Best Practices in State and Regional Innovation Initiatives Competing in the 21st Century (2013) / Chapter Skim
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8 New Initiatives in Illinois and Arkansas
8 New Initiatives in Illinois and Arkansas
Pages 165-184
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From page 165... ...
In spite of those assets, we just haven't seen enough companies starting here.1 David Miller, leader of the Illinois Biotechnology Industry Organization (iBIO) echoes this concern, observing that the state has always been strong in research 1 Thomas O' Halloran, "Disruptive environments that seed discovery and promote translation," in National Research Council, Building the Illinois Innovation Economy: Summary of a Symposium, C
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From page 166... ...
Chicago is home to eleven medical schools and enrolls more medical students than any other city in the country, but historically has been a net exporter of graduates with medical degrees.5 Illinois was site of the first planted biotechnology field in the world -- tomatoes genetically engineered by Monsanto to ward off pests -- in 1987, but has seen home-grown biotechnology companies and startups migrate to other regions.6 In 2013 a report by the Chicago Metropolitan Agency for Planning warned that in the preceding decade the Chicago region had lost nearly half of its private research and development jobs and was losing ground to smaller innovative regions like San Diego, San Francisco, Silicon Valley and Boston: As these regions enhance the R&D intensities of their manufacturing clusters and the Chicago region lags behind, it becomes harder for northeastern Illinois to adopt new technologies and compete in global advanced manufacturing…While in 2000 the region produced the fourth most patents in the nation, by 2010 its rank had dropped to eighth. As manufacturing relies on R&D 2 Presentation of David Miller, "Early-Stage Finance and Support in Illinois," National Research Council, Building the Illinois Innovation Economy: Summary of a Symposium, op.
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From page 167... ...
Entrepreneurs-in-Residence pairs serial entrepreneurs, VCs, and industry executives with early-stage companies to help them adapt to the realities of the commercial world.11 7 "Region's R&D Spending Plummets," Crystal Lake The Northwest Herald March 3, 2013. 8 Presentation by Governor Patrick Quinn, National Research Council, Building the Illinois Innovation Economy: Summary of a Symposium, op.
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From page 168... ...
Nationwide, most small firms that need financial backing are in the proof-ofconcept, start-up or seed capital phases, and need $500,000 to $1 million for prototype development.12 For the most part, this need is not being met; seed stage investments by the U.S. venture capital industry fell by 48 percent in 2011 to $919 million, or only 3 percent of all venture capital investment.13 Venture capital has been moving downstream, toward safer investments in established enterprises and technologies, a phenomenon that makes it harder for innovative start-ups to acquire funding.14 Both of the states examined in this chapter are responding by seeking to create local institutions to close the gap in early-stage financing.15 The Illinois Science & Technology Coalition The Illinois Science & Technology Coalition (ISTC)
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From page 169... ...
Instead he blamed the lack of venture capital in the area 16 Mark Harris, "Illinois Science and Technology Coalition," in National Research Council, Building the Illinois Innovation Economy: Summary of a Symposium, op.
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From page 170... ...
" Gurnee Review August 2, 2007. 20 David Miller, "Early Stage Finance and Support in Illinois," National Research Council, Building the Illinois Innovation Economy: Summary of a Symposium, op.
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"27 CLP fostered two start-up companies that ended up operating outside of Illinois because they could not raise local venture capital and "the investors they found were in North Carolina and in Madison, Wisconsin, where the companies are now operating." However, OhmX, founded by CLP professor Thomas Meade, secured funded from an investment team headed by a CLP Board Member and began operations in nearby Evanston, Illinois, developing bioelectronic protein-specific monitoring devices.28 24 Roger Moody, "Industry Perspective on Illinois," in National Research Council, Building the Illinois Innovation Economy: Summary of a Symposium, op.
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From page 172... ...
DEVELOPING ARKANSAS' WORKFORCE AND WIND POWER Arkansas is a small state that has grappled with economic forces largely beyond its control for over half a century. After World War II, when automation of agriculture eliminated many farm jobs, the state government managed to attract manufacturing firms from other states on the basis of its low costs, low taxes and favorable business climate, factors that still work in its favor today.29 Many of these industries began moving offshore in the 1970s, and the state has 29 In 1955, Arkansas' state legislature established the Arkansas Industrial Development Commission (AIDC)
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33 "Mitsubishi Breaks Ground on Nacelle Facility in Arkansas," North American Windpower October 8, 2010; "Nucor Makes Blytheville the Steel Capital of the South," Arkansas Business December 16, 1996. 34 One of the civic groups, Accelerate Arkansas, commissioned professional studies of the Arkansas economy, most notably a 2004 report by the Milken Institute that represents the most comprehensive study ever undertaken of the Arkansas economy.
