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What city leaders need to know about the EDA Tech Hubs program

Applications for the $500 million initial phase of the Tech Hubs program have an Aug. 15 deadline. The best unifying message? The strengths of your people.

This rendering of Philadelphia’s Navy Yard master plan was timed with past major federal government industrial policy. Boosters are among those bidding for the EDA Tech Hubs program. (Courtesy image)

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Remote work in far-flung places may serve you well. But it just won’t do for big economic investments.

The biggest federal government investment in emerging technologies in generations is the CHIPS Act, which includes the US Economic Development Administration’s Tech Hubs program, announced earlier this year. This is quietly playing out in wonkish policy circles but will have lasting impact for employers and economic development strategies for years.

“If we’re going to restore production in the US and simultaneously decarbonize the economy, that changes an enormous amount of products, processes and policies,” said Bruce Katz, the longtime urban policy wonk who is now director at Drexel University’s Nowak Metro Finance Lab. “This Tech Hub program signals how the Biden Administration and bipartisan members in Congress think about industrial policy.”

The phase-one bidding process opened in May and closes Aug. 15, and the feds are prioritizing integrated and collaborative regional economies. From an initial $500 million in funding, five to 10 regional groups are expected to be awarded $50 million to $75 million to advance their capacity in advanced technologies, according to the EDA.

Each region’s so-called “consortium” must include an institute of higher education, a state or local government entity, private sector firms, economic development groups and workforce representation. This may sound a bit like the 2017-18 Amazon HQ2 bonanza, but this trade is clearer: Regions seek a unifying principle for their economic future, and the federal government invests in rich and vibrant tech ecosystems.

The Tech Hubs application process gives a tidy list of favored sectors the federal government is betting on. Semiconductors and machine learning are obvious examples, though biotechnology and advanced computing are included, too.

Today’s effective, if overused, “ecosystem” metaphor to describe economic growth is baked in. Institutions and corporate giants are necessary but an ecosystem with only apex predators is no ecosystem at all. Setting aside AI fears, an economy thrives only at the behest of people, who still like meetups, bicycle trails and local tech news sites. More clearly, effective research, entrepreneurship and service providers help round out that ecosystem.

Influential research points out that innovation takes place at “structural holes” — the spaces outside of big institutions, not only within them. Any modern economic development leader worth their paycheck understands this. Hence, the bids most likely to win a slice of this EDA Tech Hub pie will effectively thread together disparate parts: big demanding institutions, highly-distributed tech communities and widespread interests.

“Building an ecosystem relies on the interplay of globally competitive firms, startups, scale-ups, an entrepreneurial focus, applied research, workforce development and logistics infrastructure,” Katz said. He advises bidders to reflect often on the application’s documentation.

“Take the scoring criteria seriously,” he said. The program calls for regions to identify a specialization with an advanced technology readiness level, or TRL in the jargon. Bigger regions will help. Serious research capacity will be needed, but university tech transfer officers and traditional economic development chiefs can’t do it on their own.

“View it as part of a broader market strategy, and involve a network of stakeholders,” Katz said. “The clustering strategy is because it has to be done this way, not just for political reasons.”

Two easy ways for regions to get their bids wrong: get dominated by big institutions or be distracted by narrow priorities. What’s a unifying message? People, not companies.

By the fall, two dozen regions will learn if they will get federal distinction and tens of millions of dollars to advance their specialization.

“Winning an application is not the end of the process; it’s the beginning,” Katz said. “It’s part of a broader strategy for global competitiveness.”

Companies: Economic Development Administration
Series: Builders

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