SSTI Digest

Despite the global growth of the industry over the past few decades, U.S. venture capital remains as concentrated as ever in the Silicon Valley region, and to a lesser extent, Massachusetts. Of the 87 venture capital firms included in the PricewaterhouseCoopers list of most active firms of 2008, 40 firms (46 percent) were located in Silicon Valley and San Francisco; only one California firm was located outside of that region (Santa Monica); another 18 of the most active firms were located in Massachusetts.

R&D Flat, but Budget Reflects Obama Administration Priorities

The first budget request of the Obama Administration keeps R&D funding virtually flat, at $147.6 billion, rising only 0.4% over the enacted FY2009 levels. That conclusion is somewhat misleading however, given Congress only approved the FY09 budget two months ago and the massive Recovery Act a month earlier. Recovery Act funding will be spent over both FY09 and FY10, providing agencies more money for research and economic development than at any time previously. The White House Office of Science & Technology Policy (OSTP) estimates the federal government will spend $165.4 billion for R&D in FY09.

Despite level funding, the Administration refocuses much of the FY10 spending on what it perceives are national imperatives: fighting climate change, finding cures for cancer, making our economy more innovation-based and efficient, and tying education and training to 21st century skill development.

The full report is available for download in pdf format.

For nearly every budget issue SSTI has prepared during the first decade of the 21st century, our opening paragraphs read like obituaries. The previous administration was ideologically opposed to the government taking an active role to support economic development, even tech-based economic development, beyond increases for university and federally based research. Spending for federal programs that support regional community and economic growth were slashed repeatedly. The memories are fresh of having to fight for every dollar in Congress, and, watching appropriation levels slide. Earmarks grew as programs were forced to fend for themselves. Unless you've been in the TBED field for nearly a decade, those may be your only perceptions of the federal role for innovation.

SSTI's review of the FY10 budget proposal includes TBED highlights from these agencies:

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To help the United Kingdom out of the recession, Alistair Darling, chancellor for the exchequer for the United Kingdom, outlined several significant TBED priorities in his budget address to the House of Commons last month.

Top among them is a £750 Million ($1 Billion USD) Strategic Investment Fund that "will provide financial support, focusing on emerging technologies and regionally important sectors in, for example, advanced manufacturing, digital and biotechnology," Darling said in his address.

This includes an additional £50 million for the Technology Strategy Board and £10 million for UK Trade and Investment. Fully one third of the new funds, £250 million, will be earmarked for low carbon investments.

Iowa legislators adjourned the 2009 session last week after voting in favor of Gov. Chet Culver's multi-million dollar I-JOBS initiative, providing $35 million for broadband access and alternative energy projects. The compromise plan approved by lawmakers allocates $715 million for investments in infrastructure, jobs, the environment, and flood relief through the issuance of bonds paid for with gaming revenue and existing tax revenues, according to the governor's office.

To improve the state's telecommunications infrastructure, $25 million will be leveraged with up to $500 million in federal funding for improved broadband access. The goal is to put in place a system worth about $1 billion when combined with private investments to replace the current system of low- and high-speed connections scattered throughout the state, according to a Des Moines Register article.

The Montana Legislature adjourned last week after passing an $8 billion biennial budget for FY10 and FY11. The state Department of Commerce was allocated $74.9 million over the biennium, $1.7 million more than the governor's request. Newly funded initiatives within the department include $3.7 million over the biennium for workforce training grants through the New Worker Training program, $1.6 million for tribal economic development projects, $2 million for high-performance computing and $2.5 million in FY10 for biomedical research grants. No funding was provided for the Montana Fund-of-Funds, which was created under the 2005 Montana Equity Capital Act but has yet to be funded.

Because fewer than 100 legislators voted in favor of the appropriations bill, Governor Schweitzer retains line item authority for the budget.

The first report from Canada's new Science Technology and Innovation Council (STIC) concludes in the State of the Nation 2008 that the status quo is not good enough and more has to be done to sustain the country's innovation system.

Established by Prime Minister Stephen Harper in 2007, Canada's STIC is the equivalent of the President's Council of Advisors for Science & Technology, or PCAST, in the U.S. Most of State of the Nation 2008 presents a statistical case for why Canada must be more aggressive in its innovation policies through comparison with other industrialized countries using more than 50 indicators of performance. In addition, the report profiles several regional and national efforts within Canada that are supporting innovation.

On a per capita basis, R&D obligations from the federal government to U.S. universities and colleges increased by 16 percent from FY 2002 to 2006, rising to $85.30 per person in FY06. Total U.S. federal R&D obligations to academia increased by 17.4 percent over the same five years, suggesting federal R&D did not keep pace with population growth during the period (see the April 15, 2009 issue of the Digest).

Using population to standardize federal obligations to academia on the state level is less than ideal as the data don't have much to do with each other. But it provides a starting point for comparison. Toward that end, SSTI has prepared a table listing the academic obligations per capita from FY 2002 to 2006, the percent change of these obligations per capita over this period, and the relative rank of this change.

W. Steven Burke is the new president of Biofuels Center of North Carolina.

Bill Gimson has been named executive director of the Cancer Prevention and Research Institute of Texas. Gimson recently retired as the chief operating officer of the Centers for Disease Control and Prevention.

Jeremy Hill has been named the director of the Center for Economic Development and Business Research at Wichita State University. Hill replaces Janet Harrah, who left the post for Northern Kentucky University.

President Obama announced earlier this week that the U.S. would increase its investment in basic and applied research and science and mathematics education to match the historic levels reached during the height of the space race. The president pledged to raise total government and industry spending on R&D to 3 percent of U.S. gross domestic product (GDP), equal to the record set in 1964. In addition to the increases in R&D spending already included in the Recovery Act, President Obama committed to finish the doubling of funds for federal science agencies and create several new programs to encourage students to pursue careers in STEM fields.