MIXED reviews of the state's TNInvestco program, the wind-down of the original INCITE co-investment program, lingering questions about the health of Tennessee technology commercialization, the ceaseless challenge of capital formation, the ratcheting-down of Tennessee's Angel Tax Credit, pressure on funding for our regional startup accelerators -- these are just a few of the hurdles facing those who want to elevate Tennessee's standing as an innovative state.

It's not clear whether the General Assembly will be much help. Continued debate over Gov. Bill Haslam's push to raise the state's fuel tax to fund infrastructure spending and other politically sensitive issues has partially clogged the legislative digestive system during its current Session.

Meanwhile, pro-"innovation economy" proposals are being quietly shopped in Legislative Plaza by nonprofits Life Science Tennessee and Launch Tennessee.

LaunchTN, formally known as Tennessee Technology Development Corporation, or TTDC, is a de facto subsidiary of the Tennessee Department of Economic and Community Development (ECD). It's too early to tell whether their pleadings will get serious consideration and a vote.

And so it goes: This week, the FY 2018 budget proposals for ECD and Launch Tennessee are scheduled for further examination by legislators and staff. Then, on Thursday (April 20), Launch Tennessee is to hold its Annual Meeting in Legislative Plaza (Room 29, 1-2p.m.).

Not that it's likely to prod legislators, but another 50-State Innovation ranking is due-out from publishers of The State New Economy Index this fall, and Tennessee may be in for another drubbing. [Update: The Fall 2017 report, released in November 2017, showed a modest gain by Tennessee.]

In 2014, data from that ranking's publisher, ITIF, showed Tennessee having net-lost ground on innovation since 1999, which was TTDC/LaunchTN's first full year of service, details here. Last month, WalletHub ranked Tennessee 45th among states based on innovativeness.

This seems like a good time to scour a batch of reports related to sustaining entrepreneurial and innovative progress by leveraging our advantages and confronting the state's weaknesses.

Tennessee Innovation Road Map

In 2006, a year before the Housing Bubble burst and revealed the Great Recession of 2007-09, consultants with New Economy Strategies reported bluntly to State officials on Tennessee's enormous natural, fiscal and locational advantages. They also reported the state's burdens -- including parochialism, underprepared workforce, underdeveloped entrepreneurial sector, and a traditional regionalism that can cut both pro and con development. At the time of the report a decade ago, the consultant cited "the dormancy and questionable effectiveness of TTDC" and the lack of momentum at that time within then-Tennessee Biotechnology Association and described a path by which the state might "become a premier destination for scientists, researchers, entrepreneurs, investors and corporations..." Regular readers will discern that the State has made some gains in implementing some of the recommendations of this report, which you'll find in its entirety here.

Technology Commercialization

Gov. Bill Haslam recently told VNC that, notwithstanding the nationwide rankings, he feels the state is making headway on innovation. In 2015, Launch Tennessee commissioned a report by advisor Stayko Staykov regarding the State's tech-transfer and commercialization and related opportunities. The findings of the report and LaunchTN's general plans in its wake were reported by VNC here in early 2016. The direct link to the verbatim Stayko report is here. LaunchTN is now seeking additional State funding for commercialization efforts and related efforts.

TNInvestco program (2009-Present)

An October 2016 performance report by the office of Tennessee Comptroller Justin Wilson found that after nearly seven years of operation, the program had not yet produced the direct returns the State had hoped for when bipartisan supporters in the General Assembly and then-Governor Phil Bredesen created the Tennessee Small Business Investment Credit Company Act, thereafter known as TNInvestco. The program ends in 2021 and, according to the Comptroller, "With five years remaining, the department will likely not receive a return nearing the $200 million in tax credits" that were available for sale by 10 TNInvestco funds to insurance companies with premium tax obligations they sought to offset. The Comptroller's comments on TNInvestco begin on page 5 in this document. As reported by The Tennessean in November 2016, Comptroller Wilson said "it doesn't appear the TNInvestco program has been successful" and said "the effect on taxpayers" should be taken more into consideration. TNInvestco executives aren't looking for a fight and have generally not objected vocally to the report, though privately some told VNC they thought it was superficial. So, the jury is out til 2021 or beyond. That said, we commend to our readers the seemingly more rigorous research methodology and acute findings of University of Tennessee Economist Matt Murray, PhD, who was, as we reported in November, hired to assess two Alabama capital-formation programs, one a CAPCO analogous in purpose to TNInvestco. In his Alabama report here, Murray concludes there are better ideas than the Alabama CAPCO, awarding that program an overall Grade "D," with an "F" awarded the Alabama model's ability to identify and determine the net-new economic activity spawned by the program. Murray's report also conveyed a sense that State governments are well advised to seek to improve instate VC investment in ways other than CAPCO. He did not mention TNInvestco. Murray also spoke with Venture Nashville in 2014 about the complexity of trying to assess results from the TNInvestco program, stressing the broader economic and political context. That article is here.

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