SSTI Digest

U.S. venture capitalists invested $21.8 billion in 2010, a 19.4 percent increase over 2009 and the first increase in venture investment since 2007, according to the National Venture Capital Association (NVCA) and PricewaterhouseCoopers Moneytree Survey. The growth in activity affected nearly every industry, particularly clean energy software and Internet-specific companies. Early stage investments, though not seed stage investments, grew by double-digits as did first-time financings. In addition to the gains in venture dollars, VC deals grew to 3,277, a 12 percent increase over 2009. Venture capital (VC) returns also have begun to improve for the 3, 5 and 10 year horizons, according to the Cambridge Associates and NVCA. Software once again became the single largest investment sector, surpassing life science. In the third and fourth quarter, the software sector returned to 2007 levels of activity, while life science saw slight declines, particularly in the medical device industry. Clean energy sector dollars grew by 76 percent, a significant increase but still below 2008 levels. Much of this growth was due to large deals, including five of the year's top ten deals.…

President Barack Obama called for a renewed commitment to American innovation, education and infrastructure to restore the country's competitive edge in his annual State of the Union address on Tuesday. The administration's "plan to win the future" includes stronger support for research and high-tech businesses in order to maintain leadership in a global economy dominated by technology-intensive industries. In order to encourage innovation, the president set the goal of providing high-speed wireless coverage to 98 percent of Americans in five years, preparing 100,000 STEM educators over the next ten years and producing 80 percent of the country's electricity from clean energy sources by 2035. Other major proposals include a five-year spending freeze for many domestic programs, which could reduce the federal deficit by an estimated $400 billion over the next ten years, and an end to congressional earmarks. President Obama made innovation the centerpiece of his speech, calling this a "Sputnik moment" for the nation, requiring both ingenuity and additional federal investment in research. In particular, he emphasized the need for federal investment in basic…

The fourth installment of SSTI's Tech Talkin' Govs series includes excerpts from speeches delivered in Alaska, Delaware, Hawaii, Michigan, Missouri, Nevada, and Vermont. The first three installments are available in the Jan. 5, Jan. 12 and Jan. 19 issues of the Digest. AlaskaGov. Sean Parnell, State of the State Address, Jan. 19, 2011"That's why this year I know we can work together to enact the energy strategy that I've submitted. This comprehensive plan puts us on track to achieve the renewable energy goal we established, together, that Alaska will derive 50 percent of our electrical power from renewable sources by 2025. To get there, I'm asking you to move decisively and aggressively with me. Let's work together this year to invest at least $65 million to jump start planning, design, and permitting for the Susitna Hydro Project; provide at least $25 million for renewable energy grants ..." DelawareGov. Jack Markell, State of the State Address, Jan. 20, 2011"And to drive home the message that Delaware is the best place to start and grow a business, we must promote job-creating capital…

Gov. Martin O'Malley last week unveiled details of his proposed $100 million venture fund announced last year during his re-election campaign as an initiative to grow the state's knowledge-based industries, particularly within the life sciences sector (see the June 9, 2010 issue of the Digest). The governor's budget also provides funding for the state's 10-year Bio 2020 initiative, including $12.4 million for stem cell research, $8 million for biotechnology tax credits and $3.8 million for the Maryland Biotech Center. The InvestMaryland initiative is designed to fill a financing gap for new startup technology companies and would be funded through tax revenue to insurance companies. Half of the investments would be allocated to the Maryland Venture Fund, a now depleted state fund established in the 1990s to invest in technology and life science companies. The other half of the investments would be allocated to the Maryland Small Business Development Finance Authority and selected private venture capital firms. Those investments would be distributed using a traditional VC model, whereby 100 percent of the principal must be returned to the state before…

Funding for university-based research initiatives would be cut significantly under Gov. Nathan Deal's proposed FY12 budget as the governor aims to close a projected deficit of nearly $1 billion. The Georgia Research Alliance (GRA), a nationally recognized model for creating and sustaining tech-based economies, would receive $4.5 million in FY12, a 75 percent reduction from the current year. The governor's budget also would transfer GRA funds to the Department of Economic Development, a move that would align TBED with the state's more traditional economic development efforts. GRA's research and technology commercialization programs, which often are replicated by other states and regions, would be severely impacted if the governor's budget is adopted in its current form. Funding for GRA's Eminent Scholars, which is used to match university funds for recruiting world-class researchers to the state, would be eliminated. The budget also reduces funding for the Advanced Technology Development Center (ATDC)/Economic Development Institute by $650,745 and recommends changing the name to Enterprise Innovation Institute. With three locations across…

