SSTI Digest

Earlier today, the Economic Development Administration announced the 2022 notice of funding opportunity (NOFO) for the Build to Scale program. State and local governments, nonprofits, institutions of higher education, National Labs and others are eligible to compete for a total of $45 million in funds to support new and expanded initiatives that support regional commercialization, entrepreneurship and capital formation efforts. EDA has slightly restructured the program for this year’s competition, with two funding streams and two levels of awards for each. The “Venture Challenge,” which focuses on innovation and entrepreneurship, includes a “Build” tier for demonstration projects up to $750,000 and a “Scale” tier for proven initiatives at up to $2 million. The “Capital Challenge,” which focuses on forming and supporting innovation finance, includes a “Form” tier up to $300,000 and a “Deploy” tier of up to $750,000. EDA has posted the formal NOFO and explanatory materials on its website. Applications are due June 13.

Earlier this week, legislation was introduced in the Senate that would rescind $2.3 billion from the State Small Business Credit Initiative. The purpose of the action would be to source funds for an additional $10 billion for new COVID expenses; the Senate proposal opts to reduce selected unspent funds from American Rescue Plan Act and CARES Act programs. The cut to SSBCI is targeted at states’ potential third tranches of program funds, as well as 40 percent of the overall SSBCI technical assistance funding. The language about SSBCI would produce the following effects: States would lose the ability to access a third tranche of general capital funds (about $2.1 billion in total); States that reach their third tranche would still have access to a pool of funds for very small businesses (about $170 million) and for businesses owned by “socially- and economically-disadvantaged individuals” (about $510 million + additional incentive funds); The pool of technical assistance funding available to businesses through the program would be reduced from $500 million to $300 million; and, States would be able to increase the administrative cost rate to 5 percent across all…

Two recent reports feature evidence demonstrating the importance of early-stage entrepreneurship for the United States economy. The first report from the Kauffman Foundation released four indicators used to track early-stage entrepreneurial development. The second report from the Economic Innovation Group studies how dynamic the U.S. economy is and recommends ways to increase the economy's dynamism, many of which center around startups and new small businesses. Both reports highlight new ways to measure early-stage entrepreneurship and offer ways to expand these businesses. The Ewing Marion Kauffman Foundation released its 2021 National Report on Early-Stage Entrepreneurship in the United States last month. This report features four indicators used to track annual early-stage entrepreneurial development. These indicators include the rate of new entrepreneurs each month, the share of new entrepreneurs measured by the percentage of new entrepreneurs creating a business out of opportunity rather than necessity, startup early job creation measured by the total number of jobs created by startups per capita, and startup early survival rate calculated as the one-year average…

Despite the shutdown of many business and government activities during the first year of the COVID-19 pandemic, the total number of SBIR/STTR awards made to innovation-focused companies continued to increase over record-breaking 2019 levels, rising 3.7 percent. This edition of SSTI’s Useful Stats examines the total number of SBIR/STTR awards and the top awarding agency by state in 2020.

This week, the House science committee met to discuss the Small Business Innovation Research (SBIR) Program and Small Business Technology Transfer (STTR) program. The hearing comes as SBIR/STTR is both about to celebrate its 40th anniversary and is set to expire in less than six months without reauthorizing legislation. Members and witnesses focused the conversation on SBIR/STTR’s role in generating economic growth and on recommendations for improvements. In her opening remarks, Rep. Haley Stevens, chairwoman of the Subcommittee on Research and Technology, highlighted the role of SBIR and STTR programs in taking discoveries from a lab and transforming them into a product. Focusing on her home state, Stevens noted that the SBIR program awarded over $348 million for research and development to small businesses in Michigan. She shared her co-sponsorship of H.R. 4033, The Small Business Innovation Research and Small Business Technology Transfer Improvements Act of 2021, which aims to encourage more manufacturer participation and reporting for the programs. The witness panel included: Dr. J. Stephen Binkley, acting director of the Office of Science in the U.S…

The U.S. Department of Commerce’s National Institute of Standards and Technology (NIST) recently awarded nearly $1.2 million to four institutions through its Advanced Manufacturing Technology Roadmap Program (MfgTech). Awards through this program will fund projects in industries and technologies such as microelectronics and biotechnology for up to 18 months to address national priorities for improving competitiveness and vaccine manufacturing capabilities.  The Regents of the University of California in Los Angeles, the Semiconductor Research Corporation in Durham, North Carolina, and the Commonwealth Center for Advanced Manufacturing in Disputanta, Virginia, each received $300,000 while Purdue University in West Lafayette, Indiana, received $296,155. NIST reported the following projects are being funded: The Regents of the University of California – Producing a roadmap for advancing the nation’s competitiveness and competency in microelectronic supply chains, especially in areas such as heterogenous integration and advanced packing technologies. Semiconductor Research Corporation – Develop the nation’s position in semiconductor production by developing a…

The White House has released its proposed budget for FY 2023. While funding levels will ultimately be determined by Congress (see SSTI’s previous commentary putting the proposal in context), the president’s budget identifies administration priorities that can indicate future agency actions — for example, last year’s proposal for the National Science Foundation (NSF) included the Technology, Innovation and Partnerships (TIP) Directorate, and the agency moved forward with the directorate despite receiving no formal authorization or funding level. The FY 2023 budget proposal contains many helpful priorities for regional innovation economies.

