SSTI Digest

Massachusetts remains the state best prepared to navigate the changing economy, according to the Information Technology and Innovation Foundation's (ITIF) 2010 State New Economy Index. ITIF uses 26 indicators in five categories to evaluate the economic structure of states and assess their capacity to drive innovation-based growth. Massachusetts ranked number one in economic preparedness by a wide margin, as it has since the first index was released in 1999. Other top states include Washington, Maryland, New Jersey and Connecticut. Overall, most states and the U.S. as a whole improved in most indicators between 2008 and 2010. Only three U.S. indicators showed a marked decline during that period: patents, non-industry R&D, and venture capital.

Facing the largest budget deficit in the European Union, British Prime Minister David Cameron will not to cut spending on S&T. The European Commission predicts the UK will face a 12 percent budget deficit in 2011. To combat this deficit, the Cameron led Tory-Liberal Democrat coalition took drastic measures to reduce the deficit by 2014. In October, Chancellor George Osborne unveiled the budget plan, which will cut almost all government departments by an average of 19 percent over four years. This austerity plan should reduce spending by almost £80 billion pounds (roughly $126 billion) according to Fox News.

The Department of Defense (DoD) lacks complete data on the number of technologies commercialized and therefore cannot determine the return on its space-related SBIR investment, finds a report by the Government Accountability Office (GAO). To meet space-related technology needs, DoD invested $5 billion, or approximately 11 percent of its total SBIR budget, on space-related Phase I and Phase II contracts over fiscal years 2005-09. However, the GAO report finds that DoD does not have a complete picture of contract awards and does not know how effectively it is commercializing SBIR technologies. Specifically, DoD is lacking complete data on Phase III and is inconsistent in recording and defining commercialization. Further, the report finds DoD does not require the services and components to track and report the data. The report offers three short- and long-term recommendations to overcome the challenges, including collecting data on all SBIR technologies that transition into DoD acquisitions or commercial-sector products or services. Read the report ...

This week, millions of people in more than 100 countries across the globe will participate in activities, forums and competitions geared toward helping young people develop the skills and knowledge needed to grow innovative companies as part of Global Entrepreneurship Week 2010. The third annual celebration co-founded by the Kauffman Foundation and Enterprise UK boasts participation from students, educators, entrepreneurs, business leaders, and government officials. In tandem with the global celebration, President Obama proclaimed Nov. 14 through Nov. 20, 2010, as National Entrepreneurship Week, celebrating American entrepreneurs and highlighting the administration's national innovation strategy, which emphasizes entrepreneurship as a catalyst for new industries, new businesses and new jobs, according to a press release. The president's National Advisory Council on Innovation and Entrepreneurship currently is collecting input from across the U.S. to recommend policies to bolster job growth.

ASAIO, the oldest society in the world focusing on medical devices, is seeking device developers who are early in development (pre-seed/seed stage funding) to submit abstracts to the New Ventures Forum (NVF). The NVF is based on a partnership between ASAIO and students from MIT Sloan School of Business that seeks to provide a forum for the presentation of next generation medical devices and a robust discussion of the commercialization challenges these technologies may encounter. Approximately three developers will be selected for 15-min presentations at ASAIO's national meeting to be held June 2011 in Washington DC at a separate session for the NVF.Submission does not require any fees. In January 2011 or so, student teams from MIT Sloan will work with selected applicants to develop and refine business plans and their presentations for the meeting. The selected applicants will present to a panel that is made up of experts from the FDA, reimbursement consultants and venture capitalists who will provide immediate feedback regarding the technologies and presentations.

"Despite the clear limitations of existing federal innovation programs, they remain important to our national economic competitiveness," according to a new report from the Center for American Progress. In Silos of Small Beer, authors Maryann Feldman and Lauren Lanahan examine the efficacy of federal innovation programs on the regional economic development of the eastern Midwest region that includes Pittsburgh in western Pennsylvania; and Cleveland, Akron and Youngstown in northeast Ohio. Utilizing surveys and one-on-one interviews, the case study not only provides insight into the efficacy of the those federal programs, but also the interaction between actors within the region (e.g., small and medium-sized business, venture capital firms, nonprofit economic development agencies, state and local governments). Researchers found several shortcomings stemming from federal innovation programs and the region in general. However, the report also highlighted some promising news related the emergence of industry clusters in the region.

