Economic Development Terms & Definitions
A term coined in the late 1990s to describe the evolution of the U.S. into a high technology-based economy, arising largely from new developments in the Internet, telecommunications and computer sectors.
Provides specialized facilities and mentoring services to start-up companies. An incubator is typically a not-for-profit entity that stimulates economic development by creating jobs, attracting private capital and building the tax base for the regions they serve. Start-up companies are nurtured in the incubator for, on average, three years. During this time they hire employees and attract capital. When they “graduate,” incubator companies establish their own facilities, benefiting local economies. Nationally, 84 percent of incubator graduate companies remain in the regions where they first began.
According to the National Business Incubation Center, incubators can be classified as mixed use, technology, manufacturing, service, and other (which includes community-revitalization incubators and incubators for web-related businesses).
According to the Association of University Research Parks, a university research park is a property-based venture that has:
- Master planned property and buildings designed primarily for private/public research and development facilities, high technology and science based companies, and support services;
- A contractual, formal or operational relationship with one or more science/research institutions of higher education;
- A role in promoting the university's research and development through industry partnerships, assisting in the growth of new ventures and promoting economic development;
- A role in aiding the transfer of technology and business skills between university and industry teams;
- A role in promoting technology-led economic development for the community or region.
The park may be a not-for-profit or for-profit entity owned wholly or partially by a university or a university-related entity. Alternatively, the park may be owned by a non-university entity but have a contractual or other formal relationship with a university, including joint or cooperative ventures between a privately developed research park and a university.
The process by which existing knowledge, facilities or capabilities developed are utilized to fulfill public and private needs. The purpose is to strengthen the economy by accelerating the application of laboratory technology and resources to private and public needs and opportunities. Results of successful technology transfer efforts include product improvement; service efficiencies; improved manufacturing processes; joint development to address government and private sector needs; and the development of major new products for the international marketplace.
Products that have undergone a technology transfer process from research to public use. These uses may be direct or indirect.
A company recently formed, usually until initial public offering. Many startups start as spin-offs from university research groups.
An angel is usually someone willing to put $500,000 or less into a company at the early stage of its formation. Angel investor groups are great sources of private capital and frequently invest angel money into new companies. The potential return is great, as is the risk. Angels differ from venture capitalists, who come in later during a company’s development. Angel investors got their name from those willing to risk their money to support theatrical productions on Broadway.
A fund-raising technique for companies willing to exchange equity in their company in return for money to grow or expand their business. It can be raised for both technology and non-technology businesses. Venture capital also invests across stages – from the early stage seed venture, to later stage intermediate financing.
Chapter 100 bonds
Industrial development bonds developed by U.S. Congress and the Missouri General Assembly to facilitate the financing of business projects. Sec. 100.010-100.200, RSMO, allows cities or counties to purchase or construct certain types of projects with bond proceeds and to lease or sell the project to a company. An industrial development “revenue” bond does not require a public vote and does not have the general credit of the municipality as a guarantee. Revenue bonds are sold on the basis of the company’s credit. Typically, either the project company or the primary lender purchases the bonds. The assets are owned by the municipality. In effect, the property tax is exempt by virtue of public ownership; however, the governing body may require that a portion of the payments otherwise due be paid in the form of a grant or contribution.