Although no Funding Opportunity Announcement (FOA) has yet been issued, interested parties have submitted responses to the U.S. Department of Energy’s (DOE) Request for Information from stakeholders on issues related to the Regional Clean Hydrogen Hub FOA strategy. The Bipartisan Infrastructure Law included $8 billion for four regional clean hydrogen hubs that will be designed to create jobs to expand the use of clean hydrogen in the industrial sector and beyond. While the information collected through the RFI will not be published and is not a binding commitment to develop or pursue the project or ideas discussed, partnerships are already being announced in anticipation of the funding. Among states that have announced interest are: Connecticut, New York, New Jersey and Massachusetts have announced their partnership to develop a proposal, Utah, New Mexico, Colorado and Wyoming signed a memorandum of understanding to develop a hub, Louisiana, Arkansas and Oklahoma have joined together, and West Virginia has announced its interest as has a group in Ohio. Press reports indicate interest from other regions as well, including Houston and North Dakota. …

A recent study found that merit aid awards increased four-year bachelor’s degree completion rates for students – especially among students that were unlikely to pursue the four-year program in the absence of financial aid. A team of researchers from the National Bureau of Economic Research assessed the marginal effects that merit aid from the Susan Thompson Buffett Foundation (STBF) has on students attending public colleges in Nebraska. The research also showed that the projected lifetime earnings of the students outweighed the costs of funding merit aid for low-income, people of color, urban, and first-generation college students in Nebraska. The researchers assessed scholarships of 3,700 Nebraska high school seniors that graduated between 2012 and 2016. These scholarships were made through STBF awards, which are grant aids that fund more than 11 percent of Nebraska high-school graduates attending public colleges in Nebraska. SBTF scholarships tend to be generous in terms of allocation and are comprehensive in terms of application criteria and selections (accounts for financial need, high school GPA, and individual experience). Many scholarship recipients are required…

Continuing a streak lasting at least 10 years, the federal government was again the top funder of Higher Education R&D (HERD) in 2020. However, new SSTI analysis shows that the federal share of HERD funding has continued to decline nationally and in most states over the 10-year period from 2011 to 2020. This edition of SSTI’s Useful Stats provides an analysis of HERD funders by state in 2020, and an examination of 10-year trends for the period from 2011 to 2020 in HERD funding by source.

A team of researchers recently assessed the relationship between angel investing and venture capital (VC) for startups. Although they found some variation in the performance of companies based on their share of angel and VC financing, there was no clear indication that angel investing provides any unique value for a startup. The research addressed three questions. First, the research analyzed if there are notable differences in the added value to startups when they utilize angel versus VC financing. Second, the research assessed if angel financing and VC financing are substitutes or complements to each other. The last question that the research sought to answer was if the order of angel and VC financing across deal rounds for a startup, referred to as the financing sequence, is related to the probability of a successful exit for the startup. The research team was comprised of Thomas J. Chemmanur, professor of finance at the Carroll School of Management at Boston College; Harshit Rajaiya, assistant professor of finance at the Tefler School of Management at the University of Ottawa and an alumni of Boston College; and Jiajie Xu, a PhD student in finance at Boston…

Workforce development efforts in Maryland gained national attention this month as Gov. Larry Hogan announced the launch of a new initiative to formally eliminate the four-year college degree requirement from thousands of state jobs, substituting relevant experience, training, and/or community college education for the degree. “Through these efforts we are launching today, we are ensuring that qualified, non-degree candidates are regularly being considered for these career-changing opportunities,” the governor said in a press release accompanying the announcement. “This is exactly the kind of bold, bipartisan solution we need to continue leading the nation by giving even more Marylanders the opportunities they need to be successful.” The governor’s office indicated there are more than 300 currently open state government jobs that no longer require a four-year degree, all of which are now listed on “Stellarworx,” Opportunity@Work’s innovative STARs talent marketplace for those it calls STARs, or Skilled Through Alternative Routes. Opportunity@Work Chief Customer Officer Bridgette Gray, in an email exchange with SSTI about the program, said…