SSTI Digest

Large federal slice of patent pie looming? In an exclusive interview with Mike Allen on The Axios Show, U.S. Commerce Secretary Howard Lutnick floated the idea that the federal government should receive “half the benefits” of federal R&D, referring to a direct share of the financial returns from patents stemming from R&D funded by the federal government.

As the end of the fiscal year approaches, Congress is again at a critical juncture in reauthorizing the SBIR and STTR programs. With only two hearings (one each in the House and Senate Small Business Committees) held so far this year on the topic, Congressman Roger Williams (R-TX), Chairman of the House Committee on Small Business, introduced H.R.5100 on September 3 to extend the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs, set to expire on September 30, 2025, for one year, “as is.” The bill passed out of committee on September 10.

As attention-grabbing as AI might be for the media and large investors (see previous SSTI analysis of AI investment), economic growth through innovation in life sciences and biotechnology is a priority for many state and regional TBED initiatives. The venture capital market recognizes that as well. In fact, Pitchbook estimates the broad biotechnology sector (comprising life science, pharma, health care, devices, etc.) captured 14% of all deals so far in 2025, making it the second largest investment group after info tech this year to date.

Understanding the composition of local economies requires looking beyond broad statewide or national trends. County-level data reveals the unique mix, or lack thereof, of industries and businesses in each area. Policy makers, by identifying which sectors drive employment and business activity within a locality, can influence the impact and design of regional innovation strategies to reflect local realities and potential.   The U.S. Bureau of Labor Statistics’ Quarterly Census of Employment and Wages (QCEW) allows examination of county-level employment and establishment counts across all private sectors at the 2-digit NAICS level. In this article, SSTI uses annualized private sector data for all provided 2-digit NAICS sectors at the county level for 2015 and 2024.

Conventional TBED wisdom for decades has been that small businesses generate more innovation in the United States. All big tech companies started as scrappy little companies in their respective eras of IT’s rapid growth. But there remains a long-running debate about whether large firms with financial resources and R&D capacity have an innovation advantage over smaller but more agile firms. Understanding the arguments for each side is important for policymakers and business leaders as they seek ways to support small and medium-sized enterprises and leverage the innovative capacity of larger corporations. In their paper, Firm Size and Innovative Performance: A Meta-Analysis Across 25 Years of Evidence, Federico Bachmann and Rodrigo Ezequiel Kataishi provide a comprehensive meta-analysis that synthesizes 25 years of research to clarify this relationship.  

As federal funding for science research decreases, it may be tempting to think that philanthropy might be able to fill the gap. However, a recent study from the Science Philanthropy Alliance illustrates that it cannot replace the robust funds that government allocation once contributed.  

Budget holes left by decreased government funding for scientific equipment and research could have thwarted, the planned construction of a radio telescope in Nevada, but advocates believe the project is well on its way to beating the odds. The “Deep Synoptic Array-2000" is an outgrowth of NSF funding and led by researchers at the California Institute of Technology (CalTech). The concept is to replicate the Arecibo telescope in Puerto Rico. That telescope collapsed in 2020.   …

The U.S. Departments of Labor, Commerce, and Education (the departments) released a strategy for workforce development with six overarching themes: industry-driven strategies, worker mobility, integrated systems, accountability, flexibility, and innovation. The plan was written in response to an April 2025 directive from the White House mandating an overhaul of the federal approach to supporting workforce training.  …

Overall, the trends identified in SSTI’s Q1 2025 analysis continue. While funding levels continue their upward trajectory, the influence of AI mega deals on total VC market activity persists (see 8/14/2025 Digest article). The trend of investment activity moving away from smaller transactions and toward larger deals also continues. These movements in investor deal preference may be persistent enough to necessitate that some TBED organizations evaluate their existing portfolios and prospective pipelines to determine if there are structural risks to companies’ abilities to secure sufficient capital, continue operations, and successfully meet their goals and those of the TBED organization in supporting the firms.  …

With federal research budgets under pressure and other nations accelerating their scientific investments, the U.S. faces critical choices about where to direct limited funds. Does concentrating resources in leading institutions best sustain discovery, or would broader geographic diffusion strengthen the nation’s overall research ecosystem? And, while discoveries are usually attributed to individual scientists or teams, the role played by research institutions in shaping where and how breakthroughs occur is not as well understood.  An academic research team recently explored these questions.  …

To grow their local populations and STEM workforce, communities across the country are experimenting with resident/worker attraction programs, as we have previously covered. But how effective are these programs? A recent study from the W.E. Upjohn Institute for Employment Research offers new insights by analyzing Tulsa Remote’s track record from its inception in 2018 to 2023.   Tulsa Remote, launched in 2018 with funding from the George Kaiser Family Foundation, provides $10,000 to eligible remote workers who relocate to Tulsa and commit to stay for at least one year. According to their 2024 economic impact report, Tulsa Remote has attracted 3,475 remote workers, with 96% completing their one-year requirement and 70% continuing to live in Tulsa. The program spends roughly $15,000 per participant, including the incentive, administrative costs, and community benefits such as access to co-working spaces and other networking activities.  The study focuses on what economists call the “but for” rate or the percentage of program participants who wouldn’t have moved to Tulsa without the incentive. Using administrative data from Tulsa Remote combined with…

Sixty-eight percent of business leaders polled for the Q4 2024 KPMG AI Quarterly Pulse Survey1 were planning to invest between $50-$250 million in GenAI over the next 12 months. Considering the investments companies are making in AI, shouldn’t the adoption rate be much higher? Apparently not. A new study from a team of researchers associated with M.I.T.’s Media Lab, covered in a New Yorker article, reports, “(d)espite $30-$40 billion in enterprise investment into GenAI … 95% of organizations are getting zero return.’”  …