Build State Support for your Innovation Ecosystem

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Hey everyone. Welcome back to our third annual SBA Innovation Ecosystem Summit. I think we have some new faces, so allow me to quickly reset the room. My name is Jamila Corbett, Engagement Director at Established. On behalf of the sba, thank you for being here. We're so happy that you decided to join us today. And if you've been with us all day, thank you. Thank you for still being here. If you enjoy sessions like these, we actually host monthly calls with ecosystem builders like yourself. To learn more and to sign up, please visit AmericaSeed Fund US. I just want to remind everyone that this event has closed captions. If you need it, just click the CC button at the bottom. If you experience any technical difficulties at any point, first take a deep breath. Then try refreshing your screen. That usually takes care of the issue. Otherwise, email supportest us and we'll do our best to troubleshoot. We also encourage you to share your learnings and highlights with us on social media using the hashtag ESL Summit2023 and see the future. All right, let's resume the party for this final session of the day. You're going to hear from federally funded organizations and leadership from SBA's Office of Field Operations on how they build support for ecosystem building at the state and local level. To lead this discussion is Stacy Swider, VP of Investments at Mass Ventures. With that said, Stacy, take us away.

Hi and thank you for that, Jamila. And thank you for having us here. As she said, I'm Stacey Swider. I'm a VP Investments of Mass Ventures. We are the state of Massachusetts strategic venture capital capital arm. Most states have an equivalent of Mass Ventures. So part of your startup ecosystem is understanding all of your quasis, including you probably have a venture one and a clean energy one like we do. We have a life sciences facing one. So there's a lot of different quasis to get to know. But we have some interesting people to listen to on this panel who have really help to build up ecosystem. So I'm going to have them introduce themselves and then we will get into some fun discussions. Tony, why don't we start with you.

Stacy? I am Tony Sodella. I'm the chair of the Drug API Innovation Center. It's the active Pharmaceutical Ingredient Innovation center. And the center is dedicated to securing our nation's drug supply chain by advancing the adoption of novel manufacturing innovations and in doing so, growing the manufacturing job base in the state of Missouri.

That's quite an ecosystem for Missouri. Jason, could you introduce yourself, please?

Yeah.

Great. Thank you very much, Stacy. So, Jason Rigenberg, I'm vice president with ssti. We're a national association working with state governments, local and regional nonprofits that are focused on economic development in their regions, institutions of higher education and national labs. And we're working with groups that are really trying to expand the research, innovation, entrepreneurship activity in their regions and helping to translate that activity into new products, companies and jobs. So work with 160 plus groups around the country on those types of issues, tracking policies, programs and practices that are proving effective.

Yeah, that's great. And Mass Ventures loves working with ssti. And also on our panel is Jen Kim with the sba. Can you tell us about your, your work there, Jen, and who you are?

Thanks, Stacey. Hi everybody. My name is Jen Kim. I'm the associate administrator for the Office of Field Operations here at the sba. I want to thank my colleagues at the Office of Investment and Innovation for hosting such a great event. My role is, I oversee our regional and district offices. So we kind of think of ourselves as many front doors to the agency all across the country. And I can talk a little bit more about how we're set up in a few minutes. And I'm based in Washington D.C. wonderful.

That is great to hear. And this is, this is a large topic for a very short session, so we're going to get right into it. And the topic, just to repeat is that there is a, there are a lot of federal vehicles, a lot for building. You can apply for EDA grants and other grants for building an ecosystem in your state, but you also need to pull in those state resources. So we're going to be focusing a bit on how you do that. And I'm going to circle right back to Tony. Tony, you've been successful, very successful in the state of Missouri. I think you shared with me yesterday that you've won $30 million. How did you accomplish all of that? Oh, please, unmute yourself.

