SSTI Digest

Throughout the past decade, the Latino entrepreneurial landscape has experienced both a growth in average annual revenue and an increase in the establishment of new employer businesses. However, Latino business owners remain significantly less likely than white business owners to receive loan approvals from major banks, resorting instead to financing options that expose the business owners to more personal financial risk including personal and business lines of credit and personal home equity loans. The strengths and weaknesses of the Latino entrepreneurial environment are explored in the recently released 2020 State of Latino Entrepreneurship Research by the Stanford Latino Entrepreneurship Initiative. The initiative gathered information from over 3,500 surveyed Latino owned employer businesses, alongside 3,500 white owned businesses, to examine the similarities and differences between the white and Latino entrepreneurial experience. When examined over the course of the past five years, from the start of 2015 to the beginning of 2020, Latino-owned businesses had an average compound annual revenue growth rate of 15 percent, similar to the white owned business average of…

The overall employment outlook for the recipients of doctorate degrees earned at U.S. institutions has improved from 2015 to 2019, while the research activities conducted by these highly trained and educated individuals has started to shift away from basic and applied research activities towards activities focused on design and development. Doctorate recipients play an essential role in developing the knowledge base leveraged in creating new technologies and companies in the innovation economy. Understanding the employment trends of this vital group can help in crafting programs and policies to strengthen local innovation economies.

The most recent annual report from the Small Business Administration (SBA) concludes that a majority of participating federal agencies did not comply with the mandated minimum spending requirements for the Small Business Innovation Research and Small Business Technology Transfer (SBIR/STTR) programs. The SBA’s 2018 Annual Report provides a robust analysis of the award data for that year. While SSTI frequently examines the SBA’s publicly available and regularly updated award data — recent articles include analyses on the distribution of agency SBIR/STTR awards by state from 2009 to 2019 and the rate of SBIR awards per 1,000 innovative companies by state in 2019 — SBA’s annual report provides additional insights that cannot be gleaned from the publicly available data. One such insight outlines which agencies complied with the minimum program spending requirement, which for SBIR is 3.2 percent of each agency’s annual extramural R&D obligations. There must also be less than 15 percent variance between agency extramural spending as reported to SBA and as separately reported to the National Science Foundation (NSF). The report shows that six of the 10…

SSTI is making Addressing Capital Access in 2021, which had previously been available only to SSTI member organizations, publicly available. The paper is focused on helping states and their partners make the most of the opportunity presented by the newly-refunded State Small Business Credit Initiative (SSBCI 2.0), which provides $10 billion to states to support capital access. Topics covered include a review of SSBCI 1.0, the current landscape for debt and investment access, and recommendations for states developing programs in 2021. The introduction to the research brief is excerpted, below. The American Rescue Plan Act provides $10 billion for the State Small Business Credit Initiative (SSBCI) as part of the national response to the coronavirus pandemic-induced recession. This funding is unlike other small business assistance programs funded during the emergency so far in that SSBCI specifically provides funds to states — at least $56 million per state — to use for their own capital access initiatives, including programs that make investments in small businesses. SSBCI was originally funded in 2010 to help address the severe decline in small business…

Last week, a bipartisan, bicameral group of legislators reintroduced the Endless Frontier Act, a bill that would authorize more than $112 billion over five years for new research and commercialization activities within the National Science Foundation (NSF) and the Department of Commerce. This proposal would establish multiple tools at each agency to support regional innovation economies. Sen. Schumer (D-NY), the driving force behind the legislation and the Senate majority leader, is looking to advance the bill through the Senate quickly, but is being slowed down despite bipartisan support. Summary The most substantial provision of the Endless Frontier Act would create a new “Directorate for Technology and Innovation” at NSF focused on development and commercialization. The legislation proposes $100 billion over five years for this directorate, which would make it roughly twice the size of the rest of the agency. NSF would be authorized to, among other things, support consortia-based technology centers, fund STEM education opportunities at all levels of higher education, and facilitate technology transfer. These activities would be focused on 10 broad technology…

In 2014, Tennessee’s Republican governor, Bill Haslam, created the nation’s first program to ensure high school graduates could attend community and technical college tuition-free, Tennessee Promise.  While several states have followed suit in one form or another, President Joe Biden wants to take the concept nationwide with the federal government footing $109 billion of the bill through his American Families Plan. Announced during his first address to Congress on April 28, free community college was just one of the proposals outlined that could dramatically alter regional capacities to support innovation, entrepreneurship and competitiveness across the country. In addition, Biden is asking Congress to make an $80 billion-plus investment in Pell Grants, which would help low-income students seeking a certificate or a two- or four-year degree by increasing the grant size by up to $1,400. Recognizing that access to postsecondary education is not enough, the American Families Plan includes $62 billion to invest in evidence-based strategies to strengthen completion and retention rates at community colleges and institutions that serve students from our most disadvantaged…

