SSTI Digest

If one were asked to identify localized examples of the economic spectacle that was the late 1990s, the metro region of Austin, Texas would be on most short lists. A recently completed economic development plan from the tech-soaked Austin suburb of Round Rock, however, reflects the fundamental upheaval or disruption that characterizes the economies of many regions of the country. Round Rock has grown quickly, doubling in population during the last decade to become the second largest city in the Austin-San Marcos metro area. It is experiencing for the first time, like many other cities emerging in a decade marked by rapid urban sprawl, the challenges of a recession.

Richard Bendis, president and chief executive officer of the Kansas Technology Enterprise Corporation (KTEC), has accepted an offer to lead the newly created Innovation Philadelphia Corporation. Mr. Bendis has been involved with KTEC since the organization was created in 1987. He was appointed to the KTEC board of directors by the Governor and served as the board’s first chairman. Mr. Bendis served as interim president in 1994 before being named president in 1995. The decision to leave was tough, Mr. Bendis said, but the Philadelphia job appeals to his entrepreneurial spirit. “I’ll be starting with a blank sheet of paper to build an entity that can help make the Philadelphia region a more vibrant participant in the New Economy.”

The Australian Government has enacted new rules to attract international private equity investment in the country’s venture capital community. The rules introduce tax concessions for international investors, including university endowment funds and venture capital fund-to-fund vehicles. The rules will treat these investors in the same way as pension funds, exempting them from capital gains tax on their Australian investments. The government’s impact analysis suggests the plan should attract $1 billion (Australian dollars) in foreign investment and add $350 million to the Australian annual gross domestic product. Venture capital proponents say the new rules levels the investment field with the U.S., the United Kingdom and other industrialized countries. More information is available from the Australian Venture Capital Association Limited by cllicking on News Releases at: http://www.avcal.com.au

The National Science Foundation has launched the new, online Industrial Research and Development Information System (IRIS) to provide easy access to information on industrial R&D performance across a broad range of years and criteria. The historical database (1953–1998) contains more than 2,500 statistical tables presenting R&D expenditures as a percentage of company sales, by industry, size of company, size of R&D program, type of cost (e.g., wages or materials), state, and source of funds. Data also is arranged to allow easy manipulation of trends analyses and state-by-state comparisons. A late-September Data Brief from the Foundation (NSF 01-338) describes the new system and provides examples of its value for the S&T community. For more information, see http://www.nsf.gov/sbe/srs/databrf/nsf01338/sdb01338.htm

Alabama Senate Bill 130, which would create $80 million in tech-based venture capital funding if passed, was introduced during the current special session of the Alabama state legislature. Using the certified capital company or CapCo model, the bill allows insurance companies to redirect tax payments into qualified investment firms. According to a recent Birmingham Business Journal article, backers of the bill concede the current fiscal environment and short session will probably lead to the bill’s reintroduction when the regular session begins in January. Atlanta, Georgia

A Letter from Bozeman, Montana The National Commission on Entrepreneurship publishes NCOE Update, a free, high-quality e-newsletter providing insightful looks into the factors and trends shaping the country’s entrepreneurial community. This week’s issue provides a useful examination of the public and private efforts to nurture technology entrepreneurship in Bozeman, Montana. The story and subscription information can be found on the NCOE website: http://www.ncoe.org/newsletter/update/10_16_01.html

The European Commission's 2001 European Innovation Scoreboard, characterizing the strengths and weaknesses in the capacity for innovation of the European Union (EU) and its member states, shows the EU continues to lag behind the U.S. and Japan.  Released October 1, the scoreboard uses 17 indicators to rate each member state's capacity for encouraging innovative business and improving the competitiveness of their industry through innovation. The aspects of the innovation process measured by the scoreboard are:  Availability and the use made of people with the right skills, using figures including the supply of new scientists and engineers and the percentage of the workforce employed in technology sectors of industry.  Creation of new ideas, based on figures for R&D expenditure and patent applications. 

The Biotechnology Industry Organization (BIO) released State Government Initiatives in Biotechnology 2001, the results of the first comprehensive survey of state government efforts to attract and grow the biotechnology industry. The report, prepared by Battelle Memorial Institute and the State Science and Technology Institute (SSTI), contains information from 48 states and shows state governments becoming increasingly active in recruiting and supporting biotechnology companies.  As an example of state government innovation in biotechnology initiatives and the valuable information contained in the report, 16 states are utilizing their tobacco settlement funds for bioscience-related research and development. In addition, 28 states reported having at least one publicly supported venture fund that can invest in bioscience-related companies. The majority of states responding to the survey have research and development tax credits, sales and use tax exemptions, or investment tax credits related to biotechnology. 

Nearly $43 million in grants were awarded October 1 to 74 non-profit organizations, including state and local governments, by the Commerce Department’s National Telecommunications and Information Administration (NTIA).  NTIA made $42.8 million available through its Technology Opportunities Program (TOP), which extends the benefits of advanced telecommunications technologies to underserved communities and neighborhoods. The grants subsequently were matched by $46.7 million in contributions from the private sector and state and local organizations.  Grant winners from across the U.S. and in Puerto Rico provide services in such areas as telemedicine, public safety, distance learning, community information, and other innovative services. 

As Congress and the Bush Administration look at national economic stimulus packages, debate is beginning in some states to enact similar measures to reverse the direction of their local economies. Various tax cuts for businesses invariably are included in the states’ discussions. The most recent edition of the Federal Reserve Research Roundup (3rd Quarter, 2001) includes a timely review of a recent working paper from the Federal Reserve Bank in Boston that looks at the relationship between corporate investment decisions and state and local taxes.  The Research Roundup article by Monique Morrissey follows in its entirety (reprinted with permission from the Financial Markets Center ): 

A Rhode Island Economic Strategy: 10 Ways to Succeed Without Losing Our Soul recently was released by the Rhode Island Economic Policy Council. The report outlines 10 economic development initiatives through four themes centered on places, people, clusters and connections.  Rhode Island must "strike a balance between collaborating and competing with its neighboring states" if it wishes to remain a center of New Economy activity, according to the report. To do so, the state must secure its share of the Boston Metro's high-wage industries while addressing infrastructure and the region's global competitiveness.  Some highlights among the report's 10 key strategies: 

California  Capital Valley Ventures, a business accelerator with a three-month training program for tech entrepreneurs, is coming to the Sacramento region, the Sacramento Bee reported. The venture is being spearheaded by Jack Crawford Jr., founder of NetLink, NetSource, 2Publish and Campus Engine. Crawford reportedly plans to start a workshop series capable of holding 25 people interested in beginning new businesses. The series, scheduled to begin this month, will involve three-hour sessions held once a month for three months and offer training on raising capital, forming a management team and generating revenues. More information is available at: http://www.capitalvalleyventures.com