Yes, really important elements relative to being able to get state funding for the type of efforts, really three things. The first is ensuring strategic fit with the state's priorities. The second thing that was important was the impact of our efforts on the local economy and local communities. And the third thing that was essential was a plan to be self sustaining. So upon receiving those state funds, I would be self sustaining and allow those investments, if you want to view them that way, to be scaled. So, for example, in the state of Missouri, expanding manufacturing was a top priority for the state and the governor. State of Missouri is number four manufacturing base in the nation by state. It's the number one drug active pharmaceutical producer by state in the United States. And so there was a natural, perfect strategic fit with the objectives of the state, with our API Innovation Center's purpose from an impact on local economy and communities. The focus was on driving economic prosperity by creating new type of manufacturing jobs across different and diverse communities and regions. For example, our efforts were focused on creating new novel jobs around quality assurance and quality control with different type of backgrounds, different type of degree backgrounds. In addition, we're able to grow regions like St. Louis, the city of St. Louis, which has a proud history of manufacturing for over 100 years that had experienced a disproportionate amount of growth in other regions. So the ability to meet the state's objectives of growing regions, growing local economy and growing communities. And then the last part I said about being self sustaining, there was definitely a requirement that gave greater confidence in the state supporting us, which was a plan, a plan to be self sustaining. With the initial funding from the state level, we fund small businesses, innovators, academic, to commercialize their technologies. But we've also developed a novel joint value capture partnership with all these innovators so that the center itself could be sustaining scale and have widespread impact locally, regionally and even nationally within drug supply chain.

Okay, we all need to go online and look at what you built at the ABI Innovation Center.

So I hope you guys all caught that.

It's about aligning with the state's goals. Provide jobs, states want to get jobs and make it a sustainable ecosystem. And all of these, particularly around the state's missions. These things you can start out by just looking online. The states often publish these in their economic development plans. And it's incumbent on you, as a person who wants to grow an ecosystem, to take the time to read, educate yourself and get to know people. Jason, I'd like to hear what you could add to this that you work with across many states and what are some other things you see?

So one of the big things that we see, people that are in this space and really interested in trying to build that state support for their innovation programs is trying to get in with the state legislature and the executive office to help create the funding opportunities and priorities that are going to then align with initiatives that funded the one like the API Innovation Center. So I believe at least part of that funding came through Missouri Tech Corps. And so as an example there, that's a state that has had an organization that has a really great history of funding important innovation work in the state. But its funding and its overall priority. And the governor's, you know, plans have shifted over time with various administrations. And so I know that in Missouri there are groups that come together to try to educate the state's leaders on the importance of having a regional innovation strategy. And that's something that many other states do as well and is very important because a lot of times governors, like any elected official, they're going to have priorities that may be in different areas. They may be more focused on infrastructure at some points or on housing issues. And then even when it comes to economic development, a lot of times people are going to be more used to the kind of economic development funding where you're giving incentives to a larger manufacturer that there is going to be a ribbon cutting at some point and a couple of hundred jobs. And so it takes a lot of education to explain why funding investments in longer term outputs through science and tech and entrepreneurship can pay really important and valuable dividends for the state as a whole, for the people of the state. And then hopefully also there can be some sort of more shorter term benefits that align with the elected officials because sometimes that is an important priority. So we've worked with a lot of states over time, including actually talking with mass ventures, then also universities in Alabama, for example, and universities as well as innovation focused organizations in Iowa. To help think about what metrics do you have about how your program firms work? What success stories can you share about the impact that science and tech have had for people and companies? And then how do you put together a plan to figure out when the important time is to go and talk with those elected officials? There are certainly things like your regular budget cycle or the development of an economic development plan like you mentioned, Stacy, that are really great times. But you know, also when does your annual report come out or do you have a pitch competition that you can invite people to and other types of activities and then remembering that you need to do this frequently? Everyone's busy. People get asked for a lot of things all the time. So it's not a matter of, hey, I talked to them last year, so now they should definitely want to support our ask next time. It's how many reminders can you provide and help keeping the importance of the work that you're doing in the front of people's minds. So just at a high level, those are a few recommendations and a few ways that we see different states getting involved to try to really build support. The one other thing I forgot to mention that I definitely want to make sure I don't forget is using clear Language. Every field has its own jargon. I think science and tech can be particularly bad about that. And SBIR versus America's seed fund, you know, those are not terms that are clear to people. So making sure that you are really using descriptive language that maybe doesn't even say the program name, but at least says what it does very clearly to a lay audience is important as part of your outreach strategies, too.

Jason, that is incredibly insightful and just wonderful advice, because part of what you're saying is that when you're looking at building an ecosystem community, what you're competing with, with the politicians or servants at the state level is a quick win. They want to just write that check. And then there's 100 new jobs, and they get a good article in the newspaper versus some things Tony was saying, like jobs of tomorrow and really supporting and having this sustainable place. So they get it. And then it brings back to your. Come back to Your communication point 200%. Learn how to communicate, hire help to communicate, and then stay on it. I want to pivot to Jen now and let her share with us the work that she. She helps grease the rails for, I guess, in all the states.

