Transcript Document

Converting University
Innovation into Jobs:
Background and Overview of the Governor’s
Innovation-to-Jobs (I2J) Initiative & the One NC Small
Business Program
John Hardin, Ph.D; Executive Director
NC Board of Science, Technology & Innovation (BSTI)
www.nccommerce.com/sti
December 2, 2014
Part 1:
Governor’s I2J Initiative
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Innovation is the Modern Economy’s Fuel
(Five Innovation Facts)
1. Innovation creates new products, services, & practices that yield value
2. Innovation comes from creative application of science & technology
3. Innovation generates between ⅓ to ½ of U.S. economic growth
4. Innovation has a big (5x) multiplier effect (across sectors & skill levels)
5. Innovative/high-tech companies’ biggest impact is to grow labor market
Bottom Line for NC:
Best way to create jobs for all is to
start/grow innovative/high-tech companies
SOURCES: U.S. Department of Commerce; Moretti 2013, “The New Geography of Jobs.”
3
NC is Below Average in High-Tech Companies
(NC’s economy is low on fuel)
US
NC
4
Yet NC is Above Average in Academic R&D
(NC’s economy is strong on a necessary component for fuel)
NC
US
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Governor McCrory’s Response
(Increase components in short supply; integrate and accelerate)
1. 5/2014 − 10/2014: Convenes Innovation-to-Jobs (I2J) Working Group
• 16 members representing universities, commercialization & investors
• BSTI staff serve as project managers
• I2J Working Group holds 8 meetings:
• Conducts comprehensive assessment of I2J challenges in NC
• Collects survey input from more than 500 well-informed stakeholders
• Drafts package of 6 recommendations for Governor’s consideration
2. 6/2014: – Re-fund One NC Small Business Program (i.e., NC’s
SBIR/STTR Matching Grant Program)
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I2J Working Group Members
University/Tech Commercialization
Investor/Business
Chris Brown (Co-Chair)
Vice President for Research & Graduate Education
UNC General Administration
Clay Thorp (Co-Chair)
General Partner
Hatteras Venture Partners
Judith Cone
Special Asst. to Chancellor for Innovation & Entrepreneurship
UNC-Chapel Hill
John Cambier
Founding Managing Partner
IDEA Fund Partners
Joseph DeSimone
Chancellor’s Eminent Professor of Chemistry
UNC-Chapel Hill
Igor Jablokov
Entrepreneur in Residence
Blackstone Entrepreneurs Network
Galen Hatfield
Vice President, Commercial Programs Division
RTI International
Karen LeVert
CEO and Co-Founder
Southeast TechInventures, Inc.
Terri Lomax
Vice Chancellor for Research, Innovation & Econ. Dev.
NC State University
Robert Long
Co-Founder & Partner
Long Miller & Associates
Laura A. Schoppe
President
Fuentek, LLC
Mitch Mumma
General Partner
Intersouth Partners
Eric Tomlinson
President
Wake Forest Innovation Quarter
Steve Nelson
Co-Founder
EiPi Systems
Eric Toone
Vice Provost & Director, Innovation & Entrepreneurship
Duke University
Carlos Parajon
Co-Founder
Harbor Island Equity Partners
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SURVEY RESPONDENT
DEMOGRAPHICS
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Note: The survey respondents are fairly evenly divided among university respondents and nonuniversity respondents.
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Note: While faculty represent 30% of the total respondents, they represent 53% of the university
respondents.
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Note: “Skipped” = Non-University respondents
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Note: “Skipped” = University respondents
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SURVEY
RESULTS
(A SMALL SAMPLE THEREOF)
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NC universities [or My university] lack[s] the following to help
create and support startups based on university innovations:
% of University Faculty Respondents Agreeing
% of University Admin & Staff Respondents Agreeing
% of Other Respondents Agreeing
Level of Respondent Agreement
-10%
10%
30%
50%
70%
50%
51%
35%
25%
19%
9%
18%
15%
18% 4%
20%
4%9%
25%
5% 13%
19%
28%
-13% 7%
-1%
0%14%
-1%
1%12%
27%
31%
25%
-7%
2%
41%
27%
17%
53%
46%
30%
28%
130%
50%
56%
29%
6% 11%
110%
64%
47%
8%
90%
22%
24%
150%
170%
Investment funding
Commercialization/translational funding
Management for startups
Time of faculty
Return on investment (of time, resources, finances, etc.)
