II

Calendar No. 429

107TH CONGRESS

2D SESSION S. 1335

To support business incubation in academic settings.

IN THE SENATE OF THE UNITED STATES

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, Mr. CONRAD, Mrs.

CLINTON, Mr. CLELAND, Mr. AKAKA, Mr. LEAHY, Mr. JEFFORDS, Ms.

COLLINS, and Mr. HUTCHINSON) introduced the following bill; which was

read twice and referred to the Committee on Health, Education, Labor,

and Pensions

JUNE 20, 2002

Reported by Mr. KENNEDY, with an amendment

[Strike all after the enacting clause and insert the part printed in italic]

A BILL

To support business incubation in academic settings.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE; FINDINGS.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Linking Educators and Developing Entrepreneurs for

6 Reaching Success Act of 2001’’.
2

•S 1335 RS

1 (b) FINDINGS.—Congress makes the following find2 ings:

3 (1) Business incubators housed in academic set4 tings provide unique educational opportunities for

5 students, provide entrepreneurs with enhanced ac6 cess to a skilled workforce, and bring a wealth of re7 sources to business, academia, and communities.

8 (2) Academic affiliated incubators bridge the

9 missions of academic institutions by bringing to10 gether education, economic development, and tech11 nology commercialization efforts.

12 (3) Studies have shown that incubator tenant

13 companies have an average success rate of 87 per14 cent, and 90 percent for technology-based incubator

15 tenant companies. These success rates are dramati16 cally higher than the success rates for companies in

17 the general economy.

18 (4) Incubator companies are also more likely to

19 remain in the same communities as they grow and

20 to provide high paying jobs and benefits to their em21 ployees.

22 (5) Business incubators help academic institu23 tions contribute to local goals of sustaining economic

24 development in their surrounding communities.
3

•S 1335 RS

1 (6) Education in entrepreneurship and other

2 business formation skills is essential to business suc3 cess and sustainable economic development.

4 SEC. 2. PURPOSE.

5 The purpose of this Act is to encourage entrepreneur6 ship by increasing the role for academia in entrepreneur7 ship by providing space and expertise in an academic set8 ting to house and support new and emerging small busi9 nesses.

10 SEC. 3. DEFINITIONS.

11 In this Act:

12 (1) DEGREE-GRANTING INSTITUTION.—The

13 term ‘‘degree-granting institution’’ means an institu14 tion of higher education, as defined in section 101

15 of the Higher Education Act of 1965 (20 U.S.C.

16 1001), that awards an associate or baccalaureate de17 gree.

18 (2) INCUBATOR.—The term ‘‘incubator’’ means

19 an entity affiliated with or housed in a degree-grant20 ing institution that provides space and coordinated

21 and specialized services to entrepreneurial businesses

22 which meet selected criteria during the businesses’

23 startup phase, including providing services such as

24 shared office space and services, access to equip25 ment, access to telecommunications and technology
4

•S 1335 RS

1 services, flexible leases, specialized management as2 sistance, access to financing, and other coordinated

3 business or technical support services.

4 (3) SECRETARY.—The term ‘‘Secretary’’ means

5 the Secretary of Education.

6 SEC. 4. PROGRAM AUTHORIZED.

7 (a) IN GENERAL.—The Secretary is authorized to

8 support the establishment and development of incubators.

9 (b) ALLOCATION OF FUNDS.—From the amount ap10 propriated under section 9, the Secretary—

11 (1) shall reserve 80 percent of the amount to—

12 (A) make awards, on a competitive basis,

13 in amounts of $500,000 to $750,000, to help

14 acquire or renovate space for incubators; and

15 (B) make awards, on a competitive basis,

16 in amounts of $50,000 to $150,000, for devel17 oping curricula, providing services, or providing

18 programming for entrepreneurs housed in an

19 incubator;

20 (2) shall reserve 10 percent of the amount to

21 make awards, on a competitive basis, in amounts of

22 $50,000 to $150,000, for feasibility studies for de23 termining the need for or siting of incubators; and

24 (3) shall reserve 10 percent for research regard25 ing best practices for incubator programs, including
5

•S 1335 RS

1 the development of a benchmarking system based on

2 uniform measures, and for dissemination of informa3 tion regarding such practices.