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From page 174... ...
Ultimately, the studies have provided the basis for a systematic, sustained strategic effort to address the principal challenges facing the state, which included work force development, upgrading education at all levels, and fostering entrepreneurship, innovation and the start-up of new, technology-oriented companies.37 The most recent survey of the state's economy concludes that "Arkansas has enjoyed clear economic benefit from activities to create a knowledge-based economy, and is now poised to take critical next steps to maintain momentum."38 Workforce Development Arkansas is taking a number of steps to meet its increasing need for highly educated and skilled workers.39 The Arkansas Task Force on Higher 35 "Choosing a Greenfield Site: Steelmakers are Drawn to Rural Areas," Iron Age March 1992; "Factory Closing Shocks Community Into Opening Wallets for Economic Development," The Regional Economist October 2010; "Arkansas Legislators Present Their Proposal for Tax Breaks for Proposed Steel Mill," Arkansas Democrat-Gazette December 7, 1987. 36 Letter from Arkansas Economic Development Commission Executive Director Maria Haley to Senator Mary Anne Salmon and Representative Tommy Lee Baker, Arkansas Legislative Council, August 22, 2011; Caterpillar Opens New Arkansas Factory Hiring 600," Cleveland.com September 1, 2010; "Windstream Picks Little Rock, AR for HQ," Business Facilities July 13, 2010.
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From page 175... ...
and vastly outpaced the national average in key "hard" research disciplines.43 A 2012 study by the Battelle Technology Partnership Practice found that Arkansas universities were outperforming the national average in technology transfer activity relative to the size of the research base, measured in terms of licenses and startups per $10 million in research expenditures.44 40 The Arkansas General Assembly set an ambitious goal in 2007of increasing the percentage of degree-holding Arkansans to the regional average by 2015. Describing a recently released update, Jim Purcell, director of the Arkansas Department of Higher Education, noted that "despite significant improvement in the rate at which high school graduates who enroll in college -- very nearly the national average, in fact -- the percentage of Arkansas residents with college degrees is on the decline." Arkansas Business, "Purcell Seeks to Raise Rates of Graduation," March 5, 2013.
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From page 176... ...
Biological Sciences 133 55 Physics 94 31 Chemistry 205 44 Other engineering 105 28 Other life sciences 443 50.5 The state's universities have benefitted from substantial upgrading of their cyberinfrastructure, which includes capabilities in high performance computing, visualization technology, data repositories and storage systems, advanced instruments, and the advanced networks which link such resources. Led by the University of Arkansas High Performance Computing Center, a committee of external experts was convened to assess the state's cyberinfrastructure needs, and on the basis of its recommendations the state launched the Arkansas Cyberinfrastructure Initiative.45 Underlying that initiative was the recognition that computing has become the most important general purpose instrument of science, and research in a number of key fields requires millions of hours of computing time annually.46 Arkansas launched the "Star of Arkansas" in 2008, a computer at the High Performance Computing Center TABLE 8-2 Technology Transfer Performance from Arkansas Universities Licenses per $10 Million Startups by $10 Million in Research in Research Year Arkansas U.S.
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From page 177... ...
Arkansas Task Force on Higher Education Remediation, Retention and Graduation Rates, Access to Success: Increasing Arkansas' College Graduates Promotes Economic Development, August 2008. 52 See the summary of the keynote speech by Governor Mike Beebe in the Proceedings chapter of National Research Council, Building the Arkansas Innovation Economy: Summary of a Symposium, op.
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From page 178... ...
Among other initiatives, the coalition has secured funding for 27 elementary school science specialists, sought state grants to STEM teachers to increase their income, established a web portal for STEM lesson plans, and advocated differential pay for STEM teachers.54 Early-Stage Funding Arkansas's efforts to foster innovation have long been hampered by the dearth of early-stage funding for start-ups. In 2002, a state task force seeking to foster the creation of knowledge-based jobs concluded that "a key element that has been missing from the entrepreneurial equation in Arkansas is the lack of venture capital to keep new knowledge-based businesses in the state.55 A 2012 study by Battelle Technology Partnership Practice found that "formal venture capital and private equity investments have been stagnant in Arkansas, with an average of less than one formal venture capital investment per year since 2007.56 Battelle commented that "as long as Arkansas lacks a locally based early-stage venture capital fund, the prospects for substantial investment of initial rounds of venture capital in emerging companies are not promising."57 A number of public and private institutions are currently working to ensure that early stage financing is available to innovative start-ups.
