December 4, 2018

Regional Innovation Strategies: EDA invests $5m to expand access to early-stage risk capital coast-to-coast and everywhere in between

December 4, 2018

EDA’s Office of Innovation and Entrepreneurship just announced its newest Regional Innovation Strategies (RIS) program Seed Fund Support (SFS) awards. EDA is adding these 16 awards, along with 24 new i6 Challenge awards, to its existing portfolio of 140 investments that have created over 8,200 jobs and $1 billion in follow-on capital during the program’s first four years of operation.

The annual SFS competition provides funding for technical assistance and operational costs that support the planning, formation, launch, or scale of cluster-based seed funds that will invest their capital in innovation-based startups with a potential for high growth. The 2018 cohort of SFS grantees was selected from 73 applicants who responded to the competitive 2018 RIS Notice of Funding Opportunity, and represent 15 different states from coast-to-coast and in the heartland. SFS awards in Massachusetts, Michigan, Mississippi, and Virginia bring the total number of states and territories represented in the portfolio to 33. Communities receiving the SFS grant this year have committed over $5.6 million in local match to EDA’s $5 million investment.

Two projects from this year’s cohort aim specifically at qualified Opportunity Zones, aligning innovation-based economic development with a new growth-oriented tax policy enacted as part of the Tax Cuts and Jobs Act. The INVEST Chicago Opportunity Fund seeks to create and provide a sustainable pool of capital to fund early-stage companies in Chicago’s underrepresented and underconnected communities in designated Opportunity Zones. By increasing access to capital for startups and investing in community infrastructure (such as shared offices, incubators and accelerators), the Fund seeks to create new jobs and a replicable model for Opportunity Funds to invest in balanced, synergistic portfolios of startups and real estate. In Pennsylvania, the Greater PHL Opportunity Zones Seed Fund is looking to provide capital, technical assistance, and support to help technology-focused companies grow and commercialize their products, ultimately creating jobs and realizing sustainable economic development in qualified Opportunity Zones.

Aside from Opportunity Zones, this cohort also strongly represents two rapidly innovating sectors: life sciences and agtech. Grantees focused on life sciences—in biotech, healthcare, and beyond—in Arizona, Louisiana, Massachusetts and Michigan are looking to address gaps in early-stage funding between federal funding for R&D and private investment, especially in university-based spinouts. The Louisiana Research Venture Fund and the University of Michigan Monroe-Brown Biomedical Seed Fund are aiming to increase critical early-stage capital and technical assistance to de-risk technologies and keep growing, innovative startups in their regional ecosystems, increasing the potential for local job growth and life sciences technology competitiveness.

In California and West Texas, respectively, the Central Valley Regional Innovation Investment Fund and Hub Tech aim to expand the availability of critical early-stage agtech capital. California’s Central Valley Region, which produces a quarter of the nation’s food but is one of its most impoverished regions, lacks access to early-stage funding to further develop its fledgling innovation ecosystem, which is poised to tackle agricultural challenges through new technology. The Central Valley Regional Innovation Investment Fund is looking to encourage more agtech startups to locate their headquarters in the Central Valley to take advantage of proximity to agtech customers and testbeds—and to catalyze regional economic and job growth. In West Texas, where much of the state’s agricultural businesses need innovation to support a growing economy, Hub Tech is looking to create a $2-10 million fund to support early-stage agtech startups to commercialize technology and ultimately to result in new businesses and job creation.

EDA is excited to support this new cohort of SFS grantees as they make more capital available to startups in more regions and as they enable America’s entrepreneurs to drive innovation, business growth, and job creation.