Yeah. So first, maybe just let me describe a little bit more about the field operations structure so you kind of know what's out there across the country. And then I'll talk a little bit more specifically about how that relates to ecosystem building. But my job, you know, I like to think I've got one of the best jobs at sba. I get to the privilege of overseeing our field operations. So that includes 10 regional offices that are led by 10 regional administrators, as well as 68 district offices across the country. And so every state has at least one, including in Puerto Rico, we've got staff in Guam and other places and some of the larger states like California, Texas, et cetera, we have multiple offices there. And then, you know, these offices are staffed with some of the most dedicated, you know, hardworking people I've ever met. And they're just, you know, really, you know, experts in their own field. Right. Subject matter experts. And so, you know, every office has a mix of staff. Of course, they're led by our district directors and deputy district directors, but we have lending relations specialists across the country whose job it is to focus on access to capital, working with SBA affiliated lenders as well as the borrowers that are benefiting from those lenders. We have business opportunity specialists that work on contracting, and then we have outreach and marketing and economic development specialists as well, whose, you know, Their job especially is to kind of create that ecosystem. But all this is to say that, you know, no matter who you encounter in one of our district offices, you know, they're very committed to helping small businesses of, you know, every industry of every geography find what they need to get to that next step. And so it could be with one of us, it could be with one of our SBA resource partners, so our small business development centers or our local SCORE chapters that have free counseling. It could be that actually you need to communicate with a state level agency or a different federal agency or whatever it is. But, you know, now to kind of address that ecosystem component, you know, we kind of see ourselves as conveners, wayfinders, navigators, depending on what the need is. And we're really, you know, all of our local staff are very well connected with state and local governments as well as the other federal agencies out there. So if you haven't already kind of looked to see what's around you locally, you can go to sba.govlocal-assistance and I think you can just type in your city or your zip code and you can see what's around you. But again, even if it's not in your city, there is a district office that covers you. You can make a virtual appointment. But, you know, our staff are, you know, ready to help businesses at every stage of life, really. But I think, you know, the key thing about being a small business, as you guys know, is kind of the larger the coalition, the larger the group that you're with helps to kind of grow the power of small businesses. SBA celebrated at 7, celebrating its 70th anniversary this year. And I think, you know, one of the things that was key at our founding when President Eisenhower signed us into law is like, how can we keep small businesses competitive against those big businesses? And so that's our whole agency focus. You know, that's what we're working on locally. And so, you know, we're, our resources are out there to help you and.

You know, where all the cool small businesses are. And it's so important to pull in these offices to your ecosystem effort because you're finding those other friends. That's just amazing. And we're so lucky to, to have all these regional and local offices. Back to Tony, I want to like, dig in a little bit to, to funding. So you want to make something sustainable. You're, you're, you're sort of pitching the state. What are some of the instruments you use to get going?

Well, I think one of the key was Building the appropriate partnerships that could scale. So even though you're working with small businesses per se, to help them scale their innovation, it requires small, large and also entities and organizations at the adjacencies. So the ability to bring what I'll call consortiums together on given projects that allows, in essence, the small business to grow and flourish, allowed for novel value capture models. And so by that I mean we de risk for these small businesses and large businesses the adoption of new technologies. So that's where we deploy the capital that the state has put in place, the de risking of allowing these new novel advanced manufacturing technologies to be brought to market and placed in an existing manufacturer or a small business manufacturer that can scale. In doing that, and doing that, we form good strong partnerships with them that allow them to thrive and them to also allow the center to capture some value back. So we built a business model, commercial partnership model with these organizations. And it's not just one, it's the large business. In our case, we have small businesses that are innovating, developing new techniques, but we have large enterprises and corporations that have built some other augmenting technologies or large corporations with different type of facilities in Missouri to produce some of these final drugs all work together. Finding an equitable value share model is what allowed us to do that. Now, I will say I think we're somewhat unique in that you have a topic that crosses both sides. We've had no challenges from both sides of the political spectrum. Everybody's committed to ensuring that our citizens through access to quality drug products that are manufactured here in the United States to allow for a security of supply. And in doing so, we get a lot of purpose and meaning to what we're doing. And the collaborations come together quite powerfully.

Yeah, it's so important to have the bigs in there. They just have so much know how and they're. They often want to come in because of the workforce development. They often have a lot of grinding needs in hiring. And so that's a great way to sort of start pulling everybody together. Jen, what kind of funding instruments can ecosystem builders look for? Often people start with a federal one and then they get the matching from the state. Do they start@grants.gov or where do they look?