Effective processes (e.g., methods, structures)
Adequate Technology transfer/commercialization staff
Supportive policies/regulations (besides promotion &…
Research funding
Supportive promotion and tenure
Faculty entrepreneurs
Peer recognition for faculty
Supportive culture
Administration support and encouragement
Physical resources (e.g., facilities, equipment)
Information resources
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Major/Summary I2J Challenges
1. Translation – Insufficient development and/or dissemination of
university-based structures and practices for technology
commercialization
2. Capitalization – Insufficient funding for technology proof of
concept, validation, IP protection, commercialization, early and
mid-stage product development/production, and business
expansion
3. Operation – Insufficient number and utilization of seasoned,
mature, business professionals to run startups and guide
companies through growth and expansion
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I2J Working Group Recommendations
(Integrated Plan for I2J)
Sequential Model of Innovation Commercialization Ecosystem
Pre-Commercial Arena
Invention/
Innovation
Proof of
Concept
Commercial Arena
Market
Validation
Product
Development
Company
Expansion
(Jobs)
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I2J Working Group Recommendations
(Integrated Plan for I2J)
Sequential Model of Innovation Commercialization Ecosystem
Pre-Commercial Arena
Invention/
Innovation
Proof of
Concept
Commercial Arena
Market
Validation
1. Translation & Operation
Product
Development
Company
Expansion
(Jobs)
2. Translation & Capitalization
3. Translation & Capitalization
Note: Details of the recommendations are currently embargoed. They will be released soon.
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I2J Working Group Recommendations
(Integrated Plan for I2J)
Sequential Model of Innovation Commercialization Ecosystem
Pre-Commercial Arena
Invention/
Innovation
Proof of
Concept
Commercial Arena
Market
Validation
Product
Development
1. Translation & Operation
2. Translation & Capitalization
Company
Expansion
(Jobs)
4. Capitalization
3. Translation & Capitalization
5. Capitalization
6. Operation
Note: Details of the recommendations are currently embargoed. They will be released soon.
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Part 2:
One NC Small
Business Program
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SBIR (Small Business Innovation Research)
Program Overview
• But SBs often lacked resources
“We in government must work
in partnership with small
businesses to ensure that
technologies and processes
are readily transferred to
commercial applications.”
• Response: SBIR Program established in 1982
~Ronald Reagan, July 22, 1982
• Late 1970’s, concerns about U.S. competitiveness
• Small businesses (SBs) began attracting more
attention for ability to innovate & create jobs
• Federal agencies (11) with R&D budgets exceeding $100 Million annually
• 2.7% set aside of extramural research budget
• $2.5 Billion annually (single largest source of early-stage tech-dev. capital for SBs)
• Since 1983, $26.9 billion awarded via 112,500 awards to SBs nationwide
• 1.45 million people are currently employed with SBIR firms
• 1 in 9 SBIR firms have attracted equity financing
• Current SBIR-funded firms ($3B) have attracted $35B in equity funding
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STTR (Small Business Tech Transfer)
Program Overview
• Established in 1992
• Federal agencies (5) with R&D budgets exceeding $1 Billion annually
• 0.3% Set Aside
• Currently = $220 million annually
• Unique feature is the requirement for the small business to formally
collaborate with a research institution
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Two Phases (both very competitive)
Phase I
• Evaluate viability and feasibility of an idea
• Up to $225K for 6-month period (STTR 12 months)
• Win Rates: approx. 1/8 (varies widely)
Phase II
• Generally prototype completion / field testing / final development
• Up to $1.5 M for up to 24 months
• Win Rates: approx. 1/2 or 1/3 (varies widely)
• “SBIR program is one of the largest examples of U.S. public-private partnerships
• Core finding is that the SBIR program is sound in concept & effective in practice”
~An Assessment of the SBIR Program, National Research Council
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Examples of SBIR-Funded Companies
Qualcomm
Symantec
Industry
Telecom. Equipment
Packaged Software
Sample Product(s)
3G & 4G Wireless Tech.
Norton Antivirus Software
# of Employees (2012)
26,600 (globally)
20,500 (globally)
Revenue (2012)
$19.12 billion
$6.73 billion
Size when received first SBIR
35 employees
5 employees
Year it received first SBIR
1986
1982
Total # of Awards
8 Phase I; 4 Phase II
1 Phase I; 1 Phase II
Total $ of Awards
$1.58 million
$245,000
# of Funding Agencies
3
1
“Without SBIR’s support for my radical idea, much of our economic growth
would not have happened. SBIR was the ‘magic catalyst’ that opened the
avenues for a wide range of new possibilities.”
