Innovation nation | Hopeful signs emerge in a tough venture capital market
For the past year or so, I have described — bemoaned, really — the difficulties our country faces in dealing with a challenged venture capital marketplace (lots of deals, not much capital) and a deficit- and politically-informed reduced federal role in the innovation economy. Since I’m not really planning to go into snow removal or lawn care (“A look back,” Mainebiz, 12/27/10), I think it’s time to take a positive look at the state of innovation in light of a troubled economy, a contentious political landscape and a tight fiscal environment.
First, let’s have a look at our assets. On the national front, President Obama demonstrated his commitment to innovation by signing the America Creating Opportunities to Meaningfully Promote Excellence in Technology, Education and Science (America COMPETES) Reauthorization Act of 2010, which supports research and education in science, technology, engineering and math.
As adviser to President Obama John Holdren notes: COMPETES authorizes the continued growth of the budgets of three key agencies — the Department of Energy’s Office of Science, the laboratories of the National Institute of Standards and Technology and the National Science Foundation. COMPETES also authorizes ongoing support for ARPA-E, the novel energy-research program modeled after the Defense Advanced Research Projects Agency which promises to give rise to “leapfrog” technologies that will reduce U.S. dependence on foreign energy sources and stimulate a green economy while producing high-quality jobs of the future. COMPETES also gives every department and agency the authority to conduct prize competitions, which have an excellent track record of accelerating problem-solving by tapping America’s top talent and best expertise wherever it may lie.
COMPETES’ re-authorization did not, unfortunately, include a provision approved by the House but pulled from the Senate version to support funding of a regional innovation cluster grant program that was to be piloted in this version of the act. As readers of this column know, I’ve been talking about the Obama administration’s interest in regional innovation clusters since Mainer and SBA Administrator Karen Mills joined the administration in early 2009. The House version was to pilot a series of grant programs designed to seed translation of R&D to early commercialization. In light of the desert of early-stage capital and the alignment with regional innovation clusters, it was disappointing, though not surprising in this political and economic climate, to see.
Regionally, New England has considerable assets to bear in the realm of innovation. Boston’s 128 belt is widely recognized for its academic, research, technology and entrepreneurship resources and institutions, historically fueled by one of the two largest concentrations of venture capital funds in the U.S. While the overall availability of capital has diminished considerably, the region’s enviable array of assets provides New England with cause for hope.
Here in Maine, Maine Technology Institute continues to offer critical resources for pre-revenue and early revenue technology businesses, as well as cluster funding akin to what COMPETES might have provided if the House version had passed. A significant challenge, as I noted in a Mainebiz Sunday show that aired on Jan. 16 (visit mainebiz.biz and click on the Mainebiz Sunday icon on the homepage for the video), will be for companies funded by MTI to locate the next round of financing to continue to drive job growth and innovation.
So, how’s that going to happen? As MTI noted in its 2008 clusters report, companies in Maine must make connections outside the state, particularly in Massachusetts, which has considerable assets to tap. How to do so without seeing Maine’s companies move out of state is an important consideration. In those sectors for which Maine’s natural or human assets may not be essential to success, the state may well lose the companies MTI has funded or turn away life-giving capital and resources. In other sectors (e.g. offshore wind, certain specialty foods), Maine’s assets (wind, rig production, composites, agriculture) may be so inextricably tied to a growth venture that an investor would not have the option to relocate the business out of state.
As I noted in the Mainebiz Sunday program, I am concerned for the emerging venture and entrepreneurship ecosystem here in the state, but not out of any negative view of the quality of our entrepreneurs or innovation capability. I worry that we stand to lose a good deal of the momentum built in the state by the handful of venture capital funds that have fueled the startup community, many of which were seeded by MTI and have limited or no access to new capital.
In the absence of capital, I come back to clusters (Note: When you are a cluster hammer, everything looks like a cluster nail). Clusters concentrate and connect resources and optimize for knowledge diffusion (everyone’s in the room) and innovation (VCs and university license offices mingle with entrepreneurs). And, if you really like clusters, the new Trader Joe’s in Portland carries various flavors of Cluster Cereal — tasty and good for you, just like regional innovation clusters.
Michael Gurau, president of Clear Innovation Partners, a Maine-based cluster development organization, can be reached at mgurau@clearinnovationpartners.com. Read more Venture Builder here.
Most Recent
Most Recent
Comments