Yeah. The good news is there's no shortage of opportunities right now. You might have to look in a couple different places, but you know, under, you know, President Biden, there's just an incredible amount of funding that's going into all sorts of different fields. I think, you know, there's innovators on this at this event today from all different sectors. So I'll just say that, you know, whether it's under the bipartisan infrastructure law or the Inflation Reduction act, the CHIPS act, you know, there's a lot of opportunity out there, and there are some, you know, set asides, for lack of a better term for small businesses. And locally, we are trying to connect those dots for folks as well. Every state has what's called the infrastructure czar, whose job it is to try to kind of like, traffic cop some of those opportunities locally and, you know, try to work with the different state and local entities as well, because some of that model funding is federal funding, but a lot of it actually is getting pushed down to state and local entities as well. And I'll just say, while, like, a lot of opportunities are already out there and have been issued, the awards and notices will continue to come, you know, well into next year as well, for sure. So, you know, again, you know, a lot of our local offices are working to connect the dots and some of those opportunities. But even if, you know, they're not working on your specific thing, maybe they know somebody else that is. But grants.gov is a good place for sure if it's contracting related. Hopefully you're registered on SAM.gov already. But again, if you can find kind of who in your state is kind of managing or coordinating those state funds, that can, I think, be a big help for you all. And, you know, again, our local folks, our regional administrators especially, are trying to make sure that we're connecting with like Department of Energy, Department of Commerce, et cetera, to kind of build those ecosystems locally. So, you know, try to cut down on the number of people. You have to, too.

That's a really important point. And, yeah, and. And also, right. It. It's not all through the sba, it's through Commerce, it's through Department of Energy, it might be through osha. I mean, not osha, sorry, noaa. Like, if it's oceanographic, I mean, I'm on the East Coast. There's a lot of ocean stuff going on.

Could be anybody, really.

Could be anybody.

That's a good point. We actually don't have the, you know, we're not issuing the funding to small businesses ourselves. But, you know, our goal is to make sure that small businesses are kind of aware of all the different opportunities across the federal government.

And I could say, Stacy, just add to Jen's comment is that our center and all the jobs and all the scaling that are being created in Missouri to produce these New medicines using us based derived innovations would not have been possible had it not been for the SBA. The SBA's investment in the Research Innovation center that got it started allowed us to create an environment and then create an ecosystem. It would not have happened. And that further attracted further support by the state and therefore further support by other entities, including commercial entities. And it was the SBA that through their stepping forward, their foresight to see that their funding of a RIC around this area was an enabler to get us to have our junk supply chain so we wouldn't exist if it hadn't been for their great work.

I love that point. I see it all the time. The federal government is often more daring than state government and so they're much more willing to seed things. And then when you show the value, you show the value. Hire Jason's firm to communicate the value and then you can start getting the state support. There is. I'm gonna. We're getting some good audience questions and it's coming back to Tony. There's interest in learning more about the business model that you use.

Could you.

We don't have a whole lot of time left, but top briefly.

Well in kind of a high level. By choosing to deploy the state funding for the research and de risking of the technology, what companies then are doing is receiving the technology that they know is proven. And when we talk de risk for drugs it's that the FDA will approve it, that it's made according to quality standards, that it technically works. So a whole wide variety of different types of risks. So by de risking it it we're committing to allow that to be in essence paid for. State of Missouri is funding that. But then on the follow on is when we bring those drug products, we seek to share in the product being brought to market. So we take a small percentage of the product that gets commercialized. It's a non profit. We're not looking for anything beyond something that allows us to self sustain. Now what's been really remarkable is that others want to see our funds go further and as such we've been getting others private companies commercial. And he's saying, you know, don't consume all of it on this or this product only. We want to stretch it even further. So it's been really a collaborative model and you know, to. To the point that Jason made. Missouri does have a really great collaborative ecosystem for growth and for supporting it between large organizations and small businesses. And that really has been demonstrated as part of our ric.

That's fantastic. And the next question you, you said you have a not for profit and the next question was about your likelihood of getting funding if you are not for profit. Jason, could you take that one? You must see a lot of not for profits.