~Gary Hendrix, Symantec founder
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NC’s SBIR Funding in late 1990’s early 2000’s
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SBIR & STTR Funding per $1M GDP, 2008-10
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SBIR & STTR Funding per $1M GDP, 2000-10
Trends:
NC’s SBIR/STTR
funding ratio
increased faster than
U.S. average and all
comparison states
Reasons:
1. SBTDC’s SBIR
Program Specialist
2. One NC Small
Business Program
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One NC Small Business Program – Overview
• 2006 – bipartisan coalition of state lawmakers established One NC Small
Business Program (NC General Statute §143B-437.81)
• Broadened and realigned the existing One NC Program to include support
for small, high-tech, entrepreneurial growth businesses
• Program has two mechanisms:
• Reimburse NC businesses with a portion of their application expenses
to federal SBIR/STTR programs (“Phase 0” support)
• Match Phase I SBIR/STTR grants (up to $100K per grant) to NC
businesses
• This presentation discusses only the Match program
• NC has strong competition from at least 15 other states in this arena
• At least three (SC, KY, & VA) modeled their programs directly on NC’s
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One NC Small Business Program – Funding
FY
Appropriated $ Awarded #
2006
2007
2008
2009
2010
2011
$1,000,000
$5,000,000
$4,830,000
$3,500,000
$700,000
$1,500,000
25*
51
49
54
22**
44
Total
$16,530,000
245
Match Cap
50% of Phase I, up to $50K
100% of Phase I, up to $100K
100% of Phase I, up to $100K
100% of Phase I, up to $75K
50% of Phase I, up to $50K
50% of Phase I, up to $30K
Awarded $
$1,111,816***
$4,553,917
$4,675,962
$3,968,588***
$1,006,439***
$1,311,513
$16,628,228
*The 2006 Solicitation ran only for 6 months, not a full year.
**The 2010 Solicitation used a lottery process, in which only half the applicants could receive Matching Grants.
*** In FY 2006, $111,816 was funded from the 2007 appropriation. In FY 2009 and 2010, awarded $ included de-
obligated funds “recycled” and carried forward from previous years when some grantees did not meet requirements
for receiving their Stage 2 payments.
• Governor recommended funding for program in FY 2012, 2013 & 2014 budgets
• Legislature did not appropriate funding for program in budget again until FY 2015
(current budget: $2,500,000)
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One NC Small Business Program – Businesses
Grantee's Main
Business Activity
Biotechnology
Advanced Materials
Medical
Computer Software
Defense
Other
Education
Pharmaceuticals
Subassemblies/Components
Environmental
Photonics
Test & Measurement
Chemicals
Energy
Manufacturing Equipment
Telecommunications/Internet
Total Grantees
#
74
30
25
24
22
21
13
7
6
4
4
4
3
3
3
2
245
%
30%
12%
10%
10%
9%
9%
5%
3%
2%
2%
2%
2%
1%
1%
1%
1%
100%
This grant program is an
effective and efficient
funding mechanism for the
state because it leverages
other invested
money and takes advantage
of collective vetting.
~Semprius, Durham &
Henderson
I cannot overemphasize the
value of this grant to our
company, our research, and
our success. To receive this
kind of funding so early in
our research gave us an
enormous advantage over
other companies.
~ManningRF, LLC,
Chapel Hill
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One NC Small Business Program – Uses*
Type
Matching $
% of Total
Wages and salaries
$8,862,142
53%
Equipment
$1,984,994
12%
Other
$1,843,635
11%
Supplies
$1,637,191
10%
Facility rental
$1,000,130
6%
Consultant fees
$941,646
6%
Computer software
$370,991
2%
$16,640,729
100%
Total
*Results from 1/2012 survey of all grantees
“In March of 2012, my
company will celebrate its
6th full year of business. The
future of my company is
now brighter than ever.
This is in no small way due
directly to the Matching
Funds program. I will
always be thankful for the
funds from the program
and I hope that it is
continued to help other
small businesses like mine
that just need that little bit
of help to be successful.
~ GTCAllison, LLC,
Mocksville
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One NC Small Business Program – Awards
(245)
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One NC Small Business Program – Jobs*
Job Category
Created Retained
Professional/Scientific
120
144
Management
17
30
Technical/Technician
58
42
Skilled labor
19
15
Unskilled labor
19
7
Other
8
9
Total
241
246
*Results from 1/2012 survey of all grantees
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One NC Small Business Program – Leverage*
Additional Funding
Count
Dollars
Colleges/Universities
Foreign investment
Non-Profit
Non-SBIR/STTR federal
Other domestic company
Other private equity
Personal funds of company
SBIR/STTR federal funding
State or local governments
U.S. venture capital
Your own company
83
76
62
103
116
97
97
95
88
87
102
$600,000
$125,000
$435,000
$21,326,825
$10,948,403
$11,613,000
$905,084
$28,608,219
$1,807,250
$6,700,000
$2,237,500
1,006
$85,306,281
Total
Phase II SBIR/STTR Awards
+
*Results from 1/2012 survey of all grantees
9-to-1 return on
the state dollar
Increased Phase
II funding rate
from 49% to 56%
– six points above
U.S rate of 50%
$73,313,803
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One NC Small Business Program – Sales*
(from technology developed during project)
Total
Total sales of product(s),
process(es), or services(s)
expected during calendar
year 2012
Other sales (e.g., rights to
technology, sale of spin-off
company) expected during
calendar year 2012
Total
$37,826,500
$19,488,000
$57,314,500
*Results from 1/2012 survey of all grantees
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One NC Small Business Program – Feedback*
*Results from 1/2012 survey of all grantees
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One NC Small Business Program – Feedback*
Strongly Agree
Strongly Disagree
*Results from 1/2012 survey of all grantees
Strongly Agree
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Part 3:
Questions & Answers
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