4 (c) CONTRACTS.—The Secretary is authorized to con5 tract with organizations with expertise in business incuba6 tion practices for the purposes of carrying out subsection

7 (b)(3).

8 (d) RECIPIENTS.—The Secretary shall make an

9 award—

10 (1) described in subsection (b)(1) to a nonprofit

11 entity that has a strong affiliation with a degree12 granting institution and manages or provides tech13 nical assistance to the degree-granting institution’s

14 affiliated incubator, or if no nonprofit entity man15 ages or provides technical assistance to the incu16 bator, to the degree-granting institution managing

17 the incubator; and

18 (2) described in subsection (b)(2) to a degree19 granting institution, or a nonprofit municipality,

20 city, township, or community development organiza21 tion.

22 SEC. 5. USES OF FUNDS.

23 Funds awarded under section 4(b)(1)(B) may be

24 used for—
6

•S 1335 RS

1 (1) curriculum, training, or technical assistance

2 developed by academic faculty with participation

3 from entrepreneurship experts and local government

4 leaders;

5 (2) programming that contributes to a coordi6 nated set of business assistance tools, such as devel7 oping management teams, providing workforce devel8 opment, forming strategic alliances, developing cap9 ital formation networks, and developing customized

10 plans to help entrepreneurs meet the challenges of

11 doing business in their specific communities; and

12 (3) hiring staff to coordinate the activities de13 scribed in paragraph (1) or (2) or for curriculum de14 velopment.

15 SEC. 6. APPLICATIONS.

16 (a) IN GENERAL.—Each entity desiring assistance

17 under this Act shall submit an application to the Secretary

18 at such time, in such manner, and accompanied by such

19 information as the Secretary may require.

20 (b) CONTENTS.—Each application shall contain an

21 assurance that the activities to be assisted—

22 (1) have the support of the municipality, city,

23 or township in which the incubator is housed or pro24 posed to be housed; and
7

•S 1335 RS

1 (2) are consistent with the local economic devel2 opment or strategic master plan.

3 (c) PRIORITY.—The Secretary shall give priority to

4 funding applications under this Act that provide strong

5 educational opportunities to students in entrepreneurship,

6 and that require significant collaboration between busi7 nesses, academia, and local government and economic de8 velopment leaders.

9 (d) CONSIDERATION.—

10 (1) IN GENERAL.—The Secretary may give con11 sideration to funding applications under this Act

12 that support—

13 (A) the building of new incubators;

14 (B) incubators located in economically dis15 tressed areas;

16 (C) incubators with successful graduation

17 rates for tenant companies;

18 (D) incubators that have shown demon19 strable economic benefits in their surrounding

20 communities; or

21 (E) incubators that work with faculty en22 trepreneurs or university-based research.

23 (2) DEFINITION OF CONSIDERATION.—In this

24 subsection the term ‘‘consideration’’ means thought

25 and does not mean priority.
8

•S 1335 RS

1 SEC. 7. MATCHING FUNDS.

2 Each entity receiving Federal assistance under sec3 tion 4(b)(1) shall contribute matching funds, in an

4 amount equal to the amount of Federal assistance received

5 under this Act, toward the costs of the activities assisted

6 under this Act.

7 SEC. 8. REPORT.

8 The Secretary, at the end of the third year for which

9 assistance is provided under this Act, shall prepare and

10 submit to Congress a report that—

11 (1) describes the most effective or innovative

12 additions to curricula developed under this Act;

13 (2) contains a comparison of small business

14 survival rates for small businesses that started up in

15 incubators versus small businesses that did not so

16 start;

17 (3) describes factors leading to success of incu18 bator businesses (if any);

19 (4) describes the best role for degree-granting

20 institutions in business incubation; and

21 (5) contains a comparison of academic-affiliated

22 incubators of specific missions and ages supported

23 under this Act with incubators with similar missions

24 and ages that are not supported under this Act.
9

•S 1335 RS

1 SEC. 9. AUTHORIZATION OF APPROPRIATIONS.

2 There are authorized to be appropriated to carry out

3 this Act $20,000,000 for each of the fiscal years 2002,

4 2003, and 2004.