Yeah, I mean most of the groups that we work with are nonprofit organizations. So I mean like Jim was mentioning, there are an awful lot of federal programs of course that fund this work and the RIC program, the Regional Innovation Clusters program that Tony mention a great one from sba. You also have the accelerator fund competition at SBA as well. But we see a lot of groups going after the build to scale program. Of course at Commerce, USDA has programs, Department of Energy has started doing more work to invest in clean energy incubators and things of that nature. At the state level there are a lot of really great and different types of models that we see depending on your state. We see some that are able to directly provide line item funding to non profits. And so if you have some really great champions in your legislature, you might be able to get direct funding to do things like create a seed fund for your state in non profit seed funds. We've seen do a lot of great work trying to de risk deep techno technologies that don't lend themselves quite as well immediately to that kind of typical 7 year get a you know, 10x ROI type of return that private VCs might be looking for for more of a software company. So again those nonprofit or public support is very popular. See lots of interesting ways that joint industry and university R D is being supported at the state level as well. And then in addition to that direct state funding, see a lot of programs being created at the state level that can fund different types of non profit work. Wisconsin Economic Development Corporation has a very cool kind of state version of EDAs built to scale where they provide it's less funding but they provide great and important support to different types of entrepreneur support organizations around the state. Again, Missouri has that program that's funding creative manufacturing initiatives that they've supported over the past few years. You see a lot of SBIR matching programs of course and phase zero assistance and all sorts of great creative programs out there. I mean Stacey, definitely take your point that a lot of times the federal government is more willing to put in money when there's not that much of a match. But when you think about all the variety of the state governments out there, there are just so many different types of initiatives depending on the state's needs and kind of who can end up being convinced to become a champion.

Yeah, it's different with the state, it's just more of a feeling of boots on the ground.

Right.

And, and we have an SBIR matching program as well, which is really great and very, it's very like high touch. I mean, all these ecosystems are high touch. But that's really great. Jen, a question to you came in from the audience. I mean, it's not directly to you, but I'm going to push it to you. What happens when the government, when there's a continuing resolution or when there's a government shutdown? Have agencies received the approved 2024 budgets yet? So what happens if you're setting up your whole life, maybe you got selected for an award and then it's like.

Oh, does it come?

Yes. Well, you know, everybody just crossed their fingers that Congress passes a full budget in the next month or two here. But yes, SBA is like all the other agencies under a continuing resolution right now, which means we do not have our full FY2024 budget. I will say the budget process is complicated, but I will say even in the event of a shutdown or other kind of hairy budget situation, there are some agencies that could be funded. So just to say that a shutdown isn't necessarily always like all or nothing, there are also programs that are funded out of different kind of budget without getting too wonky about it. So some of it is kind of one year money versus two year money versus some budgets continue even in the event of a shutdown. For example, like a lot of our disaster assistance, for example, is separate from the kind of day to day work. So mostly just have faith in government and that they will. We will figure it out eventually and hopefully, you know, we can continue all of the great momentum that is happening now around a lot of these programs. But yeah, I'm rooting for a full budget just like everybody else.

For sure. I think that was a great question. And just to sort of summarize what they said, you hope for a good budget, but a lot of things continue even though in the newspaper they call it a shutdown. It's not that that simple. So I guess some key takeaways, I'm going to wrap it up here because we're at the 1 minute mark. Thank you all so much for showing up today and sharing your stories. I think the key takeaways are is keep looking at the federal grants opportunities. There's some that are still open, there's many, many vehicles that are open. There's new instruments, there's strategic capital, there's this and that. That build a top to bottom ecosystem. Include the bigs, include the smalls, make sure it's self sustainable, make sure it's aligned with your state goals, leverages, leverage your small business development center, your local SBA offices and then learn to communicate clearly and what we sometimes just call managing upwards. Right. So speaking to legislatures, speaking to people who are can be your champion at the state level. You may even wind up with a line item in budget and, and you know, keep, keep going with that for, for quite a while while you build something self sustainable. Any, any last thoughts folks?

Wonderful recap, Stacy. That's great.

Thank you.

Just watch out. You'll have to write reports. Another reason why you need company. There's a lot of report writing.

You.

All right? Thank you all. We're at the, we're at the 4 o' clock hour.

Thank you, Stacey.

All right, thank you, Stacy, Jason, Jen and Tony. Let's give our panel an emoji or gift round of applause. All right everyone, we're at the end of our time for day one programming of the third annual SBA Innovation Ecosystem. A huge shout out to everyone who used the hashtag ESL Summit 2023 and see the future. This is the end of my time with you today. It has been my privilege to fellowship with you all and I will see you tomorrow. We're going to take a very quick break and when we come back at 4:05pm Eastern, our acting Deputy Associate Administrator Jennifer Shih and our Director of Ecosystems, Brittany Sickler will close us out.