In This Issue

• Spotlight: EDA’s Office of Innovation and Entrepreneurship: Advancing American Business through the Regional Innovation Strategies Program
• Success Story: i6 Challenge Awardee mHub, Driving the Chicago Region’s Hardware Innovation Sector
• Highlight: Port of Brownsville in Texas Receives $1.8 Million to Make Infrastructure Improvements that are Expected to Help Create Over 700 Manufacturing-Related Jobs

Spotlight: EDA’s Office of Innovation and Entrepreneurship: Advancing American Business through the Regional Innovation Strategies Program

EDA’s Office of Innovation and Entrepreneurship (OIE) leads the Regional Innovation Strategies (RIS) Program that builds regional capacity by translating innovations into jobs through proof-of-concept and commercialization assistance for innovators and entrepreneurs, and through operational support for organizations that provide essential early-stage risk capital to innovators and entrepreneurs.

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There are two funding opportunities through the RIS program. The i6 Challenge supports the creation of centers for innovation and entrepreneurship that increase the rate at which innovations, ideas, intellectual property, and research are translated into products, services, viable companies, and jobs. The second is the Seed Fund Support (SFS) Program, which provides funding for technical assistance and operational support to create, launch, or expand equity-based, cluster-focused seed funds that invest risk capital into high-growth potential startups. SFS awardees are working to grow new venture funds, support the expansion of angel investor networks, and even educate new investors what it takes to invest in high-tech, high-growth startups.

On December 4, Secretary of Commerce Wilbur Ross announced that 40 organizations — including nonprofits, institutions of higher education, and entrepreneurship-focused organizations from 28 states and two territories states received $21 million to create and expand cluster-focused proof-of-concept and commercialization programs, and early-stage seed fund support under the 2018 RIS program competition. Read the announcement on the EDA press page.

The pilot fund was successful, making $865,000 worth of investments in seven early-stage companies and creating and retaining 156 jobs. It proved that CEI’s mission-driven model to create quality jobs, environmentally sustainable businesses, and shared prosperity could create viable investment returns for growth-focused investors.

In addition to funding natural-resource businesses in rural areas, CEI created means of supporting business and continuing the mission of the fund. They built a menu of statewide business technical assistance options to support fund clients, which leverages existing resources to help businesses expand and develop future strategies. They have also developed a curriculum on using equity financing and are offering training to potential clients in the natural resources sector. With lessons from this first seed fund, CEI is now fundraising for their next seed fund, while continuing to cultivate a pipeline of potential investors.

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Success Story: i6 Challenge Awardee mHub, Driving the Chicago Region’s Hardware Innovation Sector

In 2016, EDA awarded an i6 Challenge grant to mHub, Chicago, to help them realize their vision of becoming a full-scale technology incubator with a primary focus on physical product development and hardware innovation for manufacturers and entrepreneurs.

The $500,000 EDA i6 investment was matched by $759,196 in cash, in-kind equipment, and labor, and gave mHub the capacity to expand across the Chicagoland area’s manufacturing sector.

mHub is achieving its goals by building out its network of maker spaces and fabrication labs to foster an ecosystem that enables manufacturers to develop technical solutions to their product and process challenges. Specifically, the goals of this EDA project include facilitating entrepreneurship, collaboration, and innovation; educating diverse populations in manufacturing; positioning mHub as “the” manufacturing innovation incubator for the region; and supporting members with resources to scale their businesses. These goals are helping their members along the continuum of product development, from concept to scale into the market.

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Highlight: How Seed Funding is Helping Americans Invest in Rural Innovation: Food, Farms and Fisheries

Coastal Enterprises, Inc. (CEI), a Maine-based, private non-profit Community Development Corporation and Community Development Finance Institution received EDA RIS Seed Fund Support in 2015 to drive investments in food, farm, fisheries, and bio-based businesses. The fund’s purpose is broader than the usual venture fund. This is a social venture fund that provides needed capital for rural businesses and creates jobs for rural economies. The fund generates a return for investors, adds value to Maine-grown products, and leverages powerful market-level change in the food system and other natural resource-based economies.

CEI has a 40-year history of significant impacts on the Maine economy and is responsible for over $1.30 billion in business investments across the state. However, until recently, most of these investments were made as traditional small business loans through their revolving loan fund, and other debt investment vehicles. Through this experience, CEI staff saw an opportunity to better support some of the higher-growth natural resource businesses that were not a fit for regular business loans. With a 2015 Seed Fund Support grant from EDA, and in partnership with the Maine Center for Business and Economic Research, CEI studied and evaluated a number of equity investment models that might work to support their target business profile. With this research in place, CEI launched a pilot program with a small, discrete group of funders and investors to test an equity-based seed fund model before taking it public.

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