5 SECTION 1. SHORT TITLE; FINDINGS.

6 (a) SHORT TITLE.—This Act may be cited as the

7 ‘‘Linking Educators and Developing Entrepreneurs for

8 Reaching Success Act of 2001’’.

9 (b) FINDINGS.—Congress makes the following findings:

10 (1) Business incubators housed in academic set11 tings provide unique educational opportunities for

12 students, provide entrepreneurs with enhanced access

13 to a skilled workforce, and bring a wealth of resources

14 to business, academia, and communities.

15 (2) Academic affiliated incubators bridge the

16 missions of academic institutions by bringing together

17 education, economic development, and technology

18 commercialization efforts.

19 (3) Studies have shown that incubator tenant

20 companies have an average success rate of 87 percent,

21 and 90 percent for technology-based incubator tenant

22 companies. These success rates are dramatically high23 er than the success rates for companies in the general

24 economy.

25 (4) Incubator companies are also more likely to

26 remain in the same communities as they grow and to
10

•S 1335 RS

1 provide high paying jobs and benefits to their employ2 ees.

3 (5) Business incubators help academic institu4 tions contribute to local goals of sustaining economic

5 development in their surrounding communities.

6 (6) Education in entrepreneurship and other

7 business formation skills is essential to business suc8 cess and sustainable economic development.

9 SEC. 2. PURPOSE.

10 The purpose of this Act is to encourage entrepreneur11 ship by increasing the role for academia in entrepreneur12 ship by providing space and expertise in an academic set13 ting to house and support new and emerging small busi14 nesses.

15 SEC. 3. DEFINITIONS.

16 In this Act:

17 (1) DEGREE-GRANTING INSTITUTION.—The term

18 ‘‘degree-granting institution’’ means an institution of

19 higher education, as defined in section 101 of the

20 Higher Education Act of 1965 (20 U.S.C. 1001), that

21 awards an associate or baccalaureate degree.

22 (2) INCUBATOR.—The term ‘‘incubator’’ means

23 an entity affiliated with or housed in a degree-grant24 ing institution that provides space and coordinated

25 and specialized services to entrepreneurial businesses
11

•S 1335 RS

1 which meet selected criteria during the businesses’

2 startup phase, including providing services such as

3 shared office space and services, access to equipment,

4 access to telecommunications and technology services,

5 flexible leases, specialized management assistance, ac6 cess to financing, and other coordinated business or

7 technical support services.

8 (3) SECRETARY.—The term ‘‘Secretary’’ means

9 the Secretary of Education.

10 SEC. 4. PROGRAM AUTHORIZED.

11 (a) IN GENERAL.—The Secretary is authorized to sup12 port the establishment and development of incubators.

13 (b) ALLOCATION OF FUNDS.—From the amount appro14 priated under section 9, the Secretary—

15 (1) shall reserve 80 percent of the amount to—

16 (A) make awards, on a competitive basis, in

17 amounts of $500,000 to $750,000, to help acquire

18 or renovate space for incubators; and

19 (B) make awards, on a competitive basis, in

20 amounts of $50,000 to $150,000, for—

21 (i) developing curricula;

22 (ii) providing services, including, but

23 not limited to: preparing corporate charters,

24 partnership agreements, and basic con25 tracts; assistance with patents, trademarks,
12

•S 1335 RS

1 and copyrights; and technology acquisition

2 services; or

3 (iii) providing programming for entre4 preneurs housed in an incubator;

5 (2) shall reserve 10 percent of the amount to

6 make awards, on a competitive basis, in amounts of

7 $50,000 to $150,000, for feasibility studies for deter8 mining the need for or siting of incubators; and

9 (3) shall reserve 10 percent for research regard10 ing best practices for incubator programs, including

11 the development of a benchmarking system based on

12 uniform measures, and for dissemination of informa13 tion regarding such practices.

14 (c) CONTRACTS.—The Secretary is authorized to con15 tract with organizations with expertise in business incuba16 tion practices for the purposes of carrying out subsection

17 (b)(3).

