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A new report details how Pennsylvania's innovation economy has been on the decline in recent years, which could open an opportunity for Delaware to capitalize in economic development. | DBT PHOTO BY JACOB OWENS[/caption]
For many generations now, Delaware, and especially the greater Wilmington area, has remained in the shadow of its bigger, northern neighbor.
It’s common for northern Delawareans to cross the state line for work at a life or material sciences company – it’s what brought my family here more than 30 years ago.
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Jacob OwensEditorDelaware Business Times[/caption]
But while we may draw our professional sports allegiances with the Philly faithful, all is fair in love, war and economic development. Jobs, and what side of the line they are on, matter.
As Wilmington has enjoyed economic and social revitalization in recent years, it has begun to shape a bit of its own identity around small molecule therapeutics, fintech, hydrogen production, and more. It’s produced promising companies like Prelude Therapeutics, Marlette Funding and Versogen, among others.
But it appears that Delaware has a unique opportunity to pitch its story to the industry as cracks have begun to show in the “Cellicon Valley” of the Delaware Valley.
A new report by the Brookings Institute characterizes the Keystone State’s tech and innovation economy as “anemic,” “lackluster” and “adrift,” falling woefully short from economic development rates for similarly sized and positioned states.
While it will always be an apples-to-oranges comparison with Pennsylvania, the findings and recommendations of the Brookings report caught my attention: These are all things that Delaware can do and, frankly, may be able to do better than our neighbor.
In essence, Brookings faults Pennsylvania leaders with taking their eye off the ball and assuming that momentum begun 20 years ago would continue unabated. The reality is far from that truth. Tech firms are growing about 50% slower than the national average and creating a full job less than the average.
One of the biggest reasons for that decline has been the disinvestment by Pennsylvania in innovation after the Great Recession and amid political debates in Harrisburg. While $140 million was allotted for investment in 2003, that has fallen to about $40 million this year when accounting for inflation.
Most of Pennsylvania’s innovation funding flows through the Ben Franklin Technology Partners, a state program that invests in early-stage companies and mentors them to success. Four such programs operate around the Keystone State serving different regions, with the Southeastern Pennsylvania (SEP) closest to Delaware investing $8.4 million in 39 companies in 2021.
Delaware does not currently have such a state-backed venture capital program, and access to startup funding is often the biggest hurdle identified by entrepreneurs trying to grow in-state. Although there is always some risk involved with early-stage investment, other states have successfully employed similar programs including Maryland, Massachusetts and Ohio.
With Delaware staring down a nearly $1 billion surplus next fiscal year, it could be high time for the Carney administration to consider creating such a program, even if starting small at $10 million or $20 million a year. Give researchers in Delaware and in neighboring states the opportunity to tap into venture capital funds and an innovation ecosystem while also taking advantage of our favorable cost of living.
That fact is only emphasized by recent Census data showing Delaware gained residents over the past year while Pennsylvania, New Jersey and Maryland all lost residents. We’re increasingly hearing of entrepreneurs and professionals landing here for the beneficial geography and tax climate, and starting their own companies.
Another takeaway from the Brookings’ report that Gov. John Carney will be especially excited to see was the perceived power of the bully pulpit.
“Pennsylvania state government has gone adrift on the work of shaping a compelling, forceful vision of innovation’s importance; communicating that; and using it to marshal its assets,” the report’s authors wrote, noting that reports have not been updated annually and promotion of opportunities was infrequent.
They recommend incoming Pennsylvania Gov. Josh Shapiro make innovation a key part of his economic platform and to convene a board of industry leaders and academics to help shape the state’s strategy. Sound familiar?
Carney took a similar tactic with the Delaware Business Roundtable’s 2016 “Ready in Six” report, forming the public-private Delaware Prosperity Partnership with industry leaders soon after he took office, which has paid major dividends in the five years since. The governor has continued to remain focused on job creation as his top priority, recently telling me that it helps to fix many of the other social issues that persist when jobs dry up.
There is more that Delaware could do to harness federal investment, both through traditional research funding streams as well as recently approved bills for semiconductors, hydrogen and more; make innovation more accessible for underrepresented communities; bridge gaps between metro and rural areas, and more, according to the Brookings report.
We may not be able to match the financial strength of our much larger northern neighbor, but Delaware has always been adept at being quicker and nimbler in its ability to process changes. It appears that Delaware has a rare opportunity to poach some prospects, will we take it?
