State Tech-based Economic Development: A National Perspective

1. State Tech-based Economic Development: A National Perspective Presentation by: Dan Berglund March 19, 2009

2. State Science and Technology Institute • Mission • Leads, supports, and strengthens efforts to improve state and regional economies through science, technology, and innovation • Funders • Carnegie Corporation • Kauffman Foundation • MEP • More than 180 state, local, and university TBED organizations

3. What is TBED? Approach used to help create a climate where firms that constantly innovate and maximize the use of technology can thrive Emphasis: “grow your own” Can be powerful partner with conventional economic development’s recruitment of companies

4. Why do This? • Global competition • Lesser-skilled, lower wage jobs outsourced, or done more competitively, overseas • Quality jobs • Technology industries’ wages average84 percent more than U.S. average • $69,000 vs. $37,500(2003) • Changing demands of industry • Because of the growing technology-intensity of all industry, citizens’ success is increasingly dependent on their ability to learn, adapt, and contribute to innovation

5. Kentucky vs. North Carolina

6. Major New Initiatives • Legislatures approved • AZ-- $25M/year for four years for 21st Century Fund • AR– up to $140M for various TBED initiatives • CA-- $70M for two energy research centers • FL-- $29.5M for Opportunity Fund; $180M for research • IN-- $20M Life Sciences Fund • IA-- $25M for Iowa Power Fund; $25M for next 3 years • MO-- $15M for several new TBED initiatives • WA-- $70M over biennium for Life Sciences Discovery Fund; 10 year commitment of $35M/year

7. Energy in 2007 • Heavy emphasis on research • Specific centers or demonstration plants • CA ($70M), FL ($20M), NC ($5M), OK ($40M), OR ($6.7M), TN ($51.6M) • Pool of funds to compete for • IA-- $25M w’ $75M to come • MN-- $5.65M • NM-- $2M • ND-- $14.9M • TN– $13M

8. Focus on Energy Continues • Legislature appropriated funding in 2008 • AK-- $50M for Renewable Energy Grant Fund; up to $250M • CO-- $7.65M for Clean Energy Fund; $2M for Colorado Renewable Energy Authority • FL-- $50M for the Florida Energy Consortium for R&D • HI-- $8.7M for Hawaii Renewable Hydrogen Program • KY-- $7M for Energy R&D Fund • MI-- $45M for Centers of Energy Excellence • NM-- $1M for solar energy research park • OH-- $150M for advanced and renewable energy distribution • PA-- $40M for alternative energy development program

9. Elements for Tech-based Economy • Intellectual infrastructure • Spillovers of knowledge • from universities • from informal networks • Physical infrastructure • Technically skilled workforce • Capital • Entrepreneurial culture • Quality of life

10. Intellectual infrastructure activities • Strengthen state’s higher education system R&D capacity • Example: Kentucky’s Bucks for Brains • Invest in basic research in hopes of seeding economic development and new industries • Example: California’s Embryonic Stem Cell Institute • Invest in higher ed in areas of industrial relevance • Example: Georgia Research Alliance • Invest in areas to diversify economy • Example: Michigan’s Life Sciences Corridor, Prop 301 • Encourage greater university-industry interaction • Example: Maryland Industrial Partnerships Program

11. Improving Higher Ed Infrastructure Embraced • Legislature appropriated funding • AZ-- $25M for 21st Century Fund • CA-- $70M for two energy research centers • FL-- $80M for genomic res inst; $100M for Ctrs of Excellence • ID-- $1.5M for Higher Education Research Council • IN-- $20M Life Sciences Fund • MO-- $13.4M for animal health & nutrition, renewable energy & plant sci • NC– $25M to UNC-Chapel Hill for cancer research • ND-- $20M for Centers of Excellence • OH-- $100M for Ohio Research Scholars • OK-- $75M for endowed chairs • OR-- $11.5M for signature research centers • WA-- $70M for Life Sciences Discovery Fund

12. Higher Ed 2008-- Scholars • Legislature appropriated funding in 2008 • KY-- $60M for Bucks for Brains • LA-- $8M one-time funding for endowed chairs and professorships • SC-- $30M for Endowed Chairs Program • UT-- $32.2M for USTAR • WV-- $50M for Bucks for Brains

13. Spillovers of Knowledge • Identify and remove barriers to commercialization of university-developed technology • Example: Oklahoma and Oregon • Encourage commercialization of university-developed technology • Example: Utah’s Centers of Excellence • Encourage commercialization of federal lab technology • Example: Technology Ventures Corporation • Provide seed funding to industry associations and technology councils • Examples: MD, VA, and WA; more than 200 groups

