I
107TH CONGRESS
2D SESSION
H. R. 5312
To support business incubation in academic settings, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
JULY 26, 2002
Mr. TIERNEY (for himself, Mr. SAWYER, Mr. SHIMKUS, Ms. BALDWIN, Mr.
HORN, Mr. GONZALEZ, Mr. KENNEDY of Rhode Island, Mr. PHELPS, Mr.
DAVIS of Illinois, Mr. UDALL of New Mexico, Mr. VISCLOSKY, Mr.
SERRANO, Mr. BROWN of Ohio, Mr. HILLIARD, Mr. STARK, Mr.
HINOJOSA, Mr. PAYNE, Mr. ANDREWS, and Mr. GEORGE MILLER of
California) introduced the following bill; which was referred to the Com-
mittee on Education and the Workforce
A BILL
To support business incubation in academic settings, and
for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE AND FINDINGS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Linking Educators and Developing Entrepreneurs for
Reaching Success (LEADERS) Act of 2002’’.
(b) FINDINGS.—Congress makes the following find-
ings:
(1) Business incubators housed in academic set-
tings provide unique educational opportunities for
students, provide entrepreneurs with enhanced ac-
cess to a skilled workforce, and bring a wealth of re-
sources to business, academia, and communities.
(2) Academic affiliated incubators bridge the
missions of academic institutions by bringing to-
gether education, economic development, and tech-
nology commercialization efforts.
(3) Studies have shown that incubator tenant
companies have an average success rate of 87 per-
cent, and 90 percent for technology-based incubator
tenant companies. These success rates are dramati-
cally 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 em-
ployees.
(5) Business incubators help academic institu-
tions 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 suc-
cess and sustainable economic development.
SEC. 2. PURPOSE.
The purpose of this Act is to encourage entrepreneur-
ship by increasing the role for academia in entrepreneur-
ship by providing space and expertise in an academic set-
ting to house and support new and emerging small busi-
nesses.
SEC. 3. DEFINITIONS.
In this Act:
(1) 
DEGREE-GRANTING
INSTITUTION.—The
term ‘‘degree-granting institution’’ means an institu-
tion 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 de-
gree.
(2) INCUBATOR.—The term ‘‘incubator’’ means
an entity affiliated with or housed in a degree-grant-
ing 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 equip-
ment, access to telecommunications and technology
services, flexible leases, specialized management as-
sistance, 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 ap-
propriated under section 9, the Secretary—
(1) shall use 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 devel-
oping curricula, providing services (including
preparing 
corporate 
charters, 
partnership
agreements, and basic contracts, assistance
with patents, trademarks, and copyrights, and
technology acquisition services), or providing
programming for entrepreneurs housed in an
incubator;
(2) shall use 10 percent of the amount to make
awards, on a competitive basis, in amounts of
$50,000 to $150,000, for feasibility studies for de-
termining the need for or siting of incubators; and
(3) shall use 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 informa-
tion regarding such practices.
(c) CONTRACTS.—The Secretary is authorized to con-
tract with organizations with expertise in business incuba-
tion 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 tech-
nical assistance to the degree-granting institution’s
affiliated incubator, or if no nonprofit entity man-
ages or provides technical assistance to the incu-
bator, 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 organiza-
tion.
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 coordi-
nated set of business assistance tools, such as devel-
oping management teams, providing workforce devel-
opment, forming strategic alliances, developing cap-
ital 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 de-
scribed in paragraph (1) or (2) or for curriculum de-
velopment.
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 pro-
posed to be housed; and
(2) are consistent with the local economic devel-
opment plan 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 busi-
nesses, academia, and local government and economic de-
velopment leaders.
(d) CONSIDERATION.—
(1) IN GENERAL.—In addition to applications
from other appropriate sources, the Secretary may
give consideration to funding applications under this
Act that support—
(A) the building of new incubators;
(B) incubators located in economically dis-
tressed areas;
(C) incubators with successful graduation
rates for tenant companies;
(D) incubators that have shown demon-
strable economic benefits in their surrounding
communities;
(E) incubators that work with faculty en-
trepreneurs or university-based research; or
(F) incubators located in rural, inner-city
areas, or Indian reservations or pueblos where
the presence of an incubator may enhance and
diversify the area’s economy through expanded
technology commercialization.
(2) DEFINITION OF CONSIDERATION.—In this
subsection, the term ‘‘consideration’’ does not mean
priority.
SEC. 7. MATCHING FUNDS.
Each entity receiving Federal assistance under sec-
tion 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. The non-Federal share required under this
section may be provided in the form of in-kind contribu-
tions.
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 any success of
incubator businesses;
(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 fiscal years 2003, 2004,
and 2005.
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