SSTI Digest

The PitchBook-NVA Venture Monitor Q1 2022 reports that overall venture capital (VC) investment activity was down in Q1 2022, a change from the unprecedented growth seen quarterly through 2021. However, angel and seed stage financing remained strong. Additionally, deal activity for early-stage deals had a strong start in Q1 2022, with a total of 1,499 reported deals as of March 31. Late-stage deal activity also retained its rapid growth this quarter from the previous year.

Although overall VC investment activity was down in terms of deal value, some states saw growth in various metrics. New York has continued to see an increase in share of total deal count in the United States. The Miami-Port St. Lucie-Fort Lauderdale, Florida, region also saw a considerable increase in fundraising activity in Q1 2022.

Today, SSTI’s Innovation Advocacy Council published a letter to Congress urging the adoption of key tech-based economic development policies in the final version of competitiveness legislation that will soon be conferenced between the two chambers. Known as the U.S. Innovation and Competitiveness Act (USICA) in the Senate and the America COMPETES Act of 2022 in the House, these bills are proposing to authorize new activities to support science, technology, innovation and entrepreneurship across numerous federal agencies. The Council has been talking with offices across the Hill about these proposals throughout the session and will continue to do so as the bill moves to conference.

Learn more about the Innovation Advocacy Council’s priorities for this legislation from the letter below (and in this pdf), and reach out to Jason Rittenberg (rittenberg@ssti.org) to add your support.

 

Dear Speaker Pelosi, Leader McCarthy, Leader Schumer, and Leader McConnell:

Earlier this month, legislators introduced bipartisan and bicameral legislation to modify Opportunity Zones (OZs). The beneficial changes would include a reporting requirement, which is overdue for the program,[i] as well as decertification of relatively wealthy zones. However, the bill also introduces questionable changes, including extending the program by two years, shortening the holding period for one of the tax benefits by one year, adding zones with zero population in former industrial sites, and proposing to spend up to $1 billion on technical assistance. The bill also fails to address several fundamental concerns with OZs.

North Carolina is continuing to improve its innovation standing and its research and development enterprise continue to lead among other innovation metrics, according to a new state report. The North Carolina Board of Science, Technology, and Innovation published the eighth edition of its Tracking Innovation report. This report uses 39 measures of innovation capacity to evaluate North Carolina’s standing against other states in the nation. In this year’s edition, the report dives even further by summarizing key measures at the county level along with state-by-state standings on many measures.

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:

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.

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:

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 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: