Wisconsin part of tech-based innovation trend
As the Wisconsin Legislature rolls toward a spring wrap-up of its work, economic development items on its agenda range from protecting intellectual property from “patent trolls” to setting the stage for more classified research to rethinking the state’s sore-thumb tax on capital raised by many young companies.
It’s all part of a trend, not only in Wisconsin but nationwide, where most state governments are paying attention to what makes the tech-based economy tick.
Some leading initiatives to support the creation and expansion of high-growth businesses and jobs were highlighted in a 2013 summary by the State Science and Technology Institute, which supports and tracks how state and regional economies grow through science, technology, and innovation.
Wisconsin was singled out for several initiatives. In its report “Trends in Tech-Based Economic Development,” SSTI cited the Legislature’s overwhelmingly support for a “fund-of-funds” that will begin with a $25 million state investment and attract matching private dollars over time. The money will be invested in state startups.
That same report by SSTI cited Wisconsin’s decision to amend state securities laws to permit equity crowdfunding. It also highlighted the Wisconsin Economic Development Corp.’s $300,000 investment in the BrightStar Wisconsin Foundation, which is beginning to invest in Wisconsin companies.
The SSTI also praised the UW-Madison’s investment in its “Discovery to Product” initiative to help move good ideas from the laboratory to the marketplace. That’s an idea funded, in part, by the Legislature’s UW System Incentive Grants. Only this month, the UW System and WEDC announced the creation of a $2 million fund to help transfer technology from other system campuses.
Finally, SSTI cited three workforce development bills passed by the Legislature to better connect talent with jobs.
There’s room to improve, however, as the STTI report illustrated. Here are examples of how other states invested in their R&D economies:
- Connecticut passed a 10-year, $2 billion Next Generation Connecticut Plan to expand funding for science and technology education on the campuses of the University of Connecticut and a $200 million fund to spur biosciences R&D.
- Pennsylvania’s General Assembly approved a plan to auction $100 million in tax credits to generate state revenue that will be invested in the funding of tech-related startups.
- Lawmakers in Indiana dedicated $25 million to establish a biosciences institute with the expectation of building an endowment up to $400 million over the next five to seven years drawn from corporate and philanthropic sources.
- Colorado created an advanced industries acceleration program to provide grants ranging from $150,000 to $500,000 for proof-of-concept, early stage capital, retention, and infrastructure. In a recent report by the Wing Marion Kauffman Foundation, five Colorado cities made the list of the nation’s top 25 startup hubs.
- Rhode Island joined a growing list of states with a state matching fund for companies that win merit-based federal grants through the Small Business Innovation Research program. The 32-year-old SBIR program has been a launching pad for a number of companies that rely on technologies often developed by academic researchers. In Wisconsin, for example, 42 companies won 75 highly competitive federal awards worth nearly $37 million in the most recent year.
- Hoping to attract private funding for early stage companies focused on cybersecurity technology, lawmakers in Maryland established a $3 million Cybersecurity Investment Tax Credit Reserve Fund.
- Much like the Wisconsin “fund-of-funds,” New York set aside $50 million for a venture capital fund to provide seed and early stage funding.
Too often, politicians are focused on protecting or bolstering parts of the economy that may be in decline. The smarter game in the United States today is to invest in tomorrow’s economy, which usually includes emerging companies that have the potential for high growth and job creation.
As hockey great Wayne Gretzky once said in describing his success, “I skate to where the puck is going to be, not where it has been.” As their own season moves toward a closing horn, Wisconsin lawmakers should tighten their skates and keep Gretzky’s scoring mantra in mind.
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