Notes from Innovation Policyworks

I recently had the good fortune to achieve recognition in one of my hobbies, and I shared the news with a few friends and family, starting with the statement, "Sorry to brag..." My brother-in-law, Thomas, wrote back, "Never be afraid to state the truth!" Out loud I thanked him, but inside I was thinking, "Well, more proof he wasn't brought up in New England!" I was taught that it is rude to talk about your accomplishments, because they are only evidence of the gifts and opportunities you have that others don't, rather than of any work on your part. I suspect that I'm not the only one who "hides their light under a bushel." It seems that a lot of us don't want folks to know that we're doing well. We also don't want folks to know when we're not doing well, when we have failed. MORE

Cathy

Can Rural Economies be Fixed?

If you want to read a stunning indictment of the state of the rural economies in this country, you might want to peruse Alan Greenblatt's article about Toledo, Oregon, a stand-in for small town USA. He details the demographic, economic, political and social tsunami that's been unleashed everywhere you look. He offers a glimmer of hope that local leadership, working collaboratively, can increase investment and find a way through this. However, what's left unsaid is that the people who live in rural areas must also be part of the solution. READ MORE

One driver is simple demographics: rural America has become older, whiter and less populated in the last two decades. Roughly 25% of seniors live in rural communities, and 21 of the 25 oldest counties in the US are rural. This is especially concentrated in the West. And, the working-age population is declining in many places, meaning a smaller talent pool for the workforce, increased difficulty finding qualified workers for business who stay and greater demand for social services while tax revenues take a hit.

All of this calls for a collaborative effort by leaders and citizens to make their rural communities the heart of America again.

MORE HERE.

Evidence that Innovation Districts Work

We recently completed a project with the Newton-Needham (MA) Regional Chamber to write a strategic plan for their N2 Innovation District. The N2 situation is unusual since it is in fringe cities/suburbs to Boston, with exactly the type of older office parks that technology companies supposedly are moving away from. But, with focused investment, we believe they have the opportunity to be more than just a redeveloped office park or series of business properties, but rather to achieve the vision of an innovation district like the one that has existed in Greater Philadelphia for many years.

The core activity in the Philadelphia innovation district is the University City Science Center, which has proven to be a catalyst for one out of every 100 jobs in the region, and drives nearly $13 billion in economic activity. Of the 442 firms associated with the Science Center since 1963, 155 remain in the region, directly and indirectly supporting 40,000 jobs, driving $12.9 billion in annual economic activity. MORE

More R&D Tax Credit Effectiveness Evidence

The federal government made the R&D tax credit permanent in December 2015, making a long-hoped for commitment to getting US companies to invest in research and development. Most studies have found that this incentive is effective in achieving this goal. A new study by four researchers from the London School of Economics uses a statistical technique to capture the effect of stopping and then starting an R&D tax credit in the UK. They found that UK businesses' expenditures on R&D roughly doubled after the credit was enacted and patenting increased 60%. READ MORE

More on Women Entrepreneurs and Funding

New research from the Alberta School of Business (CA) published in the Harvard Business Review suggests that the success of VC-backed startups, evidenced by an acquisition or IPO exit, is the same for male and female-led companies if the VC firms have a female partner. All-male VC firms experience over 37% fewer successful female-led startups than male-led ventures. It appears that VC firms with female partners are better at evaluating and assisting female-led teams. A crucial step to helping more female entrepreneurs succeed may be to encourage more women to join venture capital firms. MORE

Boomer Entrepreneurship is Booming

The Kauffman Foundation continues to mine their data on startup activity, and recently released a report showing that entrepreneurship among Baby Boomers (ages 55-64) increased from 0.34 percent in 1996 to 0.37 percent in 2014. They explain that this means that 370 out of every 100,000 adults in this age group became entrepreneurs in a given month. Compare this to the data for Millennials who, according to urban legend, are starting up companies every which way. The data are that the rate for the 20-34 demographic is only 0.22, down from 0.28 in 1996. MORE

Are Startups Really Struggling?

Under the heading of lies, damn lies and statistics, there is increasing consternation in the entrepreneurial policy community about the supposed drop in startups. A 2014 Hathaway and Litan paper found that the percentage of US firms that were less than a year old fell by almost half between 1978 and 2011.