18 (d) RECIPIENTS.—The Secretary shall make an

19 award—

20 (1) described in subsection (b)(1) to a nonprofit

21 entity that has a strong affiliation with a degree22 granting institution and manages or provides tech23 nical assistance to the degree-granting institution’s

24 affiliated incubator, or if no nonprofit entity manages

25 or provides technical assistance to the incubator, to
13

•S 1335 RS

1 the degree-granting institution managing the incu2 bator; and

3 (2) described in subsection (b)(2) to a degree4 granting institution, or a nonprofit municipality,

5 city, township, or community development organiza6 tion.

7 SEC. 5. USES OF FUNDS.

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

9 for—

10 (1) curriculum, training, or technical assistance

11 developed by academic faculty with participation

12 from entrepreneurship experts and local government

13 leaders;

14 (2) programming that contributes to a coordi15 nated set of business assistance tools, such as devel16 oping management teams, providing workforce devel17 opment, forming strategic alliances, developing cap18 ital formation networks, and developing customized

19 plans to help entrepreneurs meet the challenges of

20 doing business in their specific communities; and

21 (3) hiring staff to coordinate the activities de22 scribed in paragraph (1) or (2) or for curriculum de23 velopment.
14

•S 1335 RS

1 SEC. 6. APPLICATIONS.

2 (a) IN GENERAL.—Each entity desiring assistance

3 under this Act shall submit an application to the Secretary

4 at such time, in such manner, and accompanied by such

5 information as the Secretary may require.

6 (b) CONTENTS.—Each application shall contain an as7 surance that the activities to be assisted—

8 (1) have the support of the municipality, city, or

9 township in which the incubator is housed or pro10 posed to be housed; and

11 (2) are consistent with the local economic devel12 opment or strategic master plan.

13 (c) PRIORITY.—The Secretary shall give priority to

14 funding applications under this Act that provide strong

15 educational opportunities to students in entrepreneurship,

16 and that require significant collaboration between busi17 nesses, academia, and local government and economic devel18 opment leaders.

19 (d) CONSIDERATION.—

20 (1) IN GENERAL.—The Secretary may give con21 sideration to funding applications under this Act that

22 support—

23 (A) the building of new incubators;

24 (B) incubators located in economically dis25 tressed areas;
15

•S 1335 RS

1 (C) incubators with successful graduation

2 rates for tenant companies;

3 (D) incubators that have shown demon4 strable economic benefits in their surrounding

5 communities;

6 (E) incubators that work with faculty entre7 preneurs or university-based research; or

8 (F) incubators located in rural, inner-city

9 areas, Indian reservations or pueblos where the

10 presence of an incubator may enhance and diver11 sify the area’s economy through expanded tech12 nology commercialization.

13 (2) DEFINITION OF CONSIDERATION.—In this

14 subsection the term ‘‘consideration’’ means thought

15 and does not mean priority.

16 SEC. 7. MATCHING FUNDS.

17 Each entity receiving Federal assistance under section

18 4(b)(1) shall contribute matching funds, in an amount

19 equal to the amount of Federal assistance received under

20 this Act, toward the costs of the activities assisted under

21 this Act. The non-Federal share required under this section

22 may be provided in the form of in-kind contributions.
16

•S 1335 RS

1 SEC. 8. REPORT.

2 The Secretary, at the end of the third year for which

3 assistance is provided under this Act, shall prepare and

4 submit to Congress a report that—

5 (1) describes the most effective or innovative ad6 ditions to curricula developed under this Act;

7 (2) contains a comparison of small business sur8 vival rates for small businesses that started up in in9 cubators versus small businesses that did not so start;

10 (3) describes factors leading to success of incu11 bator businesses (if any);

12 (4) describes the best role for degree-granting in13 stitutions in business incubation; and

14 (5) contains a comparison of academic-affiliated

15 incubators of specific missions and ages supported

16 under this Act with incubators with similar missions

17 and ages that are not supported under this Act.

18 SEC. 9. AUTHORIZATION OF APPROPRIATIONS.

19 There are authorized to be appropriated to carry out

20 this Act $20,000,000 for each of the fiscal years 2003, 2004,

21 and 2005.

Calendar No. 429

107TH CONGRESS

2D SESSION S. 1335

A BILL

To support business incubation in academic

settings.

JUNE 20, 2002

Reported with an amendment