What the $500M Tech Hubs race can learn from the past
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Back in 2013, a Senate subcommittee slammed a locally-led innovation cluster as having “no measurable benefit” from $55 million in federal funding.
It was part of an Obama-era Department of Energy program focused on identifying and commercializing energy efficiency in buildings, which are still responsible for 40% of carbon emissions in the United States. One of the longest-running locations for research was at Philadelphia’s Navy Yard. It had at least three names over its tenure, one of which was the Energy Efficient Buildings Hub.
The subcommittee report was unflinching: “The Hub was more focused on the economic development of the Philadelphia area rather than developing a national program to improve the energy efficiency of commercial and residential buildings across the United States.”
Today, that city’s isolated former shipbuilding zone is a growing business center, but tens of millions of dollars failed to generate breakthrough innovations. It’s a cautionary tale for a new generation of federal funding into place-based technology hubs.
By early summer, a coalition representing Baltimore and another multi-state group centered in Philadelphia will know if they’re among a handful of regions to be awarded between $50 million and $75 million to advance their capacity in some advanced technology. It’s the centerpiece of the federal Regional Technology and Innovation Hubs program.
What’s different this time?
The energy-efficiency program from a decade ago was focused on experimental inventions, led by academia and centralized inside an institution. This Tech Hubs initiative is focused on already proven technologies and taking “an ecosystem approach.” So says Tony Green, the chief scientific officer at Pennsylvania’s state-backed investment firm Ben Franklin Technology Partners.
Green was a bit player for that old program and is taking a leading role in this one, corralling Philadelphia’s precision medicine bid. Each of the 31 regional bids have a slightly different economic focus.
“This is not academic,” Green said, “but about how do you get a product out the door?”
It’s outcome will be telling. One of the biggest economic stories of the moment is the amount of federal funding splashing around the United States. Can government-led industrial policy accelerate innovations? Or is it doomed to misalign with market trends?
Funding tech hubs for ‘jobs and onshoring’
Starting with $4.6 trillion in pandemic response initiated under President Trump and continued with another two trillion dollars between a trio of spending bills signed by President Biden, the American government has forestalled recession and stoked inflation with spending. (By one measure, US national debt has essentially doubled since 2015.)
The feds also hope to reshape the American economy, combating climate change, reshoring manufacturing and maintaining supremacy in an array of advanced technologies.
One of the programs is this Tech Hubs effort administered by the federal Commerce Department’s US Economic Development Administration. Back in the fall, the feds designated just under three dozen “Tech Hubs” from more than 300 bids from around the country. Within months, 5 to 10 regional groups are expected to be awarded tens of millions of federal dollars each.
“This can change a whole lot for a region,” said Zakiyyah Ali, the Tech Council of Delaware executive director and a workforce development veteran. She is part of Green’s precision medicine bid that deftly incorporated four states, including New Jersey and Maryland.
Like the Baltimore bid, leaders across jurisdictions are chipping in for a chance at public investment and the economic gains they hope will follow.
"It's about jobs and onshoring," Green said "We have over 70 partners and five projects … focused on precision medicine.”
