Today is my last day running the Utah Science Technology and Research Initiative (USTAR), and it is a bittersweet day.
While I am exceptionally proud of what our team at USTAR has accomplished—and excited for my new adventure in the private sector—I hope we will not lose sight of the fact that technology-based economic development efforts in our state are more important than ever to ensuring long-term economic resiliency and growth.
Technology-based economic development (TBED) programs seek to grow the economy through innovation, developing and commercializing new technologies. Creating new technologies leads to the creation of new companies, new jobs, and even whole new sectors.
In essence, TBED programs do not seek to get a bigger slice of an existing pie but seek to create whole new pies. Think of how many current jobs in Utah have resulted from the development of technologies that scarcely existed 10 or 20 years ago.
When we look at Utah’s history of innovation, and Utah’s current economy, it is easy to become overconfident. Utah's economy is consistently ranked as one of the strongest in the United States. Forbes has rated Utah as the best state for business for six of the last nine years. We’ve been ranked the number one state for entrepreneurs. Unemployment is low. Our exports are growing.
However, we cannot afford to become complacent or let Utah’s TBED programs fall into limbo. The danger of living in a fast-moving innovation economy is that the disrupters can soon become the disrupted.
According to the Advanced Manufacturing National Program Office, at least one half of America’s economic growth can be attributed to scientific and technological innovation. Hence, maintaining a strategic focus in Utah’s deep technology and science clusters is key to long-term prosperity. New deep tech innovators, inventors, and entrepreneurs must be sought out and supported to keep the tech development pipeline full. We must encourage continuous innovation and maintain a healthy innovation ecosystem.
USTAR has made a demonstrable impact in supporting Utah’s deep tech innovators. As a result of USTAR’s new, targeted programs created by the Legislature in 2016, Utah is seeing a massive influx of follow-on investment for its early-stage entrepreneurs.
In the last two years, USTAR-supported companies and projects have received $152.4 million in follow-on funding. This means that for every dollar spent by USTAR through our new programs, our client companies and projects have received an average of $4.60 in follow-on funding, a more than 4.5x return.
Further, by focusing globally-relevant deep tech sectors such as life sciences, aerospace/defense, energy/cleantech, and automation/robotics, USTAR is supporting the diversification of Utah’s technology economy.
For example, in aerospace/defense, one of the only sectors in Utah that did not see negative growth during the Great Recession, USTAR’s impact was highlighted at the Defense TechConnect conference held in October of 2018.
Defense TechConnect provides early-stage companies with a high potential to positively impact the warfighter and national security with the opportunity to “pitch” their technologies to leaders across the science and technology agencies within the Department of Defense, Department of Energy, and NASA.
Of the 101 global companies who were invited to attend, six were from Utah. Only the (much larger) states of California, Texas, and Florida had more companies represented at the conference than Utah.
Five of the six Utah companies invited to the conference are part of USTAR’s portfolio of early-stage companies. The representation at TechConnect highlights how targeted, relatively small-scale government can magnify Utah’s spirit of entrepreneurship and innovation, fostering growth that might otherwise not occur in the sector.
As Utah seeks to build on its economic success and vitality of the past decade, it must continue to look toward strategic growth decisions that are focused on long-term outcomes, and not short-term economic performance.
A study in the Harvard Business Review finds that the most successful private-sector companies continuously “…develop new markets and invest in enlarging their asset bases. These companies also judiciously increase spending on R&D.” This principle is also true for state economies. Forty-six U.S. states, and nearly every advanced economy in the world, have TBED programs similar to USTAR.
As an independent analysis of Utah’s TBED efforts by TEConomy Partners, LLC, recently concluded, “Eliminating USTAR would send a strong message that the State of Utah is retreating from its long-term commitment and investment to the growth of its research- and technology-based sectors at a time when states like Wyoming, Virginia, and Massachusetts are increasing investments in theirs.”
A potential elimination or diminishment of Utah’s TBED efforts through USTAR would likely impact statewide start-up activity and follow-on funding for early-stage innovators in Utah’s deep tech sectors, making our state less competitive.
USTAR’s current programs are performing as designed and are showing results far beyond what was projected in the prospectus by SRI International that guided USTAR’s legislative overhaul in 2016. In fact, USTAR has met its five-year performance metrics in just two years in follow-on funding, job creation, and commercialized sales by companies supported through USTAR’s programs.
USTAR’s momentum is promising and must be allowed to continue.