To support business incubation in academic settings.

August 2, 2001

Mr. KENNEDY (for himself, Mr. DEWINE, Mr. DASCHLE, Ms. SNOWE, Mr. DURBIN, Mr. CORZINE, Ms. STABENOW, Mr. BAUCUS, Mr. BINGAMAN, Mr. LIEBERMAN, Ms. LANDRIEU, Mr. JOHNSON, and Mr. CONRAD) introduced the following bill; which was read twice and referred to the Committee on Health, Education, Labor, and Pensions

To support business incubation in academic settings.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE; FINDINGS.

(a) SHORT TITLE- This Act may be cited as the `Linking Educators and Developing Entrepreneurs for Reaching Success Act of 2001'.

(b) FINDINGS- Congress makes the following findings:

(1) Business incubators housed in academic settings provide unique educational opportunities for students, provide entrepreneurs with enhanced access to a skilled workforce, and bring a wealth of resources to business, academia, and communities.

(2) Academic affiliated incubators bridge the missions of academic institutions by bringing together education, economic development, and technology commercialization efforts.

(3) Studies have shown that incubator tenant companies have an average success rate of 87 percent, and 90 percent for technology-based incubator tenant companies. These success rates are dramatically higher than the success rates for companies in the general economy.

(4) Incubator companies are also more likely to remain in the same communities as they grow and to provide high paying jobs and benefits to their employees.

(5) Business incubators help academic institutions contribute to local goals of sustaining economic development in their surrounding communities.

(6) Education in entrepreneurship and other business formation skills is essential to business success and sustainable economic development.

SEC. 2. PURPOSE.

The purpose of this Act is to encourage entrepreneurship by increasing the role for academia in entrepreneurship by providing space and expertise in an academic setting to house and support new and emerging small businesses.

SEC. 3. DEFINITIONS.

In this Act:

(1) DEGREE-GRANTING INSTITUTION- The term `degree-granting institution' means an institution of higher education, as defined in section 101 of the Higher Education Act of 1965 (20 U.S.C. 1001), that awards an associate or baccalaureate degree.

(2) INCUBATOR- The term `incubator' means an entity affiliated with or housed in a degree-granting institution that provides space and coordinated and specialized services to entrepreneurial businesses which meet selected criteria during the businesses' startup phase, including providing services such as shared office space and services, access to equipment, access to telecommunications and technology services, flexible leases, specialized management assistance, access to financing, and other coordinated business or technical support services.

(3) SECRETARY- The term `Secretary' means the Secretary of Education.

SEC. 4. PROGRAM AUTHORIZED.

(a) IN GENERAL- The Secretary is authorized to support the establishment and development of incubators.

(b) ALLOCATION OF FUNDS- From the amount appropriated under section 9, the Secretary--

(1) shall reserve 80 percent of the amount to--

(A) make awards, on a competitive basis, in amounts of $500,000 to $750,000, to help acquire or renovate space for incubators; and

(B) make awards, on a competitive basis, in amounts of $50,000 to $150,000, for developing curricula, providing services, or providing programming for entrepreneurs housed in an incubator;

(2) shall reserve 10 percent of the amount to make awards, on a competitive basis, in amounts of $50,000 to $150,000, for feasibility studies for determining the need for or siting of incubators; and

(3) shall reserve 10 percent for research regarding best practices for incubator programs, including the development of a benchmarking system based on uniform measures, and for dissemination of information regarding such practices.

(c) CONTRACTS- The Secretary is authorized to contract with organizations with expertise in business incubation practices for the purposes of carrying out subsection (b)(3).

(d) RECIPIENTS- The Secretary shall make an award--

(1) described in subsection (b)(1) to a nonprofit entity that has a strong affiliation with a degree-granting institution and manages or provides technical assistance to the degree-granting institution's affiliated incubator, or if no nonprofit entity manages or provides technical assistance to the incubator, to the degree-granting institution managing the incubator; and

(2) described in subsection (b)(2) to a degree-granting institution, or a nonprofit municipality, city, township, or community development organization.

SEC. 5. USES OF FUNDS.

Funds awarded under section 4(b)(1)(B) may be used for--

(1) curriculum, training, or technical assistance developed by academic faculty with participation from entrepreneurship experts and local government leaders;

(2) programming that contributes to a coordinated set of business assistance tools, such as developing management teams, providing workforce development, forming strategic alliances, developing capital formation networks, and developing customized plans to help entrepreneurs meet the challenges of doing business in their specific communities; and

(3) hiring staff to coordinate the activities described in paragraph (1) or (2) or for curriculum development.

SEC. 6. APPLICATIONS.

(a) IN GENERAL- Each entity desiring assistance under this Act shall submit an application to the Secretary at such time, in such manner, and accompanied by such information as the Secretary may require.

(b) CONTENTS- Each application shall contain an assurance that the activities to be assisted--

(1) have the support of the municipality, city, or township in which the incubator is housed or proposed to be housed; and

(2) are consistent with the local economic development or strategic master plan.

(c) PRIORITY- The Secretary shall give priority to funding applications under this Act that provide strong educational opportunities to students in entrepreneurship, and that require significant collaboration between businesses, academia, and local government and economic development leaders.

(d) CONSIDERATION-

(1) IN GENERAL- The Secretary may give consideration to funding applications under this Act that support--

(A) the building of new incubators;

(B) incubators located in economically distressed areas;

(C) incubators with successful graduation rates for tenant companies;

(D) incubators that have shown demonstrable economic benefits in their surrounding communities; or

(E) incubators that work with faculty entrepreneurs or university-based research.

(2) DEFINITION OF CONSIDERATION- In this subsection the term `consideration' means thought and does not mean priority.

SEC. 7. MATCHING FUNDS.

Each entity receiving Federal assistance under section 4(b)(1) shall contribute matching funds, in an amount equal to the amount of Federal assistance received under this Act, toward the costs of the activities assisted under this Act.

SEC. 8. REPORT.

The Secretary, at the end of the third year for which assistance is provided under this Act, shall prepare and submit to Congress a report that--

(1) describes the most effective or innovative additions to curricula developed under this Act;

(2) contains a comparison of small business survival rates for small businesses that started up in incubators versus small businesses that did not so start;

(3) describes factors leading to success of incubator businesses (if any);

(4) describes the best role for degree-granting institutions in business incubation; and

(5) contains a comparison of academic-affiliated incubators of specific missions and ages supported under this Act with incubators with similar missions and ages that are not supported under this Act.

SEC. 9. AUTHORIZATION OF APPROPRIATIONS.

There are authorized to be appropriated to carry out this Act $20,000,000 for each of the fiscal years 2002, 2003, and 2004.

END