The fact, however, is that the decline is concentrated in "subsistence" businesses, where the founder has no intention of creating a big company. Instead, the number of these "lifestyle" companies has declined.

It turns out that "highly ambitious companies are being formed as actively as ever." The catch is that these high-growth potential companies are not succeeding as often as such companies once did. Researchers Stern and Guzman say, "even as the number of new ideas and potential for innovation is increasing, there seems to be a reduction in the ability of companies to scale in a meaningful and systematic way."

Figuring out how to help companies scale would appear to be the next frontier for policy development. MORE

Future of the Suburbs -- Hint, it's Grey!

While we were working on the Newton-Needham project, we had a lot of opportunity to think about the future of the suburbs. It turns out that the Baby Boomers want to grow old there - in 1950, only 7.4% of suburban residents were 65 or older. Now, it's 14.5% and expected to rise even more.

But while Baby Boomers are "in denial" about what it will take for them to remain in their homes, state and local officials are similarly not thinking about how to serve seniors with appropriate public transportation, affordable housing and long-term care.

In many suburbs, mention affordable housing, and images of low-income immigrants come to mind, not seniors looking for single level, smaller apartments, condos or homes. Mention public transit, and many focus on an image of "those people who ride buses," rather than considering a time when they or their parents can't drive to the grocery store themselves.

Interestingly enough, these are the exact same challenges that face Millennials who want to see more transportation, housing and entertainment options before they consider living in the 'burbs. STAY TUNED and MORE

In This Issue - August 2016

Can Rural Economies be Fixed?

Innovation Districts Work

R&D Tax Credits Work Too

More on Women Entrepreneurs

Boomer Entrepreneurship

Struggling Startups?

Future of the Suburbs

Boston Brain Drain

Rural Broadband Divide

Quote of the Month

"I have not failed. I've just found 10,000 ways that don't work."

Thomas Edison

Trump Towers Bigger Threat to Birds than Wind Power

Republican presidential candidate Donald Trump recently criticized the wind power industry for killing birds. However, according to the National Audubon Society, about 599 million birds are killed annually in the US when they fly into tall buildings, the second highest cause of death after cats. Wind turbines kill about 234,000. Trump also said that wind and solar are very expensive and don't work without subsidies. He is out of date with that information as well, given the enormous drop in prices for wind and solar that makes power from these sources at parity with fossil fuels. SOURCE

Even Boston Has a Brain Drain

A new report by real estate firm CBRE shows that Boston has the largest brain drain out of 40 cities in the country, with more than 17,200 people with tech-focused degrees having left between 2011 and 2015. San Francisco gained the most, 89,600 people. Of course Boston graduated around 40,000 people with STEM degrees in those same years, and although demand is robust for these skills, it's not enough to absorb this number of skilled workers. MORE

Rural and Urban Broadband Divide

Even though we've been talking about the digital divide for two decades, major disparities still exist between broadband access in urban and rural areas.

Since the FCC redefined broadband as connections with 25 Mbps download and 4 Mbps upload speeds, an increase of six times the previous standard, it is now evident that ten percent of Americans lack access to broadband at this level. While 39% of Americans in rural areas lack access to these speeds while only 4 percent of urban Americans are in the dark.

This divide must be addressed as part of the challenges of rural America, since increasingly education, government services, and even potentially the ability to vote are based on broadband. MORE

Envisioning Maine

This book of essays by Maine's leaders shows the way forward. Buy your own copy at www.envisionmaine.org.

Dr. Renault's essay talks about the importance of an innovation culture to support economic growth.

135 Maine Street, Suite A-183 � Brunswick, ME 04011 � 207.522.9028

crenault@innovationpolicyworks.com � www.innovationpolicyworks.com

Innovation Policyworks enables economic development officials at state, regional and local levels make better, data-driven decisions by providing expert research, analysis and recommendations. Our clients see innovation and entrepreneurship as critical elements of their economic development strategy, and are developing new programs or policies, and/or evaluating existing ones.

Dr. Catherine S. Renault has been delivering innovation-based economic development results in rural states for 25 years, most recently as science advisor and Director of the Office of Innovation for the State of Maine. Cathy is currently working with E2Tech, Wyoming Manufacturing-Works, a NIST MEP Center and iNBIA. For a list of selected projects, see www.innovationpolicyworks.com/projects.