Entrepreneur's Corner: Testimony of Richard Bendis
Testimony of Richard A. Bendis, President and CEO, Innovation America
Before House Committee on Small Business - Subcommittee on Contracting and Technology on Thursday, July 9, 2009
NOTE: Richard Bendis is the Keynote Speaker at the upcoming Entrepreneurial Development Center Client EXPO on September 1, 2009. The below is a partial copy of Bendis’ recent testimony to Congress in early July. Full testimony can be found at www.edcinc.org under the Resources tab.
Mr. Chairman and Members of the Subcommittee:
Good morning. My name is Rich Bendis and I am the President and CEO of Innovation America, a national, non profit Innovation Intermediary focused on accelerating the growth of the entrepreneurial innovation economy in America. I am also a long time member of the American Society of Mechanical Engineers (ASME), a founding Board member of the National Association of Seed and Venture Funds (NASVF), and the State Science and Technology Institute (SSTI), and a former technology entrepreneur.
I want to thank this subcommittee for providing me the opportunity to comment on the importance of extending the Research and Experimentation Tax Credit, Innovation America, ASME, and NASVF support this extension.
Innovation America also supports the Coalition’s recommendations of a permanent R&D tax credit at a commensurate rate for all companies: a 20 percent simplified credit and an extension of the traditional credit.
The National Academies have cautioned that “without high-quality, knowledge-intensive jobs and the innovative enterprises that lead to discovery and new technology, our economy will suffer and our people will face a lower standard of living.”
Since 1981, when the federal R&D tax credit was enacted, the U.S. Government sought to encourage businesses to look to the future and invest in long-term, high-risk, high-dollar investments that would create high-wage jobs. The R&D tax credit helps to lower the cost of these high-risk investments that are necessary to keep American companies competitive and foster growth in the overall economy especially during these challenging economic times.
The National Academies has cautioned that “without high-quality, knowledge-intensive jobs and the innovative enterprises that lead to discovery and new technology, our economy will suffer and our people will face a lower standard of living.” Our trading partners around the globe recognize the long-term value of R&D and have moved aggressively to implement generous and permanent tax policies that attract these vital investments to their shores.
In addition to the Federal R&D tax credit program, at least 38 states utilize tax credit programs as economic development incentives. A research paper published in Economic Development Quarterly “In State R&D Tax credits and High-Technology Establishments” concluded that state R&D tax credit programs have “significant and positive effects” on the number of high tech establishments in a state…
…I also believe that while the R&D tax credit program extension is a critical component of the U.S. innovation portfolio of programs, it is not the only area that this subcommittee should be concerned with.
Job creation is one of the highest priorities this Administration and Congress has, especially those created by innovative entrepreneurial companies. If recent history is any indication, for three years following both the 1990-91 and 2000-01 recessions, small businesses of less than 20 employees were responsible for over 100% of the net new job growth in America. Unfortunately, what worked after the last two recessions might not work as well today due to the fragile nature of our financial markets.
The “Valley of Death” which represents the entrepreneurial funding gap between $500,000 and $5,000,000 has gotten wider and deeper. Venture Capitalists average investment last year was $8.3 million and they had their lowest investment quarter in 13 years last quarter...
In December of 2008, we met with members of the Obama Transition Team and presented a proposal for Creating a National Innovation Framework… Time does not permit a detailed discussion of this Innovation strategy, but it is complimentary to the R&D tax credit discussion that has occurred today in this subcommittee hearing.
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