By Dave Feehan
President, Civitas Consultants LLC
Since 1990, Business Improvement Districts or BIDs, as they are commonly known, have become the most effective and accepted method for funding downtown and business district organizations.
For many decades, merchant associations and voluntary downtown councils played the role of business district manager and advocate; but the decline in downtown retail, the shift to national chain stores, and the acquisition of local headquarter firms by national and international conglomerates made these downtown management models difficult to sustain. Continue reading “Business Improvement Districts – Not Just for Big City Downtowns”
Colleges and universities are a critical driver for regional and national development. They are critical to the well being of our nation and the communities that they serve, as much as these institutions depend on vibrant communities and a strong nation for their own success. Deregulation of banks and utilities have weakened the traditional economic development partnership, leaving colleges and universities as the one viable partner that shares and shapes community goals. Colleges and universities have been strong job creators, adding more than 341,000 jobs in the last ten years. Continue reading “The University Economic Engine”
In recent months our Fourth Economy team has been hard at work on several town-gown development projects. It’s time to share a few lessons learned. First, if you live in a smaller town and are fortunate enough to have an institution of higher education close by, don’t squander the opportunity to build upon this high value asset – embrace it, leverage it, and cultivate it.
While the many positives associated with town-gown partnerships may be obvious to most of us, surprisingly those positives often need to be clearly identified, communicated and tactically acted upon. Continue reading “Small Towns, Great Gowns, Big Opportunities”
Fourth Economy has been providing management and development services to the University Economic Development Association (UEDA) for more than a year now. Last month more than thirty UEDA members and Board convened in Washington D.C. to discuss the Association’s operational plan and provide updates on each of the committees’ action items. “A special thanks to all of those who were able to attend the UEDA Spring meeting,” said UEDA President Chuck Shoopman. “We learned from our presenters and each other while making good progress with face-to-face committee meetings. The energy in the room was positive and productive,” Shoopman added.
Continue reading “Connecting Town and Gown through the University Economic Development Association (UEDA)”
Although governments have been reluctant to resort to New Deal-style direct job creation, agencies at all levels are seeking ways to accelerate the current economic recovery. One of the most reliable formulas researchers have identified for private-sector growth has been the regional innovation cluster model. Regions build upon their existing university programs, industrial capacity and technology strengths to develop a competitive advantage that promotes export-driven growth with high-value jobs. Some regional planners proudly report that their innovation clusters provide “5% of the companies, 10% of the jobs and 20% of the payroll.” Continue reading “Eds, Meds & Feds: The Innovation Economy in the DC Metro Region”
Here at Fourth Economy, we’re always looking for opportunities to identify and build upon local assets. This often takes the form of bringing together various stakeholders to advance specific technologies and sectors. We’re currently working on building more robust sectors around both energy and water here in the greater Pittsburgh region and beyond. Even though this work is challenging, a dense network of universities, technology intermediaries, economic development partners, and private sector businesses aids our work. But what happens when you leave the “big city” and those players are spread further across a region?
Last month, the Fourth Economy team organized a panel discussion at the annual summit of the University Economic Development Association (UEDA) in Indianapolis, IN. The panel topic “Partnerships for Place-making” brought together a cross-sector of university, private real estate and community development specialists.
How colleges and universities can engage for community and economic development is an important fourth economy element. Aaron Laramore, Program Officer for the Local Initiatives Support Corporation (LISC) of Indianapolis summarized the key resources and roles his regional universities play within the community development nexus.
- Research and Analysis – They can help to effectively define the problem, determine how long has it been going on, how bad it is, and what can be done.
- Implementation – They can help development solutions, deployment strategies and evaluate results.
- Education – They can help inform the community on project opportunities and guide the community planning process
Resources in Indy?
Within the Indiana University–Purdue University Indianapolis (IU-PUI) partnership, several centers and community resources exist.
The Center for Urban Health researches the enhancement of health and sustainability for urban populations, focused on environmental legacies to include reduced contamination, removing social and economic disparities and emerging threats such climate change and water quality.
The Center for Service and Learning partners students, faculty and staff with near campus neighborhoods to address community and social justice issues.
The Polis Center is an academic research center with practical and applied orientation on issues related to metro Indianapolis and other mid-sized American cities using geospatial information systems
The Outcomes in Indy?
Several key community improvement initiatives and development projects have resulted through these partnerships.
