SSTI Digest

Criticism of the federal Opportunity Zone program has been directed at individual examples of questionable tracts for inclusion, the process for selecting tracts in each state, and the merits of some of the development projects underway. For example, some question inclusion of lowlands subject to flooding as sea levels rise with climate change and subsidence, while others raise eyebrows at inclusion of greenfield freeway interchanges or tracts already undergoing gentrification in fast growing cities. Complaints have been raised about projects where the end use (e.g. a hotel) will offer low-wage, part-time jobs without benefits for worker or a chance of raising them out of poverty.  Still others question if a decade of forgone public revenues from real estate projects that would have happened anyway is good policy. A new report from the U.S. Government Accountability Office recommends Congress pass legislation granting the Treasury Department the authority to actually evaluate the program to determine if all of the concern is justified.  The economic development linchpin of President Trump’s re-election effort, and further embraced in President-elect Joe Biden’…

The Angel Capital Association has recently released its Angel Funders Report 2020, examining the angel investor landscape through a survey of 76 angel groups and investments made during 2019. While the survey results represent only a portion of the larger angel investment community, the ACA report does provide useful insights into the current trends within the angel funder sphere. The report also provides an in depth look at the current trends and methodology of the participating angel investors while also exploring the changes in investment strategy throughout recent years. In gauging willingness to invest, ACA notes a shift from the spring. When surveyed in April 2020, 2 percent of angel funders were willing to increase investment, 63 percent planned no change in investment level, and 33 percent had a decreased willingness to invest. When revisited in September 2020 however, 19 percent of the surveyed angel groups had a willingness to increase their investments, 49 percent felt no change in their investment level, and 32 percent of funders held a decreased interest in investing. The report also notes a shift in investment type as 34 percent of angel groups…

Amid dwindling hope for a second stimulus package from Congress, the Federal Reserve has widened the terms of its Main Street lending program to better target support for small businesses. According to the new guidelines, the minimum loan size for three Main Street vehicles available to for-profit and non-profit borrowers has been reduced from $250,000 to $100,000. Corresponding fees have also been adjusted to encourage loan dispersal. A new FAQ has also been added clarifying that Paycheck Protection Program (PPP) loans of up to $2 million may be excluded for purposes of determining the maximum loan size under the Main Street lending program. The program is designed to help credit flow to small and medium-sized for-profit businesses and nonprofit organizations that were in sound financial condition before the onset of the COVID-19 crisis, but now need loans to help maintain their operations until they have recovered from, or adapted to, the impacts of the pandemic. The loans are not grants, and cannot be forgiven. Thus far, the Main Street lending program has made only 400 loans totaling $3.7 billion – far below the $600 billion in total funding the Federal…

The Securities and Exchange Commission (SEC) recently published a final rule clarifying acceptable communications during “demo days” and expanding the accessibility of crowdfunding, among other changes. The new rule establishes guidelines to make “demo day” activities exempt from general solicitation requirements. Exempt events must be sponsored by institutions of higher education, nonprofits, incubators, accelerators, local governments or, added in response to SSTI’s letter on the proposed rule, state governments or state/local instrumentalities. The rules provide guidance on the types of communication allowed during the events and limits on compensation for hosting the event, but, unfortunately, the SEC opted not to include any of the clarifications requested by SSTI and other commenters. The Regulation Crowdfunding rules are largely in line with the SEC’s initial proposal, which was covered in the Digest earlier this year, and include raising the offering limit to $5 million and providing guidance for investment limits on non-accredited investors. Temporary rules relaxing crowdfunding information disclosures have been extended another 18 months (see SSTI's …

The United States is currently ranked tenth in research and development intensity (a measure of R&D investment as a percent of a nation’s Gross Domestic Product) but has continued to lead the pack in total research and development spending, according to the American Association for the Advancement of Science (AAAS) recently published A Snapshot of U.S. R&D Competitiveness: 2020 Update. The report analyzes the role R&D investment plays within the U.S. while also examining research and development trends globally. It notes that while U.S. spending remains high, China’s R&D spending has “seen staggering increases over the past two decades, and remains an undeniable leadership rival to the U.S.” When measuring R&D intensity, AAAS found that the U.S. ranked tenth when combining public and private R&D investment, but is ranked 14th when only factoring in public spending towards R&D. In addition to weighing R&D funding, the AAAS brief explores the growth of the research workforce throughout the world. America’s 1.5 million fulltime research workers ranks behind China and the combined 28 E.U. nations in total research workforce. When adjusted for…

