BILL ANALYSIS                                                                                                                                                                                                    

                                                                    AB 2664

                                                                    Page  1

          Date of Hearing:  April 12, 2016


                                 Jose Medina, Chair

          AB 2664  
          (Irwin) - As Amended March 17, 2016

          [Note:  This bill is double referred to the Assembly Jobs,  
          Economic Development, and the Economy Committee and will be  
          heard as it relates to issues under its jurisdiction.]

          SUBJECT:  University of California:  innovation and  
          entrepreneurship expansion

          SUMMARY:  Provides funding to the University of California (UC)  
          to expand the infrastructure necessary to increase innovation  
          and entrepreneurship for the purpose of creating economic  
          development for the State of California.  Specifically, this  

          1)Finds and declares the following of the Legislature, with  
            respect to innovation and entrepreneurship expansion at the  

             a)   The State of California is well-positioned to harness  
               the power of the expertise of the UC to spur economic  


                                                                    AB 2664

                                                                    Page  2


             b)   The UC contributed to the foundational research  
               breakthroughs that launched some of California's strongest  
               industries, including aerospace, agriculture,  
               biotechnology, computers and semiconductors,  
               telecommunications, and digital media;

             c)   Research at the UC continues to create new inventions  
               that will be the genesis of tomorrow's industries,  
               companies, and commercial successes;

             d)   Innovation and entrepreneurship at the UC create  
               equitable economic development throughout California; and,

             e)   It is therefore the intent of the Legislature to provide  
               funds to establish or expand the infrastructure at each  
               campus and the Lawrence Berkeley National Laboratory (LBNL)  
               to expand infrastructure necessary to build a network of  
               innovators, entrepreneurs, startups, investors, and  
               industry and community partners to spur innovation and  
               economic development in communities surrounding UC  
               campuses, the LBNL, and across California.

          2)Specifies that monies appropriate, as specified, shall be used  
            by the UC to expand the infrastructure necessary to increase  
            innovation and entrepreneurship for the purpose of creating  
            economic development.

          3)Stipulates that specified funds shall be used to fund  
            innovation and entrepreneurship programs at each campus of the  
            UC and the LBNL.


                                                                    AB 2664

                                                                    Page  3

          4)Requires that the manner in which the specified funds may be  
            used, shall be determined by the UC; and, authorizes the funds  
            may be used, but shall not necessarily be limited to, the  
            establishment of programs or projects to facilitate economic  
            development in communities surrounding the 10 campuses of the  
            UC, the LBNL, and other locations across California for  
            purposes such as any of the following:

             a)   Providing business training and resources to reduce  
               common barriers to success for entrepreneurs and startup  

             b)   Offering subsidized work and laboratory space to  
               startups for prototype development, proof-of-concept  
               research, or both;

             c)   Providing proof-of-concept funding to increase the  
               likelihood that entrepreneurs and startup companies will  
               attract venture or corporate capital backing;

             d)   Providing mentorship to the underrepresented interested  
               in entrepreneurial pursuits; and,

             e)   Coordinating and aligning innovation functions at a  
               campus of the university or at the LBNL, and building  
               relationships between the university environment and  
               successful, independent enterprises to facilitate the  
               rollout of products to the market and the public.

          5)Requires the UC to report to the Department of Finance and the  
            Legislature annually on the use of the funding, as specified.


                                                                    AB 2664

                                                                    Page  4

          6)Allocates $66 million from the General Fund (GF) to the UC  
            Regents for allocation, as specified, in accordance with the  
            following schedule:

             a)   $22 million for expenditure for the 2017-18 fiscal year  

             b)   $22 million for expenditure for the 2018-19 FY; and,

             c)   $22 million for expenditure for the 2019-20 FY.

          EXISTING LAW:  

          1)Establishes the Donahoe Higher Education, setting forth the  
            mission of the UC (Education Code (EC) Section 66010, et  

          2)Grants the UC Regents regulatory authority over the UC (EC  
            Section 92440, et seq.).

          FISCAL EFFECT:  $66 million from the GF over three years.

          COMMENTS:  Background.  As the research arm of the state, the UC  
          has driven innovation and economic growth.  According to the UC,  
          it is now the world's academic leader in the number or research  
          inventions, with 1,700 reported in 2014.  The UC continues to be  
          the launching platform for a numerous startup companies that  
          stimulate the economic and job growth in California.


                                                                    AB 2664

                                                                    Page  5

          The state, in 2000, created the California Institutes for  
          Science and Innovation (Cal-ISIs) through the budget and  
          legislation (AB 2883, Villaraigosa, Chapter 79) to speed up  
          business growth in the state, develop research and innovations  
          to meet California's needs, and train future scientists.

          The state provided start-up funds of $400 million for the  
          Cal-ISIs and the UC provide a 2-to-1 match from a combination of  
          business and federal sources.  The state continues to reap the  
          benefits of its original investment.  

          What is needed for continued growth?  According to the UC,  
          specific investments are needed so that the pace can be  
          maintained to keep up with the demand for innovation and  
          entrepreneurial infrastructure, resources, and support programs.  
           The UC contends that the investments will leverage UC research  
          in two ways:  a) provide researchers with the necessary tools to  
          turn their ideas into job-providing companies; and, b) organize  
          research systemwide in order to address the various challenges  
          facing California.

          Expanding the infrastructure for UC innovation and  
          entrepreneurship to create innovation and economic development  
          in the surrounding communities of UC campuses and across  
          California will not happen overnight.  The UC has a three-year  
          investment of $2 million per year for each of the 10 UC campuses  
          and the Lawrence Berkeley National Laboratory.

          This measure calls for the appropriation of $22 million for FYs  
          2017-18, 2018-19 and 2019-20 inclusive, to be used by the UC in  
          order for the UC to expand the infrastructure necessary to  
          increase innovation and entrepreneurship for the  purpose of  
          creating economic development for California.


                                                                    AB 2664

                                                                    Page  6

          Purpose of this measure.  According to the author, in 2014,  
          active UC startups based in California employed over 19,000  
          Californians and brought in more than $14 billion in revenue.   
          The author contends that in order to maximize the transformative  
          power of UC's research engine, the UC innovation ecosystem needs  
          to expand throughout the State.  The author states, "The UC's  
          ability to provide entrepreneurial services is at capacity.  The  
          demand for startup seed funding is rising, and workspace demand  
          consistently exceeds capacity.  While UC-fostered  
          entrepreneurship is increasing, entrepreneurship in the state of  
          California is declining.  The number of new adults becoming  
          entrepreneurs per month slipped from a high of 440 out of every  
          100,000 Californian adults in 2012, to 390 in 2015; a troubling  
          trend as young companies are the primary source for all net new  
          jobs created annually."

          This measure seeks to build upon the successful model that the  
          state created in 2000. 




          Aduro Biotech


          Breakout Labs


                                                                    AB 2664

                                                                    Page  7

          California Chamber of Commerce

          California Manufacturers and Technology Association

          City of Santa Cruz

          Computing Technology Industry Association

          Data Collective

          Foley & Lardner, LLP

          Gerson Bakar Foundation

          Inevitable Ventures


          Manitou Ventures

          Monterey County Business Council

          Pfizer, Inc.

          San Francisco Chamber of Commerce


                                                                    AB 2664

                                                                    Page  8

          San Francisco Global Trade Council



          University of California

          Velocity Venture Capital

          4 Individuals


          None on file.

          Analysis Prepared by:Jeanice Warden / HIGHER ED. / (916)  


                                                                    AB 2664

                                                                    Page  9