SSTI Digest

The third quarter of 2023 continues the venture capital market’s recent two-year decline in investments, investors, and initial public offerings. This puts a squeeze on startups. How helpful investment funding will be to startups in the rest of 2023 and beyond likely depends on whether the downward trends settle in alignment with pre-pandemic activity or continue into a VC-specific recession. Regardless, there could be dire consequences for many companies.

The 2021 BERD dataset reveals the highest level of business R&D spending on record. Since 2015, R&D expenditures have increased by 69% from $356 to $602 billion, representing an average annual growth of $41 billion or 9%. But what industries are contributing the most to this trend? The growth of business R&D in nonmanufacturing industries has far outpaced that of manufacturing industries since 2016, with an average growth of 15% per annum, compared to 6% for manufacturing industries. Nonmanufacturing R&D expenditures have been driven by massive increases in the information sector, among other industries, while chemicals—specifically pharmaceuticals and medicines—have led manufacturing. While nonmanufacturing industries have higher growth rates in their R&D expenditures, they still lag behind manufacturing industries in actual expenditures, but the gap is rapidly closing.

Latino- and Latina-owned businesses represent the fastest growing demographic in the U.S. business ecosystem, growing revenues and creating jobs for all Americans, according to the Stanford Graduate School of Business. The number of Latino/a-owned businesses grew by 34% from 2007 to 2019, while existing businesses grew at a median rate of 25% between 2019 and 2022. Even at these rapid rates, there is still room to grow.

Last week, a Senate committee heard Commerce Secretary Gina Raimondo and National Science Foundation Director Sethuraman Panchanathan discuss CHIPS & Science Act program implementation (similar to a September hearing in the House). Both agency leaders affirmed rapid progress toward making funding announcements on major programs and reminded the committee that more funding is needed to meet the vision Congress defined in its legislation.

Several notable statements that Raimondo made about Tech Hubs to the U.S. Senate Committee on Commerce, Science, and Transportation included the following (all quotations per the transcript provided by C-SPAN):

How do you explain your work to others? Explore this important and challenging topic with your peers during a TBED Community of Practice webinar. SSTI will share findings about public perception and interpretation of common TBED activities, such as that people think tech transfer means moving files to a new device, and facilitate a discussion with experienced state leaders and the audience about effective strategies to build public awareness and stakeholder support. You’ll log off with new ideas for communicating your work to partners, funders, legislators, and even your family.

An independent selection committee recently announced the incoming board of trustees that are expected to oversee a nonprofit entity that will operate the National Semiconductor Technology Center (NSTC). The NSTC is the core research and development (R&D) component of the Department of Commerce’s CHIPS for America program. The NSTC will be a collaboration hub for members of the entire semiconductor manufacturing and supplier ecosystem. It will accelerate innovation and help lower the cost and time required to bring new technologies to market. 

Most states, businesses, families, and individuals spent the pandemic walking on the edge of a jagged economic cliff. Luckily, there were some guardrails in the form of fiscal recovery funds, disaster loans, paycheck protection, and childcare grants. These devices helped pull thousands back from the edge.

But now, with the pandemic emergency over, the cliff is still in sight, but the guardrails are gone. Without them, will states, businesses, and others tumble over the economic cliff? The answer may depend on how they used those guardrails during the pandemic.

Different states used Fiscal Recovery Funds in various ways

Congress passed the American Rescue Plan Act (ARPA) in March 2021, providing $1.9 trillion to respond to COVID-19 after the partial shutdown of the nation's economy. This money included $350 billion for Coronavirus State and Local Fiscal Recovery Funds (SLFRF).

NSF recently announced the first Experiential Learning for Emerging and Novel Technologies (ExLENT) investment of $18.8 million to 27 teams at U.S. institutions of higher education, including teams led by minority-serving institutions and historically Black colleges and universities. Each team will receive up to $1 million for up to three years.

Of the 27 teams receiving ExLENT awards this round, nine received an award in the Pivots track, which provides current professionals in any field an experiential learning opportunity that builds the skills and competencies they need to pivot into careers in key technologies. The remaining 18 teams received awards in the Beginnings track. Teams in this track will target individuals that have some basic experience in STEM fields and will receive additional experiential learning opportunities to deepen their knowledge and skills in key technologies. ExLENT teams will build partnerships between organizations in key technologies and those with expertise in workforce development.

The U.S. Department of Energy (DOE) recently announced up to $325 million for 15 projects to accelerate the development of long-duration energy storage (LDES) technologies. These demonstration projects will increase community control of local power systems, mitigate risks associated with disruptions to the grid, and help communities develop reliable and affordable energy systems. These projects will help DOE realize its Long Duration Storage Shot goal of reducing the cost of LDES by 90% by 2030 and will advance critical clean energy technologies, expand the adoption of renewable energy resources, and strengthen energy security.   

The Department of Defense recently awarded six Defense Manufacturing Community Support Program (DMCSP) grants totaling approximately $30 million from the Office of Local Defense Community Cooperation (OLDCC). The DMCSP invests long-term in critical skills, facilities, workforce development, research and development, and small business support to strengthen the national security innovation base.

The awards derive from Fiscal Year 2023 appropriated funding and leverage an additional $10,934,491 in non-Federal funds for a total investment of $40,759,243. The award winners focus on defense-critical sectors, from battery and energy storage to microelectronics and castings and forgings.

The grant awards are:

$4,997,965 to the Michigan Defense Resiliency Consortium. The consortium will undertake a $6,302,965 project to create the critical foundation for energy storage and battery manufacturing necessary to support the Department of Defense's rapid transformation from internal combustion engines to electric vehicles. They also will provide technical assistance, technology acceleration, and workforce training initiatives.

SBA's Office of Investment and Innovation recently established the Invention, Innovation, and Entrepreneurship Advisory Committee (IIEAC) to serve as an independent source of information, advice, and recommendations to the Administrator on matters broadly related to the U.S. startup and small business innovation ecosystem. 

The committee will provide information and recommendations on how SBA can:

Support innovation across the United States. Develop or evolve SBA programs and services to address commercialization hurdles. Address vulnerabilities and gaps in funding domestic invention and innovation. Facilitate and enable broad access to, and participation in, federal innovation support and funding programs.

The IIEAC is tasked with examining the issues facing U.S. innovation economy stakeholders in these subject areas.

Committee members include:

In the absence of cohesive federal policies or regulations involving the growing development and use of artificial intelligence (AI), states’ governors and lawmakers are undertaking studies and crafting legislation that seeks to balance governance and implementation of this evolving technology. The studies and legislation are intended to protect constituents from AI’s possible harms without hindering potential uses or contributions of AI to government services or medical, science, business, and educational advancements.

A recent report by the National Conference of State Legislators (NCSL) detailed how some states are currently regulating AI, but it also illustrated that for state policymakers nationwide, AI is (or continues to be) a growing area of concern.