The Senate released its draft appropriations bills for FY 2021 this week. Priorities for SSTI’s Innovation Advocacy Council did well, with increases for Build to Scale ($38.5 million, + $5.5 million from FY 2020) and FAST ($5 million, + $2 million) and level funding for Regional Innovation Clusters ($5 million). Science and innovation highlights within the FY 2021 budget proposal include the following: Economic Development Administration – Build to Scale – $38.5 million (+ $5.5 million) STEM apprenticeships – $2 million (no change) Small Business Administration – Regional Innovation Clusters – $5 million (no change) FAST – $5 million (+ $2 million) Growth Accelerators Challenge – $2 million (no change) National Institute of Standards & Technology – Manufacturing Extension Partnership (MEP) – $149.5 million (+ $3.5 million) Manufacturing USA – $16 million (no change) Defense Manufacturing Communities – $50 million (+ $45 million) Rural Innovation Stronger Economy – $5 million (no change) Appalachian Regional Commission – $180 million (+ $15 million) National Science Foundation – $8.5 billion (+ $200 million) National…

I suspect the whole country woke up Wednesday morning and looked at the half that voted for the other candidate and said, “What were you thinking?!?” Rather than attempting to address the question of what people were thinking, let me attempt to address where we are and what we need to do. The 2016 election of Donald Trump, the rise of Trumpism, the pandemic and George Floyd’s killing have laid bare fundamental crises that face America. The challenge that presumptive President-elect Joe Biden has is how to address the stark divisions we have in the country. The election results are just representative of the divisions we’re facing.

While official results are still being certified, unofficial counts reveal a mixed bag on a slew of state ballot initiatives that could have an impact on innovation, education, state budgets and elections. Some gained favor with voters, like a battle over gig workers and how they are classified, which landed on the side of Uber and Lyft. The California Proposition 22 initiative won voter approval (58 percent) following a $200 million effort to defeat earlier legislation that provided employee-like protections for the app-based drivers. The approval allows the drivers to be classified as independent contractors and not employees, overriding Assembly Bill 5, and possibly chilling other states’ efforts to consider legislation that would have forced companies to treat freelancers as employees. Meanwhile, California’s Proposition 14, a bond measure that authorizes $5.5 billion in new funding for stem cell research for the California Institute for Regenerative Medicine (CIRM) that was created in 2004 after a $3 billion bond approval but ran out of unallocated funds last year, is currently narrowly passing with 51 percent of the vote, but its final fate is unknown. A…

After a historic election night, the winners of the gubernatorial elections in 11 states appear to have been chosen. Barring a dramatic swing in votes, all of the nine incumbent governors have been reelected to a second or third term. In Montana, Rep. Greg Gianforte (R) has flipped control of the governor’s seat, and in Utah, Spencer Cox (R) has defeated Chris Peterson (D). Many of the incumbent governors held strong approval ratings going into election night and won their voters’ approval for another term as the country tries to inch out of the pandemic and recover economically. SSTI previously reported each of the candidates’ innovation and technology-based economic development platforms prior to the election. What follows is a review of the unofficial election results from Tuesday night and a look and actions each governor may take in another term. Delaware Incumbent Gov. John Carney (D) is winning the Delaware gubernatorial election by a margin of 59.5-38.6 percent. During the campaign, Carney cited the creation of new grant programs, tax credits, and incentive programs designed to promote small business growth and encourage economic development. Carney has…

As of this writing, control of Congress remains officially undecided, although the end result will likely be status quo: Republican control of the Senate and Democratic control of the House. While the discourse and activity around major legislation may not change, there will be changes to the committees that most strongly impact science and small business legislation. The new members will not be determined until the next session, but multiple departures from these committees are already known. Senate Six Senators did not seek reelection, and three incumbents lost reelection, with both Georgia Senate seats appearing likely to head to a runoff (per New York Times as of Friday at noon). The most significant change among current science and small business committees is that Sen. Cory Gardner (R-Colo.) has lost his election and will not be returning as chair of the commerce subcommittee overseeing science legislation. Sen. Ted Cruz (R-Texas), who is next in line, may prefer to maintain his chairmanship of the space subcommittee. Sen. Dan Sullivan (R-Alaska) would be next in line to lead the science subcommittee, although his race has not yet been called. …

More special purpose acquisition companies (SPACs) have been formed in 2020 than in the last several years combined. These entities have helped some high-profile unicorns go public recently, including DraftKings and Nikola Corp. PitchBook recently suggested, backed by several transactions involving electric vehicle companies, that SPACs may be well-suited to taking companies with relatively high product costs public. Here are five things for tech-based economic development practitioners to know about SPACs. 1. SPACs provide an alternative path to going public The primary purpose of a SPAC is to take a private company public through a merger, rather than through an initial public offering (IPO). A SPAC, commonly called a “blank-check” company, is essentially a publicly-listed fund established for the explicit purpose of acquiring a private company: through this acquisition, the private company becomes listed in the public market. 2. Exiting through a SPAC is likely easier than via IPO… Broadly speaking, the primary advantage to startups of exiting through a SPAC instead of an IPO is the ease of working with one partner instead of shopping the…

Nearly half of voters within battleground states have a deep level of trust in scientists, according to a recent study conducted by Third Way. This represents a significant increase from the 21 percent of voters who held scientists in high esteem in 2016, and is in line with Pew Research Center’s earlier report that found 39 percent of U.S. adults trust science and believe scientists act in the public’s best interest.