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From page 179... ...
The Arkansas Research and Technology Park has been established adjacent to the University of Arkansas at Fayetteville to nurture technology-based companies with a "set of core R&D competencies at the university."63 In 2011, Arkansas State University at Jonesboro opened a commercial innovation technology incubator at its Arkansas Biosciences Institute Commercial Innovation Center, which provides offices and laboratory facilities for businesses seeking to turn biological innovations into services and products.64 In 2011, Governor Mike Seed Capital Fund provides an annual average of $750,000 for working capital to support initial capitalization and/or expansion of technology-based start-ups in the state. The Arkansas Risk Capital Matching Fund, administered by the Arkansas Development Finance Authority provides Technology Validation funding to assist very early stage start-ups in proof of concept, prototyping, market research, and other commercialization milestones.
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From page 180... ...
for engineering and logistics in a collaboration involving Sam's Club and the University of Arkansas.68 Wind Power Manufacturing Arkansas state and local authorities have augmented the state's natural advantages and technological legacy in the electric power industry with incentives and support from state universities to establish the state as "a manufacturing powerhouse for the wind industry." Arkansas is located at the edge of the "Saudi Arabia of wind," the U.S. Great Plains, and its strategic geographic position is cited by manufacturers of wind power equipment as an important factor in their decision to locate facilities in the state.69 In addition, the University of Arkansas is the site of the National Center for Reliable Electronic Power Transmission (NCREPT)
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"Fort Smith Lands Wind Power Plants 400 Jobs," Arkansas News October 16, 2009. 73 Joe Brenner, "The Wind Industry in Arkansas: an Innovation Ecosystem," National Research Council, Building the Arkansas Innovation Economy: Summary of a Symposium, op.
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From page 182... ...
At the federal level, Nordex received $22 million in tax credits pursuant to the American Recovery and Reinvestment Act of 209 for its Jonesboro facility.74 The innovative wind manufacturing complex that has evolved in Arkansas since 2007 is now exporting wind equipment to wind farms in the Great Plains and Middle West, where its location gives it a transportation cost advantage relative to production bases in Europe and China.75 In 2011, Governor Beebe, who was serving as chairman of the National Governors Association Natural Resources Committee, noted that the wind power industry was a growing sector within Arkansas' economy, and while the state's own wind resources were not ideal -- reflecting inconsistent wind patterns -- he hoped the wind power industry in the state would continue to grow: At some point we have to realize that our national security interests are best pursued when we're not dependent on parts of the world that don't like us very much … We weren't satisfied jut to sit back and let other folks take the lead on that wind power.76 74 Interview with Joe Brenner, Vice President of Production of Nordex USA, in Wind Systems January 2001; "Beckmann Volmer Breaks Ground on Osceola Plant," Paragould Daily Press September 14, 2011; "Nordex Opens Arkansas Wind Energy Plant," REVE October 31, 2010; Jonesboro Asked to Increase Bond Issue for Plant," Arkansas Business August 24, 2009; "Nordex Gets Council's OK to Raise bonds to $125 M," Arkansas Business August 24, 2009; "Firm building Jonesboro Plant to Get $22 million Stimulus," NWA Online January 11, 2010. 75 "Jonesboro's Nordex Plant Secures Turbine Contract," Associated Press State Wire: Arkansas February 24, 2012; "Nordex Wins 75-MW Project in Repeat Order," Windpower Engineering December 2, 2010; "Nordex USA Wins 41 MW Wind Energy Order from Wind Farm," REVE November 10, 2010; "Nordex USA Wins Two New Wind Turbine Orders for Iowa," REVE November 23, 2011; "Texas Wind Farm to Use 30 2.5 MW Wind Turbines," Windpower Engineering December 19, 2011; Way Wind and Nordex USA Announce New Wind Power Venture in Nebraska," Windpower Engineering June 21, 2011; "Nordex, Michigan Firm Partner on 300 MW Wind Power Project in US,"REVE March 23, 2011.
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From page 183... ...
State leaders are confronting these weaknesses through initiatives to support start-ups, university programs designed to foster entrepreneurialism and creation of new institutions to provide early stage financing. Arkansas's long standing weakness has been the low average educational and skills level of its workforce and the difficulty of starting new companies in the state, above all a reflection of the dearth of early-stage financing.
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