The point at which an exciting research project is poised to become the next great product or service can be fraught with peril. So, what’s an innovator to do?

Make connections, seek advice, build a team of advisors and investors who can help navigate that rocky road and bridge the gap between research and results. As the valley of death has expanded in recent years, making the right connections has become even more critical to achieving the next milestone.

The Innovation Showcase, which is produced quarterly by the Technology Alliance, offers innovators the chance to expand their business network as they move forward on the path to commercialization. It started out as an experiment to see if we could help innovators make the transition from grant-funded research to company formation and investment. Based on the enthusiastic response to our pilot program a year and a half ago, we knew we must be onto something. For many innovators, this event is their first opportunity to pitch their ideas to those outside of the academy. For the experts in building and growing companies that attend the Showcase, it is a unique opportunity to witness some of the most interesting work being commercialized at our state’s research institutions.

Last Tuesday afternoon was no exception. An enthusiastic audience had the opportunity to learn about ground-breaking technology in the life sciences, clean tech, and wireless sensing fields. Presenting companies included:

EnVitrum: This company, based on technology developed by University of Washington graduate student Grant Marchelli, has a patent-pending technology that converts low-value, waste stream glass into a high-value material that has several applications in the green building industry.

Hive: UW professor Brian Otis has developed a wireless technology platform that increases the battery life of transceivers – with applications in medical devices, body-area networks for consumer sports and fitness, and the automotive and aviation industry.

Precision Genome Engineering: Dr. Andrew Scharenberg and his team are developing tools for making precise genome manipulations and custom organisms.

Shockmetrics: Critical care physician Kenneth Schenkman has develped a noninvasive monitor for the early detection of shock in patients.

SNUPI: UW computer science professor Shwetak Patel, who sold his water monitoring company, Zensi, to Belkin last year, is building a highly specific resource sensing system for homes and businesses. The system, which builds on colleague and fellow presenter Brian Otis’ “bumblebee” technology, has the potential to fundamentally transform how customers consume electricity, water, and natural gas.

Having worked with these and over two dozen other companies during the program’s two years of existence, we’ve noticed a few things about the very early stage opportunities emerging from Washington laboratories:

Be Early, and Be Interesting

We have found that our audience responds to a well-balanced slate of technologies from different industries. Audience members – even the ones with an investment focus – are focused on the technology first; stage of development is a secondary consideration. Interesting technology appears to trump … Next Page »

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The interesting thing about Michigan is that as a state it has already implemented many forward-thinking economic development strategies and policies. Michigan has been much more innovative than Washington state has been in this respect. Washington’s success has frankly been in spite of, rather than because of, state policy much of the time.

We in Washington state are getting better, but the technology sectors and the jobs they provide have been a bit taken for granted by our citizens and state government. Not so in Michigan. For example, I was going to recommend that Michigan encourage more angel investing by providing income tax deductions for angels who invest in Michigan startups. Guess what? Already done. Michigan has several other programs promoting access to capital which they should continue, as venture capital will continue to be in short supply for the foreseeable future.

Michigan should make sure it has strong programs in entrepreneurship at all the state’s colleges and universities. This is already being done through the Great Lakes Entrepreneur’s Quest, but more programs like this should be encouraged. Host lots of business plan competitions. Invite successful entrepreneurs to campus to talk to students. Help students learn the difference between a small business that stays small and one that becomes a high growth success. Encourage ambition and thinking big. UW hosts an “Environmental Challenge,” an annual competition for the best green idea. Hundreds of students participate from across the state. Dozens of us attend to judge it and other competitions to encourage the next crop of entrepreneurs. Grow a new generation of smart, idealistic and energetic entrepreneurs and support them along the way and the business culture will change.

One thing that really impressed me when I visited Austin, Texas several years ago was how they celebrated their entrepreneurs. In their uniquely-Texas-charming way, they just bragged about how many cool software companies they had and how great the CEOs were. The community—mayor, chamber, venture capitalists—supported entrepreneurs in any way they could and they made a big deal out of an industry which was actually quite small at the time. Through marketing their region externally and nurturing the companies they did have, they grew what was a small set of companies into a sector. I would copy them.

Here is a don’t: Don’t chase after out-of-state businesses with big tax breaks. It’s so last century and it is a big waste of time and taxpayer money. Really focus on growing your own.

Lastly, and most importantly, really support your higher education system, especially your research universities. This is an area where Michigan is truly world class. Take very good care of University of Michigan and Michigan State University, even when it is difficult to because of budget constraints. They are creating knowledge and the next generation of top-flight scientists, engineers, and entrepreneurs. Some will leave the state, but many will stay—especially as more local companies have great jobs for them. You grow an innovation economy first, last and always with smart, creative and talented people.

[Editor's note: To help launch Xconomy Detroit, we've queried our network of Xconomists and other innovation leaders around the country for their list of the most important things that entrepreneurs and innovators in Michigan can do to reinvigorate their regional economy.]

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Every second year, the Technology Alliance gathers policymakers and leaders from the innovation community at a retreat designed to explore issues affecting Washington’s technology sector and to map out strategies to increase our state’s long-term competitiveness. We organize the retreat around what we call the “three drivers” of a vibrant innovation economy: excellent K-12 and higher education systems; strong research capacity at our public and private research institutions and companies; and a robust entrepreneurial climate that nurtures the growth of young startups generating new technologies, services and jobs in our state.