While seeking to spur economic growth through new investments in university-based research, Gov. Sam Brownback also proposes to consolidate the efforts of a longstanding program recognized for creating high-wage jobs and diversifying the state's economy. Under the governor's FY12 budget proposal, many of the programs currently managed by the Kansas Technology Enterprise Corporation (KTEC), which provides dedicated support for researchers, entrepreneurs and technology companies, would be transferred to the Department of Commerce. Eliminating KTEC and folding some of its programs into the Department of Commerce would save $1.7 million, according to budget documents. Overall, the governor's budget proposes elimination of eight state agencies for a cost savings of $9.2 million. A similar plan was proposed by former Gov. Kathleen Sebelius two years ago and subsequently rejected by the legislature. Under the plan, the Department of Commerce would manage the Centers of Excellence ($1.35 million), Entrepreneurial Centers ($968,023), and Mid-America Manufacturing Technology Center ($1 million). The Experimental Program to Stimulate Competitive Research (EPSCoR…

The Obama administration plans to award $2 billion in grants to two-year, degree-granting institutions over the next four years to expand job training programs across the country. The funding was allocated through last year's health care act and will support training programs designed to meet the needs of local employers. Awards will range from $2.5 million to $5 million for individual institutions and from $.25 million to $20 million for consortia. The administration also is using the program to support the development of free, online learning materials, according to The Chronicle of Higher Education. Find out more ...

Massachusetts continues to be the country's most successful high-tech economy, according to the 2010 edition of the Milken Institute State Technology and Science Index: Enduring Lessons for the Intangible Economy. The Index uses 79 indicators to evaluate and rank state performance in five categories: R&D inputs, risk capital and entrepreneurial infrastructure, human capital capacity, technology and science workforce, and technology concentration and dynamism. Since the last update in 2008, Utah climbed three places to rank fifth overall due, in part, to improved risk capital availability. Alaska and Ohio had the greatest improvement, each moving up seven spots in the overall rankings. Download the Index (requires login) ...

New York City Mayor Michael Bloomberg recently launched the NYC Urban Technology Innovation Center, an initiative that will connect universities, technology companies and building owners in an effort to bring new green building technologies to market. The initiatives will provide a database of technology needs and research, and will provide researchers with real world test sites for their work. Building owners will be able to use the technologies at discounted rates. Learn more ...

With the fears of rising state deficits and high unemployment, states must make tough decisions regarding their economic development efforts in the coming years. Researchers at the Brookings Institute contend that states should focus on regional economic clusters because it provides a "low-cost means" to reignite innovation, entrepreneurship and job creation. "Organic" job growth should be the focus of state economic development, according to the report — Job Creation on a Budget. The researchers say, "Some 95 percent of all job gains in a year in an average state come from the expansion of existing businesses or the birth of new establishments (i.e., organic factors of job growth)." These efforts also take significantly smaller financial commitments by the state and provide a more streamlined approach to achieve meaningful job growth than other more conventional economic development efforts. However, many states continue to focus their economic development efforts on the costly practices of tax credits, R&D training programs and physical infrastructure. The authors point out that only 2% of job creation can be attributed to…

The third installment of SSTI's Tech Talkin' Govs' series includes excerpts from speeches delivered in Colorado, Georgia, Nebraska, and South Dakota. The first and second installments are available in the Jan. 5 and Jan. 12 editions of the Digest. ColoradoGov. John Hickenlooper, State of the State Address, Jan. 12, 2011"We also hope that every bill you consider passing will be viewed through the lens of its impact on our economic growth. ... "... For example, we know there are several bills you are considering that will establish a venture capital fund for small businesses. We will work with you on these proposals and create strong public-private partnerships. GeorgiaGov. Nathan Deal, State of the State Address, Jan. 12, 2011"... Let me highlight some of the projects I propose for bond funding... $15 million for funding for STEM charter schools that focus on Science, Technology, Engineering and Mathematics education, areas that are vital to our competiveness in the global economy." Nebraska — See related story in this week's DigestGov. Dave Heineman, State of the State Address,…

Arizona Gov. Jan Brewer will convene a special session to focus on job creation proposals centered on her effort to replace the state's Department of Commerce with the public-private partnership she established through executive order last year (see the July 14, 2010 issue of the Digest). Along with legislative approval of the Arizona Commerce Authority (ACA), the governor is calling for $25 million to launch the Arizona Competes Fund, providing tax incentives for businesses locating in the state. Under the governor's recently released policy agenda for her upcoming four-year term, the new ACA would be exclusively focused on business attraction, retention and expansion in Arizona's strongest economic sectors. As part of the overhaul, the Office of Energy, currently part of the Department of Commerce, would become an independent agency within the governor's office to allow for focus on statewide policy. The FY12 budget unveiled last week by Gov. Brewer recommends a general fund appropriation of $658,200 to support ACA's first three weeks of operating costs until the agency is self-sufficient. Gov. Brewer earmarked $10 million in stimulus funds to establish the authority last…