What contenders in the $500M Tech Hubs race can learn from the past

By Christopher Wink

Back in 2013, a Senate subcommittee slammed a locally led innovation cluster as showing “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 those 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 a 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, who was a bit player for the previous program, is taking a leading role in this one, corralling Philadelphia’s precision medicine coalition. 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?’”

Its 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 $2 trillion between a trio of spending bills signed by President Biden, the American government has forestalled recession and stoked inflation with spending. (By one measure, U.S. national debt has essentially doubled since 2015.) 

The feds also hope to reshape the American economy, combat climate change, reshore manufacturing and reclaim supremacy in an array of advanced technologies. 

One outcome of Biden’s spending bills is this Tech Hubs effort administered by the federal Commerce Department’s Economic Development Administration. Back in the fall, the feds designated just under three dozen “Tech Hubs” out of 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 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.”

Precision medicine is something like the intersection of technology, life sciences and health  care – all areas where Philadelphia can credibly claim leadership. The field targets individualized care, like a patient’s specific cancer cells or specialized blood transfusions.

It mixes advanced research with manufacturing and technology, along with a skilled workforce – the stuff of policymaking dreams.

“Philadelphia is the region for this because a lot of these medicines were innovated here,” said Kelvin H. Lee, director of the National Institute For Innovation In Manufacturing Biopharmaceuticals. He’s another of the Philadelphia coalition members.

Side benefit: Lots of people working on a single focus

A criticism of government-led economic strategies like these is that they require a surfeit of priorities to gain sufficient political backing.

In the case of this Tech Hubs program, a comparatively petite half a billion dollars is meant to re-shore advanced manufacturing, boost jobs, address racial wealth inequality and coalesce regional coalitions. Planning meetings for the Baltimore bid were a who’s who of that region’s economic and workforce conversation, with a wide range of priorities. Similar scenes took place around the country. Can leaders balance many voices within a singular focus?

Past federal economic funding programs went the other way, too many priorities tightly guarded by too few institutions. This time around, Green argues, at least in the Philadelphia case, it’s the opposite: a focused proposal informed by a credible mix of influence from investors, employers, universities and – wait for it – people. You know, a workforce.

“That ecosystem metaphor may be 30 years old, but it has gained some steam again the last 10 years,” Green said. “These initiatives are easy to only happen at the big institutional level because these are complicated processes that require a lot of dedicated staff and a whole lot of resources.”

But, he added, we need many perspectives brought together to advance precision medicine. It’s important work, not just for narrow, local economic gains but for widespread health outcomes that the technologies promise.

“Because of the cost of manufacturing, the cost of the access to these medicines is relatively high,” said NIIMBL’s Lee. “We think there’s a real opportunity…to make sure [these products] are affordable and accessible.”

Christopher Wink is the cofounder and chief executive officer of Technical.ly, where this story first appeared.