Academics and policymakers should "be more careful with the assumption that technological knowledge spillovers and networks occur automatically in innovative clusters," according to a recent article on the Cambridge IT cluster. The report, Do Clusters Really Matter for Innovation Practices in Information Technology? Questioning the Significance of Technological Knowledge Spillovers, examines the impact that a cluster has on R&D workers in IT field with an emphasis on territorial learning and knowledge spillovers. Over 100 IT professionals in various R&D job positions — junior developers, Chief Technology Officers to Managing Directors at small firms — from Cambridge, United Kingdom (UK) were surveyed or interviewed. The region's IT cluster is widely considered "one of most innovative and successful high-technology region in the UK and the EU." Author Franz Huber found that 49.1% R&D workers did not find clustering to be "beneficial for their work." However, Huber quickly points out that Cambridge's "guarded culture" may reduce the amount of formal and informal diffusions of knowledge.

Legislative control will shift from Democratic to Republican majority in eleven states and Republicans now control the legislature and governor's office of 20 states, up from nine, after adding more than 675 seats in last week's midterm elections, reports the National Conference of State Legislatures (NCSL). The GOP gained control in one or both chambers in the following states: Alabama, Colorado, Indiana, Iowa, Maine, Michigan, Minnesota, Montana, New Hampshire, North Carolina, Ohio, Pennsylvania, and Wisconsin. Results from elections in New York, Oregon and Washington are still pending. Republicans won control of both chambers in Southern states previously controlled by Democrats, including Alabama and North Carolina, and gained control of both houses in the Midwestern states of Michigan, Pennsylvania, Ohio, Wisconsin and Indiana, according to Stateline.org. Sweeping proposals on budgets, taxes, social issues, redistricting and challenges to the federal health care law are anticipated in the coming year, reports NCSL.

With the end of federal stimulus funding for higher education on the horizon, states are considering proposals to retool current funding formulas for colleges and universities and looking to alternative funding sources to sustain their programs and services in the coming years. Ahead of the 2011 legislative session, groups commissioned by governors in Colorado and Virginia recommended a voter-approved tax and more stable funding streams from the state, respectively. In Texas, the Higher Education Coordinating Board endorsed a method in which a percentage of university funding would be based on student outcomes. The proposals were submitted to Gov. Rick Perry and the legislature last week, reports the Austin American-Statesman.

Colorado

Southerners voiced that focusing on innovation and technology-based business operations, supporting entrepreneurship, identifying community asset, developing skilled workforce and increasing community involvement in economic development strategies are vital for the South to recover from the current economic downtown according to a recent report — The Road to Recovery is Named Main Street — from the Southern Growth Policies Board. The report was assembled using comments of over 2,300 citizens from communities across the south. During community gatherings and via online surveys, Southerners discussed not only the challenges and concerns caused by the Great Recession, but also the priorities and potential to build stronger regional economies. Participants provide states, regional economic development organizations and local governments with five key themes: look beyond industrial recruitment, reduce regulation, identify and build on community assets, revamp workforce training and facilitate partnerships.

Angel investors continue to move their focus from seed stage startups to later stage deals, according to recent analysis by the University of New Hampshire's Center for Venture Research. During the first half of 2010, 26 percent of angel capital was invested in seed and startup stage companies, down from 35 percent in 2009 and 45 percent in 2008. Meanwhile, overall angel funding fell to $8.5 billion, a 6.5 percent decrease from the first half of 2009. Though angel investors are conducting a greater number of smaller deals than they were in the last few years, this has not translated into investment in younger companies.

Jeffrey Sohl, director of the Center for Venture Research, hypothesizes that the migration away from seed and startup deals reflects a need to invest in portfolio companies to help them survive the recession and eventually reach a profitable exit. If the trend toward later stage investment continues, however, the lack of capital availability for young startups could result in a crisis for new venture creation.

U.S. jobs in solar energy could increase by 26 percent by this time next year, according to the first nationwide solar census from The Solar Foundation. The census estimates that there are currently 93, 000 solar workers in the U.S., and 50 percent of solar firms plan to add jobs in the next 12 months. Solar workers are defined as employees who spend more than 50 percent of their time supporting solar activities. Read the census at: http://www.thesolarfoundation.org.