14. Spillovers of Knowledge • Improve competitiveness of existing manufacturers • Example: Manufacturing Extension Partnership

15. Physical Infrastructure • Research parks • Example: Centennial Campus • Examine quality of infrastructure • Example: e-Com Ohio, ConnectKentucky • Improve it through public or private action • Example: Berkshire Connect, e-NC

16. Technically Skilled Workforce • Increase exposure to math & science in K-12 • Example: Maine’s Laptops for 7th graders • Encourage more students to enter S&E fields • Examples: SciTech Scholars and GI Bill for the New Economy in Pennsylvania • Create internships to link students with jobs in-state • Example: North Dakota “Operation Intern” • Subsidize tuition for undergraduate education • Example: Hope Scholarships • Training for workers in technology-based companies • Example: Maryland’s Partnership for Workforce Quality

17. Capital • Use state funds to invest in technology companies • Example: Massachusetts Technology Development Corporation • Use state funds to leverage private funds to invest in technology companies • Example: Maryland Venture Capital Trust • Encourage angel investing • Example: Arizona angel investor tax credit • Provide assistance to companies to access financing sources • Examples: Oklahoma Tech Comm Center, Venture capital conferences, SBIR assistance

18. Entrepreneurial Culture • Improve survival rate of start-up companies • Example: Ohio’s Edison Incubators • Work intensively with entrepreneurs to develop their businesses • Example: Oklahoma Technology Commercialization Corp. • Recruiting management talent • Examples: Kentucky, BFTP/Central • One-stop resource directory • Example: CREC Program Finder

19. Kansas • Kansas Technology Enterprise Corp. • Investment Program • Angel Investor Tax Credit Program • Tech-based incubators • Five small Centers of Excellence • KTEC Pipeline • MEP Center • Annual budget $12.5M • Kansas BioScience Authority • Funded by TIF-like mechanism; sunset at $581.8M • Lead agency pursuing National Bio and Agro Defense Facility • Recruit eminent scholars and support rising stars • Matching federal funds • Pre-venture financing to early-stage bioscience firms • R&D voucher program to support university-industry partnerships • Awarded $86.7M as of Sept 2008

20. Kentucky • Council on Post-Secondary Education • Research Challenge Trust Fund; $410M since 1998 • Department of Commercialization and Innovation • Coordinating and strategy organization • Match SBIR Phase I and II awards • High-Tech Investment Pool • $16.9M in FY2008 (some of which flows to KSTC) • Kentucky Science and Technology Corp. • Kentucky Enterprise Fund • Kentucky R&D Voucher Program • Kentucky Rural Innovation Program • Kentucky New Energy Ventures • Innovation and Commercialization Centers • Kentucky Science and Engineering Foundation • Kentucky Commercialization Fund • R&D Excellence Program • SBIR/STTR Phase 0 and Phase 00 Program

21. Maine • Maine Office of Innovation • Coordinating body and strategy • $10M annual budget (most directed to MTI) • Maine Technology Institute • Business Innovation Programs • Seed Grant Program • Development Awards • Accelerated Commercialization Fund • SBIR/STTR Phase 0 • Cluster Initiative Program • Maine Technology Asset Fund

22. Maine Strategy Three phases • Invest in R&D capacity, building up universities and non-profits such as Jackson Laboratory, Bigelow Labs using EPSCoR and R&D bond funds. Also Maine Technology Institute funds for private sector R&D. (1999- present) • Invest in research infrastructure competitively with focus on collaboration (FY08-09 $50 million bond). • Going forward – focus on commercialization – next steps increased support for technology transfer, proof of concept, entrepreneurship, venture capital

24. $397,126,970

25. Lessons Learned • Committed high-level leadership is required that understands: • Economic impact further down the road than other approaches • Research does not always succeed • Significant cultural differences between actors • Action should be based on: • Understanding of needs, capabilities, and gaps • Filling gaps to encourage change in private sector behavior

26. Lessons Learned • Characteristics of successful TBED programs • Three hallmarks for long-term sustainability • Do good work • Measure whether they’re doing good work • Telling people they’re doing good work • Champions from more than one sector (ideally all three) • Private sector, university, government (gov or legislature) • Effective management and staff • Entrepreneurial in approach/responding to change

27. Contact Information For more information, contact: Dan Berglund 614.901.1690 berglund@ssti.org To sign up for SSTI Weekly Digest go to: http://www.ssti.org