SSTI Digest

Greater investment in basic scientific research, as opposed to applied research, is more likely to drive stronger long-term economic growth, induce a knowledge spillover effect, increase productivity ROI, and encourage more public-private collaboration, according to a group of economists at the International Monetary Fund. They found that basic research is an essential input into innovation and the economists explain its importance in a recent post on the IMFBlog titled Why Basic Science Matters for Economic Growth.

With the regular budget process stalled for the time being, Senate Democrats released their draft bills for the remaining three-quarters of the FY 2022 federal budget. Included in these proposals are substantial increases for Build to Scale and the Small Business Administration’s innovation programs, as well as funding for a new Directorate for Technology, Innovation and Partnerships (TIP) at the National Science Foundation. The draft bills are another positive indicator for how Congress may invest in science, technology, innovation and entrepreneurship in the near future, but the path forward remains uncertain.

The bills released by the Senate majority earlier this week include legislation funding the Department of Commerce, science agencies and SBA, among others. Highlights for regional innovation economies include the following:

New York City and the state of Illinois have both made moves recently to shift more of their economies to clean energy. Mayor Bill de Blasio and the New York City Economic Development Corporation (NYCEDC) announced a 15-year, $191 million Offshore Wind Vision (OSW) plan to make New York City a leading destination for the offshore wind industry.  Last month, Illinois Gov. J.B. Pritzker signed sweeping legislation offering new incentives for the adoption of clean energy and aim to move it to 100 percent clean energy by 2050. And Massachusetts Gov. Charlie Baker is looking to use American Rescue Plan Act (ARPA) money to establish a clean energy investment fund.

Technologies that are developed from the Department of Energy’s R&D are now required to be substantially manufactured in America. The requirement was developed in response to President Joe Biden’s executive order that all agencies review their policies related to supply chain vulnerabilities. The rule change takes the domestic manufacturing preference that is in place currently only for exclusive licenses for products sold/used in the U.S. and applies it by default to all Energy licenses from Oct. 1 on.

ESS Inc., a company that closed a deal to go public earlier this month, was able to leverage public capital at its early stages to accelerate its success as a startup. Founded in 2011, the Wilsonville, Oregon, based company manufactures batteries for long-duration energy storage applications. In 2012, ESS Inc. received a Phase I Small Business Innovation Research (SBIR) award from ARPA-E, and additional grant support from the Oregon Nanoscience and Microtechnologies Institute (ONAMI), an SSTI member. ONAMI is an Oregon-based non-profit that provides grants, equity funding and business development guidance to startups engaged in research-based scientific innovation. It receives funding from Business Oregon, also an SSTI member.

The White House is seeking public input to help remove barriers to equity in the science and technology ecosystem. The White House Office of Science and Technology Policy (OSTP) launched the Time is Now: Advancing Equity in Science and Technology Ideation Challenge that asks for ideas from the public in answering a central question: “How can we guarantee all Americans can fully participate in, and contribute to, science and technology?” OSTP is asking for ideas and examples of successful programs to help advance equitable science and technology and to contribute to America’s global competitiveness in the 21st century.

France announced a $35 billion five-year plan to develop innovative technology and industrial activity to help boost its economic growth. An AP news story said the plan includes $9.2 billion to develop energy technology to help reduce greenhouse gas emissions and additional funding to finance small nuclear reactors. Called France 2030, the plan contains 10 objectives including making France a green hydrogen leader with at least two gigafactories of electrolysers that will produce hydrogen; decarbonize industry by reduce greenhouse gas emissions by 35 percent compared to 2015; produce nearly 2 million electric and hybrid vehicles; and, build low-carbon aircraft.

Across the United States, universities’ endowments have seen a large return in their portfolios in the past year, according to a recent PitchBook report. This trend was most notable in well-known universities with large endowments. The University of North Carolina reported a 42.3 percent return, Duke University reported a 56 percent return, and Washington University in St. Louis reported a 65 percent return. These gains are largely attributed to their investments in alternative assets like venture capital and private equity.

Semiconductor leaders and stakeholders have joined together to launch a year-long, industry-led effort to boost U.S. semiconductor competitiveness. The National Semiconductor Economic Roadmap (NSER) will focus on the workforce, supply chain and infrastructure to support industry R&D, design, manufacturing and end applications. Arizona Commerce Authority is facilitating the effort; the group’s founding industry partners have operations in more than a dozen states and territories.

The NSER partners will convene over the coming months to identify precompetitive technical challenges and opportunities, infrastructure and supply chain issues, workforce skill requirements and more. Participating entities will include private sector companies, higher education institutions, industry associations and states. Arizona has received two multi-billion dollar semiconductor investments since May 2020 that combined are expected to create about 5,000 jobs in the state.

The PitchBook-NVCA Venture Monitor Q3 2021 reports eye-popping investment activity through the first three quarters of the year. So far this year, the total venture capital market has invested more than $238 billion across an estimated 12,000+ deals, more than 1,300 exits have yielded more than $580 billion in value for investors, and 526 funds have raised more than $96 billion. Most of these metrics have already broken all previous annual records.

As has been the case since 2018, the market continues to be very top heavy: 57 percent of VC investment this year has gone to rounds of at least $100 million, and a comparable level of commitments to new funds occurred for funds with at least $500 million.

Innovations are often born from small businesses, operating with few employees, if any at all, to bring new technologies and processes to market. However, new small businesses frequently fail and are not the only source of innovation. Understanding the regional dynamics of business creation can help leaders better support their regional innovation economies, and this edition of Useful Stats builds on our previous analyses of net establishment creation and net job creation by state and by industry to explore net establishment creation by state and by establishment size (as measured by the number of employees) for 2019.

The emerging innovation-intensive sector of urban farming is seeing heightened interest by venture capitalists, investments are growing faster than the crops: $2.4 billion so far this year at last count by PitchBook. That reflects a year over year (YoY) investment growth rate of 214 percent.  The number of individual deals also is rising 14 percent YoY. The sector is expected by many market analysts to capture an increasing share of the nation’s food supply for a number of reasons. Most notably, the historic drought in the western half of the U.S.