This year’s conversation was all about talent.

Much has been made by our organization and others about the need to increase our students’ college and work readiness; to improve science and math teaching and learning in our schools; and to invest in high-impact, high-demand programs at our public universities. These have been priorities of our organization and our partners in the innovation community for a long time. Now, it’s time to get serious. Washington is at a crossroads. We have the framework to enact meaningful education reform with the enactment of Senate Bill 2261, and the design of an important new tool to track student progress and teacher effectiveness through a longitudinal data system.

The latter is particularly important when one considers the data we heard at the retreat, and a lack of awareness on the part of many in our state who could help drive change. Here are just a few key points we heard during our retreat that everyone in this state should know:

• According to Postsecondary Opportunity, our education pipeline isn’t so much leaking as it is hemorrhaging: for every 100 students who start 9th grade, only 69 graduate from high school four years later; only 33 of those enter college the following fall; only 24 return sophomore year; and only 17 earn a four-year degree within 6 years of enrollment. We start with 100 high school freshmen, and we get 17 college graduates. Seventeen.

• Meanwhile, we were told that 80-90 percent of parents surveyed expect that their kids will get a bachelor’s degree. That is particularly sad when you remember that our high school graduation requirements do not, at present, align with the minimum requirements to enter our public baccalaureate institutions.

• Kati Haycock, president of The Education Trust, shared sobering data on our performance internationally. We in the tech community know we are competing not just with other states but with the rest of the world. We don’t do well: in the 2006 PISA test given to 15-year-old students in 26 OECD countries, the United States ranked 22nd in mathematics and 19th in science.

• In higher education attainment, the U.S. is one of only two OECD nations (out of 30) in which today’s young people are less educated than their parents.

• Teacher quality matters more than anything else. Studies … Next Page »

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Even with the economic downturn, plenty of Seattle area technology companies are going to be hiring new, highly skilled workers in 2009. These are high-paying jobs; the average annual salary plus benefits per worker in Washington’s technology-based industries is more than twice the state average.

Too bad more of those jobs won’t be going to people who grew up here.

Why? Because Washington State is not preparing its children to effectively compete for these jobs. It is projected that each year we will have over 1,000 more openings in engineering, over 1,000 more openings in the medical professions, and over 3,000 more openings in the computer science field than qualified in-state graduates, based on the current rate of production.

Many people are surprised to learn that, on a per capita basis, Washington is 37th out of 50 states in producing four-year college graduates, i.e., people with bachelor’s degrees. Seattle is recognized as one of the most highly educated metropolitan areas in the country, and Washington ranks 9th among the 50 states in the percentage of residents age 25 years and over who hold a bachelor’s or higher degree.

So, how do we end up with a comparatively high concentration of educated workers – workers who have fueled the growth of our software, life sciences, aerospace and other innovative industries and earned us a place among an elite group of technology-intensive states?

We import them, of course; we draw highly educated people from other states and other countries to fill these high-wage jobs.

The accompanying chart shows how we stack up against other states in the number of educated workers we import compared to degrees we award. Among all 50 states, only Nevada imports more educated workers than Washington! Who wants to be second only to Nevada in the disparity between our ability to educate our own kids and the opportunities our own economy provides?

The upside is that we do have a robust economy and a quality of life that attracts top talent from around the nation and around the world (when they can get a visa, that is). Let’s keep that up, because, in the global economy, it’s a global competition for talent, and we will need the creativity, expertise and entrepreneurial spirit of the best and brightest from wherever they come. But how about providing more shots at those great jobs for Washington’s kids?

The Technology Alliance, along with many other partner organizations, has worked hard for the last decade to increase state funding for higher education in Washington, particularly in the high demand, high impact areas of science, technology, engineering and mathematics, often called the STEM disciplines. I can say that some real progress was made over the past two biennia, when the legislature modestly increased funding for degree programs in these fields.

Will we be able to hang on to these hard-won gains, or will the higher education budget get hammered in the 2009 legislative session?

If history is a guide, we have reason to be extremely concerned. Whenever we experience an economic downturn in Washington, we get a double whammy-sales tax revenues decline just as demands for state services go up. How do legislators balance the budget? They cut the one big area of the operating budget they are not legally mandated to pay for: higher education. During the 2001 recession, higher education took a 7.8 percent hit in the 2001-2003 biennial budget. With a shortfall of $3 billion and counting staring us in the face, we can expect even deeper cuts this time around.

We at the Technology Alliance believe that K-12 and higher education are the most important investments our state can make to grow and sustain a 21st century economy. To lose what modest gains we have made in the last couple of years-which just helps us stay out of the bottom 10 states in bachelor’s degree production-would be unconscionable, not to mention unwise. We really must invest in our future, especially during difficult times.

Remember: the new economy is based on two key components – great people and great ideas. These are the products of higher education. We plan to be very noisy about this in 2009 and encourage all of Xconomy’s readers to do the same.

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The big election news for the innovation economy today is what the voters did on transportation. Even in tough economic times voters understood that mass transit has to improve or we will cripple our economy.

People can argue if all the components of Proposition 1 were the right ones, but voters supported it and voted down I-985, which would have slowed down express transit buses. No matter how many people telecommute, we still do have to get around this region and smart investments in transportation are critically important to keeping us competitive.

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…is coming soon.

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