Improving Kids Environment (IKE) – IKE is a local non-profit in Indianapolis focused on the reduction of environmental threats to children’s health. IKE uses research and tactical expertise from IUPUI to educate residents on soil lead levels, environmental hot spots, safe gardening techniques and air quality monitoring.
Indy Indicators – Indy Indicators is a website resource measuring and engaging people in the quality of life in Central Indiana by providing interactive maps based on census tracts and neighborhoods on key indicators, metrics and community assessments.
IUPUI Fit for Life – Fit for Life assists neighborhoods in creating long-rage health plans to reduce obesity, heart desease, diabetes, high blood pressure and stroke. Fit For Life established a 6,000 square foot wellness center open for use by parents and community members
Growing Nearwest – The IUPUI Herron School of Arts enlisted two classes to create a garden identity and image for the initiative and marketing materials. A design team engaged community residents in determining relevant crops, garden sites and strategies to address water and labor engagement to support the gardens.
Click here to view Aaron’s full presentation:
LISC mobilizes corporate, government and philanthropic support to provide local community development organizations with 1) loans, grants and equity investments, 2) local, statewide and national policy support and 3) technical and management assistance.
If you have a fourth economy partnership story you would like to share with us, drop us a note below…
The “Elements of the Fourth Economy” series will feature key drivers and examples we’ve identified as necessary in building the fourth economy.
The Fourth Economy team continues to encourage “Collaboration” as a key tenant for success in our modern economy. Collaboration is especially important between economic development stakeholders and higher education.
We were fortunate this past summer to work with the University of Louisiana at Lafayette (ULL) and the Lafayette Economic Development Authority (LEDA) on a commercialization assessment and site development project. The project was led by the nationally recognized planning firm RCLCO, Inc. What we discovered there was impressive.
The partnership between ULL and LEDA moves far beyond marketing rhetoric. There is a deep understanding from both camps that an alignment between economic development and the university is key to achieving each of their respective goals and objectives. “Without the successful company recruiting and retention activity of our regional economic development entities, such as LEDA, our students would face a much greater likelihood of underemployment or outmigration,” noted Dr. Paula Phillips, Assistant Vice President for Institutional Planning and Effectiveness at ULL.
Gregg Gothreaux, President and CEO, LEDA, added, “From LEDA speaking in support of the establishment of new degree programs to UL professors providing expertise in specific fields for recruitment efforts—officials at LEDA and UL Lafayette see that the benefits of working together extend beyond one company or one project, but to the community as a whole. It’s this ongoing cooperation that was recognized by Southern Business and Development’s inclusion of Lafayette in their 2011 list of the top 10 economic development collaborations in the South.”
This recognition of how ULL and LEDA activities impact each of their success is a milestone in and of itself. But this partnership’s effectiveness is also highlighted in three keys key areas of its operations.
Strong collaboration is built upon active communication and engagement. ULL and LEDA have extensive cross representation on their boards, committees and projects. From key research faculty to the President’s office, ULL is a part of the LEDA operations, actively engaged in strategic planning, business outreach, and regional market positioning. Likewise, LEDA management and board members are linked through the trustee board, development office and campus planning. This level of ongoing communication enables each offer coherent and seamless service and planning continuum.
As a result of the communication linkages, LEDA and ULL work daily to understand their respective objectives and the assets needed and available to achieve those goals. High value resources such as ULL’s LITE Center, Microscopy Center, FTTP Initiative, Center Business and Information Technology, Enterprise Center of Louisiana, Louisiana Accelerator Center, and Center for Structural & Functional Materials are all aligned with LEDA’s target industry sectors and market niches. LEDA actively leverages each of these assets for business attraction, creation and retention.
We have seen very few economic development organizations so effectively use and understand its regional market data than LEDA. The economic development agency has become the “go to” organization when gauging industry market trends and opportunities. This year LEDA developed their own customized ‘Lafayette Economic Performance Index,” which highlights key data points unique to their own market. This information is shared with ULL and used as a tool to gauge market, research and employment opportunities.
“Our viability at the university, in large part, is contingent upon the achievements of LEDA , and we both do whatever we can to support that synergy and interdependence”
Dr. Paula Phillips Carson, University of Louisiana at Lafayette
These three factors help define a fourth economy collaboration. They enable each partner to be nimble, responding quickly to challenges and opportunities. The partnership builds a level of confidence for potential investors, as they can quickly learn that this it is highly functional and not simply a marketing strategy. And finally it forms a long-lasting engagement as each builds trust in and understanding of the other.
