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Nevada looking hard at copying Utah business, job-creation model

By ThisIsReno

By Andrew Doughman, Nevada News Bureau: Ted McAleer says he’s got a silver bullet for creating jobs in the Silver State.

McAleer is with a unique University of Utah-based jobs research program, and lately he’s become the toast of Nevada. He wowed public officials when he spoke at the Nevada 2.0 economic development conference in Las Vegas. Now many of those same public servants have gone to Carson City to talk about the unique Utah program that uses the business community, universities, local agencies – and millions of tax dollars – to create high paying jobs.

Senate Democrats could introduce a jobs bill this week based McAleer’s model.

Model could provide jobs for Nevadans

The basic idea in Utah was to build research teams at universities that could turn a small investment into millions of dollars in federal research grants.

It’s called Utah Science Technology and Research Initiative, or USTAR.

Steven Wells, president of the Desert Research Institute, explained it like this: “Let’s focus on three or four key areas that we can be really competitive in and then bring in top flight faculty to work with current faculty.”

From there, the “top flight” team would develop an idea into a marketable product.

Often, these discoveries languish on dusty shelves. So the state would help connect venture capitalists with researchers to bridge the so-called “valley of death” between invention and innovation.

Entrepreneurs in the tech market would then try to develop a marketable product. With venture capital and intellectual property centered in one area, the areas around Reno or Las Vegas could become the next Silicon Valley.

This would diversify Nevada’s economy while also providing jobs and creating or expanding Nevada businesses.

The initiative idea does all that — on paper at least.

Proposal might require new spending

But copying Utah’s model and applying it in Nevada could also mean new spending. Indeed, in Utah the legislature signed off on giving $179 million to the effort.

Gov. Brian Sandoval, however, is proposing $163 million in cuts to the higher education budget.

So where’s the money?

“We’re looking at what necessary funding needs to be in place,” said Senate Majority Leader Steven Horsford, D-Las Vegas, who chairs the Senate Finance committee. “We want to work with the Governor to find the right funding mechanism.”

Nobody has yet defined a specific funding source.

But Robert Lang of Brookings Mountain West, who had invited McAleer to a Vegas conference, told a Senate committee that private investment money is already in the state if the state can initially supply funding.

“We have a lot of venture capital specialty in the state in places like Incline Village,” he said. “Incline Village is a colony of ex-Silicon Valley retirees. Those folks are looking to do good here as well and invest in the Nevada economy.”

A “no-cost stimulus”

In some form, what Utah has embraced has been going on for decades throughout the country.

Robert E. Litan of the Kauffman Foundation explains in the current issue of The American Interest that commercialized university research led to barcodes and the Internet.

He calls commercialization the “no-cost stimulus” available to all states with a major research institution.

He cites two figures: Entrepreneurs launching start-ups have created “virtually all new jobs” in the U.S. economy since 1980. Later, he cites National Science Foundation figures that $90 billion in federal research grants flowed through U.S. universities during 2009.

Large public research universities like the University of Washington were able to net $800 million of that money, more than any other American public university.

That’s compared to $63 million at the University of Nevada, Reno, in the same year.

Building on what Nevada has

Legislators rushing to use a USTAR model may note that Nevada already commercializes research.

For example, UNR has a Technology Transfer Office that takes intellectual property developed at the university and transfers it to the private sector.

“Essentially what happens in tech transfer is that the faculty do the research that they want to do,” said Ryan Heck, director of the transfer office. “It’s not necessarily tied to anything that’s industrially relevant.”

Faculty direct their own research. Some of it ends up at Heck’s office. He then tries to market it as best he can. That’s led to about four or five start-up companies during the past decade.

But that’s not exactly a USTAR-like model. Could Utah’s plan take root in Nevada?

Desert Research Institute’s Wells says it’s not likely this year.

“I don’t think you can do USTAR with what is being proposed to be cut,” Wells said. “You have to think about, if you’re trying to lure people in … why would they want to come here if they know that the investment in higher education is going to be cut?”

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