smaller amount than the other two. Additionally, these companies are more likely to receive a higher proportion of deals occurring earlier in the VC pipeline. Since 2014, companies founded or co-founded by a female have increased by the largest amount of any gender combination. Sixty percent of these founders have received a venture capital (VC) deal, according to SSTI analysis of PitchBook data. Across both male- and female-founded or co-founded companies, this figure drops to a relatively lower 29%, while those founded or co-founded by a male have increased 24% over the same period. The spread of deal types making up these investments, as well as the amount of capital invested, differs greatly; in 2023, female-founded and co-founded companies received primarily pre/accelerator/incubator deals, while male-founded and co-founded companies, as well as those across the two gender groupings, primarily received later-stage VC deals. A prior Useful Stats article, “Female founders…

In the 21st century, some high-tech firms in emerging fields are valued more for their perceived innovation potential than by traditional measures of a successful business. But how does innovation influence the value of existing publicly traded firms? New research by Panteleimon Kruglov and Charles Shaw explores the relationship between R&D intensity and financial performance among S&P 500 companies over 100 quarters from 1998 to 2023 and its implications for firm competitiveness and market positioning. The research employs various econometric models to estimate the relationships between R&D intensity and key financial and operational variables. These variables include total assets, EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization), physical assets, size, recession indicators, tax rate, dividend yield, and the Graham Number (a measure of fundamental value of a stock). Interesting findings of this study include that while larger total assets and greater physical assets are associated with higher R&D intensity, firm size has a negative relationship with R&D intensity. Also, while economic downturns have a negative impact…

The measurements for success of female-founded and female-co-founded companies, while improving, remain lower than male-founded companies in number, deal count, and capital invested, according to PitchBook’s 2023 Annual US VC Valuations Report. PitchBook found that female-only-founded startups received just 2% of all venture capital (VC) dollars in 2023, while those female-co-founded reached 21% that year—a record high. SSTI analysis of PitchBook data finds that the number of VC deals to female-founded and female-cofounded companies has increased 58% over the past decade, yet despite reaching that milestone, they have been on a sharp downward trend since 2021. This edition of Useful Stats takes a deep dive into these metrics and more using PitchBook data. SSTI analyses are curated into multiple data tools and graphics, revealing the deal count, number of, and capital invested in female-founded and female-co-founded companies across different geographies, VC deal types, and industry verticals. This approach aligns with the definitions underlying PitchBook’s female founders dashboard and extends that tool’s overview of the market and scope by including pre/accelerator/…

“Inclusive clusters have an explicit focus on equity, have identified the precise issues that lead to economic disparities in the cluster and have targeted strategies in place to shrink those disparities,” say the authors of Developing Inclusive Clusters, a recent Insight Report from the New Growth Innovation Network (NGIN) and RTI International. They cite the high-tech industry as a high-wage industry whose benefits “tend to exclude women, people of color, and non-urban communities” and note that this type of disparity has not been “widely or systematically” studied. The authors outline the key decisions that go into creating inclusive clusters. “Creating an inclusive cluster requires looking through a ‘lens of equity and inclusion’ at every decision-making juncture to ensure barriers to inclusion are first identified and then addressed,” they note. The report lists and discusses the key decisions that influence the inclusivity of a cluster. These decisions include: Creating a governance structure that includes a more diverse group of people in the decision-making process; Focusing on an industry cluster that has a high probability of generating opportunities…

On Wednesday, the STEMM (Science, Technology, Engineering, Mathematics, & Medicine) Opportunity Alliance announced STEMM Equity and Excellence 2050: A National Strategy for Progress and Prosperity. In a press release, SOA also announced that its partners have collectively committed more than $2 billion to realize the vision of the national strategy, each committing to “multi-lateral, cross-sector collaboration to achieve systems-level change.” Examples of these commitments include: Microsoft has committed to supporting an educational program, FarmBeats for Students, to increase equitable access to STEMM learning experiences in rural communities around the country. The Education Development Center will expand its Math for All professional development program, reaching about 960 teachers and 44,800 students in grades three through six, thus increasing the number of skilled and diverse educators. The Alfred P. Sloan Foundation is investing about $5 million to support educational pathways from minority-serving institutions (MSIs) to master’s and doctoral degree programs to support the development of STEMM faculty from historically excluded and marginalized…

The Internal Revenue Service (IRS) has released its final rules, as required by the Inflation Reduction Act, to make many clean energy tax credits transferable (able to be sold to a third party) or available for elective pay (a direct payment to the credit holder). Both rules may help expand investment in clean energy by providing mechanisms that get capital to the project’s developer immediately, even if the developer is a nonprofit or public entity that would never have paid any taxes on the project. Credits covered by the rules include the production tax credit, investment tax credit, advanced manufacturing credit, and the hydrogen production credit. For more information on the energy tax credits renewed or created in the Inflation Reduction Act, visit epa.gov; for the new IRS rules, visit treasury.gov.