Kudos to our partners in Lafayette for building capacity in the fourth economy! If you have a success story, send it along. We are eager to learn more about new and innovative approaches happening in your neck of the woods.
Utah made headlines by generating more startups in 2009 than MIT on ¼ of their budget. Interest and activity in university spinoffs continues to grow. A number of new initiatives have launched recently to promote the commercialization of university technology and more specifically the development of startup companies.
- Texas is a building a $7 million, 20,000SF accelerator facility, the Center for Research Commercialization. The CRC will provide green and biotech startups with access to Texas State faculty and labs.
- The Auburn Business Incubator, located on the Auburn University campus is a new incubator facility to link startups to a network of services from university and community sources.
- Carnegie Mellon University, a perennial startup powerhouse, recently launched a new initiative, Greenlighting Startups, which leverages their ‘Five Percent, Go in Peace‘ policy to generate university startups. One new twist is the Open Field Entrepreneurs Fund (OFEF) that provides early-stage business financing to alumni who have graduated from CMU within the past five years.
University startups are one of the most visible ways in which academic innovation produces regional economic benefits. Startups, however, require more effort than licensing agreements, and it is not an appropriate strategy for commercializing every technology.
The Association of University Technology Managers (AUTM), which began in 1974 as the Society of University Patent Administrators, provides data on these startups and university technology transfer. As more universities emphasize startups or other aspects of technology commercialization, it will be important to have good benchmarks in terms of the effort required and the expected return.
Institutions emphasize different aspects of the commercialization process and may prefer licenses and patents to startups. The AUTM data doesn’t tell us the strategic emphasis of the institutions, so the average for how many startups you can expect out of a given amount of research expenditure is skewed by including institutions that never attempt to create a spinoff firm. Analyzing the AUTM data from 2003 to 2009, there are 133 institutions that produce less than one startup per year (Table 1). A number of these schools have very small budgets and are not oriented towards creating startups; in fact, only 24 of the 133 (18 percent) have annual R&D budgets above $100 million.
When we look at the institutions that generate at least one or more startups per year, we see why the $100 million threshold matters (Figure 1). It does not take $98 million or $100 million of research to generate a startup, but you can’t tell which research and which technology will lead to a startup, so you need to have a lot of research activity going on in order to find those opportunities to produce a new startup. At less than $100 million in R&D, you will need to be either very lucky or very good to consistently create startups.
As the volume of research increases, institutions become more efficient. At $200 million to $400 million in R&D, institutions can expect only a modest increase in startup rates – getting one startup for every $92 million in research. The very best schools, those that produce more than 4 startups per year, are able to generate one startup for every $77 million in research. For the smaller institutions, implementing the best practices and doing everything you can to be efficient at producing startups might add one more startup every other year.
An improvement in the data collected by AUTM would be to have more specific data on research expenditures and commercial outcomes by sector so that institutions have a better idea of how they stack up. AUTM reports the number of university startups and research expenditures but it does not provide specifics on the technology sectors for those indicators. For example, it is more expensive to develop a technology and launch a startup in biotech versus a web application, but all of those numbers are mixed together in the AUTM data.
There is also a need for more and better data about the quality and performance of university startups. The AUTM data does not distinguish various qualitative factors on startup development, or their ultimate level of success. Is a legally incorporated shell company with no employees, no investment and no revenue equal to, less than or greater than three committed entrepreneurs who have invested $50,000 of their own money to develop a prototype but they haven’t legally filed for incorporation? These are questions that require more long-term study and data collection. A few universities have collected this data for economic impact studies, but the variety of methods employed make it difficult to compare performance.
I am certainly a believer in the power of university based economic development, but I also know that it is not easy to succeed with that strategy and it is not the right fit for every university. With the data currently available, we can’t accurately answer the question of how many startups a university can expect to produce from its research base. If you have thoughts on how to improve the information about university commercialization and specifically startups, let us know by email or leave a comment below.
What are the consequences of declining public support for research? There are many positive aspects to Universities becoming more engaged with industry and with economic development efforts, but we have to make sure that good science is not compromised. A new book from the University of Pittsburgh Press, The Commodification of Academic Research: Science and the Modern University, explores these issues. You can also get a good overview from this Q&A style article here.