President Joe Biden has nominated Alejandra Y. Castillo to serve as the next assistant secretary for economic development in the U.S. Department of Commerce. If confirmed, she will have a unique opportunity to leave a significant imprint on regional efforts toward growing prosperity as a result of the $3 billion appropriated to the Economic Development Administration in March through the America Rescue Plan Act.  Her past professional career is fully consistent with the Biden administration’s commitment toward broadening economic opportunity to more Americans. Castillo is the immediate past CEO of YWCA USA, where she led the 163-year-old organization and its 204 associations serving over 2.3 million women and families across 1300 communities in the United States.  She also served in senior leadership roles in two previous presidential administrations with a specific focus on international trade, minority entrepreneurship and economic development. In 2014, she was appointed by the Obama administration to serve as national director of the Minority Business Development Agency, becoming the first Hispanic American woman to lead the agency. Castillo holds a…

As state budgets move into the legislatures for final negotiations and approvals, the last of the governors have addressed their constituents and put forth their proposals. While a renewed sense of hope is seeping into the latest addresses, governors are still cautious and guarded in proposing new programs. Broadband, small business, education and workforce initiatives continue to be among the innovation-related initiatives announced by the state leaders, with the intent that those efforts will also boost the economic recovery of the states. Louisiana Gov. John Bel Edwards, in acknowledging the unusual circumstances of his April 12, 2021, State of the State address (he gave it from the A.W. Mumford Stadium on the campus of Southern University as opposed to a usual address inside the House chamber due to COVID-19 safety precautions) sounded a hopeful note, saying, “A new day is dawning with every shot in every arm.” In addition to the pandemic, Louisiana is still recovering from the two hurricanes that hit its coast, and the governor said that “no state is more adversely impacted by climate change….” He said the state will be a leader in reducing carbon emissions…

As the new administration settles in, the Economic Development Administration (EDA) has updated its investment priorities — the guiding principles behind all of its competitive grants. Changes to the priorities are outlined below so that participants in local innovation economies are better able to align their proposed programs to these federal priorities. The EDA’s new list of investment priorities includes seven points, with the inclusion of “Equity,” “Technology-Based Economic Development (TBED),” and “Environmentally-Sustainable Development” being three notable changes. The list of EDA’s investment priorities, including commentary on their differences from previous administrations’ priorities, is as follows: Equity – absent in the Trump administration EDA’s list, and although the Obama administration included “Underserved Communities” as its sixth and final priority, the Biden administration’s EDA specifically places “Equity” at the top of its new list. It also identifies racial equity as a priority (identifying “women, Black, Latino, and Indigenous and Native American persons, Asian Americans, and Pacific Islanders as traditionally disadvantaged populations…

If venture capital was water, then sea levels continue to rise.  Yet more and more innovation-based startups across the country seemingly are being left high and dry as private venture capitalists continue to push their money into bigger, later stage deals. Investors seem increasingly set to cruise toward cashing in on the currently hot exit path of public listings. All of the key metrics in the latest Pitchbook-NVCA Venture Capital Monitor suggest many of the youngest innovation opportunities have been left out of recent VC activity, a trend that typically hurts those geographic areas receiving less VC than national averages.  Pitchbook reports the total venture capital invested during the first quarter of 2021 nearly doubled the amount invested in Q1 2020, logging 92.6 percent more dollars flowing into portfolio firms. This explosive growth comes in the wake of the record year that 2020 proved to be for the VC industry.  Fundraising “also proceeded at a record-setting pace with $32.7 billion raised across 141 funds. For perspective, $79.8 billion was raised in 2020, the current annual record,” the authors write. The survey found a record three-…

The Department of Defense is seeking comments and information on President Biden’s Executive Order, “America’s Supply Chains,” which directs several federal agency actions to secure and strengthen the country’s supply chains. The U.S. Department of Commerce is also seeking public input on a licensing or other pre-clearance process for entities engaging in certain information and communications technology and services transactions (ICTS Transactions). The defense department is seeking input from consumers and producers, as well as those with relevant expertise, on increasing transparency; diversifying sources of supply and production; establishing and strengthening manufacturing of value-added products; research, development and demonstration priorities to support production and advanced manufacturing base for materials; and, more. The deadline for submitting comments is April 28, 2021, and the full announcement is available here. Additionally, on Jan. 29, 2021, the commerce department published an interim final rulemaking on the implementation of Executive Order 13873, “Securing the Information and Communications Technology and Services Supply Chain,”…

A presidential budget provides, in theory, a strategic vision for the more than $1 trillion in annual, discretionary spending of the federal government. In practice, Congress will pass a spending bill that reflects its own will. The value of the president’s budget is the window it offers into the administration’s priorities. The Biden-Harris Administration’s skinny budget indicates priorities that should excite those working to build regional innovation economies. As a reminder, the Trump administration’s budgets would have reduced or eliminated many programs — and even some entire agencies — that support tech-based economic development (as well as initiatives in other policy areas). The administration used its budget to make a clear statement about its interest in seeing a much smaller federal government. Congress, of course, was unwilling to pick up these proposals even halfway. Presidents’ budgets do not pass as proposed — even when Congress is controlled by the same party. The final FY 2022 budget will ultimately be a greater reflection of congressional than presidential will. Presidents can always use influence and political power to push Congress to…