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Virginia’s Technology FutureTechnology, Innovations and Startups
Council
Josh LeviVice President of Policy
Northern Virginia Technology Council
June 24, 2013Richmond, VA
1
Highly educated workforce World class institutions of higher education Low tax state Attractive regulatory environment Right to work Reliable, available and affordable energy Excellent ports and international airport Well Managed State/AAA bond rating Open to innovative public-private partnerships
Commonwealth of Virginia Supports
and Promotes Business
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Why Technology?
Technology industry drives growth
Technology increasingly important in state government
Technology keeps Virginia businesses competitive
Technology and innovation drive effective and efficient solutions to problems
We are already ahead! Virginia’s technology successes have already distinguished us as a global technology center and a top destination for technology businesses and workers
3
Virginia Is National Technology Business
Leader
1st in highest concentration of high tech employees in the nation
3rd in high tech services
4th in number of tech workers
5th in high tech payroll
6th in # of high tech establishmentsSource: The TechAmerica Foundation, 15th edition of Cyberstates 4
Virginia Is National Technology Business
LeaderAlso…
1st in STEM job growth from 2002-20121st in STEM job concentration 1st in high tech share of all businesses 1st in fast growing firms2nd in computer systems design
employment2nd in private sector scientists and
engineers3rd in e-government4th in engineering services employment 6th overall in ITIF’s State New Economy
Index7th in venture capital as percent of worker
earnings8th in internet and telecommunication
services
Source: The TechAmerica Foundation, 15th edition of CyberstatesUnited States Chamber of Commerce, Enterprising States 2013The Information Technology & Innovation Foundation, The 2012 State New Economy Index
5
Source: CHMURA Economics & Analysis, Virginia Economic Trends, 2nd Quarter 2013 Report
All Industries
High - Tech
2012Q3VA
Virginia Technology Employment
84%
16%
Total Employment: 3,621,476
High-Tech Employment: 594,306
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Source: CHMURA Economics & Analysis, Virginia Economic Trends, 2nd Quarter 2013 Report
2012Q3VA
Virginia Technology Wages
69%
31%
Total Wages: $45.24B
High-Tech Wages: $14.19B
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All Industries
High - Tech
Tech workers earned an
average wage of $98,920
93 percent more than Virginia’s
average private sector wage
Aerospace
Big Data/Data Analytics
Bioinformatics
Biotech/Life Sciences
Cyber Security
Data Centers
Education IT
Green IT
Health IT
Information Technology
Internet
Modeling and Simulation
Nanotechnology
Professional
Services/Government
Contracts
Semiconductors
Software
Systems Integration
Telecommunications
Virginia Has Strong And Diverse Technology Industry
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Center for Innovative Technology (CIT) Virginia Innovation and Entrepreneurship Investment
Authority (IEIA) Nation’s First Cabinet – Level Secretary of Technology Chief Information Officer to Manage State IT (CIO) Virginia Information Technologies Agency (VITA) Joint Commission on Technology and Science (JCOTS) Senate Committee on General Laws and Technology House Science and Technology Committee Advisory councils including:
Aerospace Advisory Council Broadband Advisory Council Modeling and Simulation Advisory Council
Virginia’s Government has Embraced Technology
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Aggressive computer crimes laws Early leader in e-government Commercial law to support e-commerce State investments to build research capacity Broadband deployment policies and investments Telework promotion and incentives Technology procurement policy Technology tax incentives
The Commonwealth of Virginia Supports & Promotes Technology
Business
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Dual Emphasis Economic Development Strategy is Key
Emphasis 1: Enhance Tools To Attract Companies Seeking To Relocate, Expand, Establish R&D Operations
Includes: Governor’s Opportunity Fund Virginia Jobs Investment Program Virginia Investment Partnership Act Virginia Economic Development Incentive
Grants VEDP Marketing and Overseas Offices Major Business Facility Jobs Tax Credit Worker Training Incentives Department of Business Assistance Program
Activity
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Emphasis 2: Employ Comprehensive “Grow Your Own”/New Company Formation Strategy
Position Virginia as:
A leader in next-generation tech company formation and innovation
Top destination for entrepreneurs, early stage investors, innovators
Dual Emphasis Economic Development Strategy is Key
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Research Commercialization Startup Growth Maturity
Research
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Direct Research Funding From The Commonwealth
Capital Investments To Provide Space/Capacity
Commonwealth Research and Technology (R&T) Strategic Roadmap
CRCF: Eminent Researchers Component CRCF: Matching Funds Component Higher Education Equipment Trust Fund R&D Income Tax Credit R&D Sales Tax Exemption
Research Commercialization Startup Growth Maturity
Research
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CRCF: SBIR/STTR Match Component
CRCF: Commercialization Program
CRCF: Facilities Enhancement Loan Program
BOVs May Delegate Faculty Conflict Of Interest Waivers To University Presidents
BOVs May Assign Title Of University IP
Research Commercialization Startup Growth Maturity
Research
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Virginia’s Business One Stop
CIT GAP Funds
Mach37™ Cyber Accelerator
Angel Investment Tax Credit (Qualified Equity And Subordinated Debt)
Capital Gains Tax Exclusion
Sales Tax Exemption For Software Publishers
Refundable R&D Tax Credit
R&D Sales Tax Exemption
Research Commercialization Startup Growth Maturity
Research
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Provide highly skilled STEM workforce for growth businesses
594, 306 tech employees 2012Q3
More than 18,700 students were enrolled in information technology programs and over 3,600 degrees and certificates were awarded in the 2010-2011 academic year (SCHEV)
Commonwealth STEM Industry Internship Program
SySTEMic Solutions
Research Commercialization Startup Growth Maturity
Research
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(continued)
Targeted State Incentives: Semiconductor Manufacturing
Performance Grant Program Data Center Incentives Sales Tax Exemption For Downloaded
Software Telecom And Internet-related Incentives Green Jobs Tax Credit Discretionary Performance Grants Local Personal Property Tax Incentives
For: • Biotechnology• Broadband• Data centers
Big Data AnalyticsBiotechnologyComputers/Telecommunications/ ITCybersecurityData Center Infrastructure and
InvestmentGreen Technology and Alternative
EnergyHealth ITModeling & SimulationNanotechnologySecurity and Information AssuranceSpace and Aerospace
Leveraging our Competitive Advantage in Targeted Industry
Sectors
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Virginia’s Technology FutureTechnology, Innovations and Startups
Council
Josh LeviVice President of Policy
Northern Virginia Technology Council
June 24, 2013Richmond, VA
21
CIT accelerates the next generation of technology and technology companies
Our objective is to be globally recognized as the innovator,
builder and premier provider of services that accelerate
technology company development
Mission
Accelerate federal funding for small businesses
Operate technology sourcing and management consulting practice
Operate Office of Telework and Broadband Promotion
Operate the GAP Fund
Provide demand generation and infrastructure services
• •
•
•
•
Service Lines and 2013 Objectives
Deliver technology solutions via R&D programs
Maintain a statewide research and tech roadmap
Administer the Commonwealth Research Commercialization Fund
• •
•
RESEARCH
PROOF OFCONCEPT
ORINVENTION
EARLY STAGE
DEVELOPMENT
PRODUCTDEVELOPMENT PRODUCTION
Areas of Operation
CIT GAP Funds Overview
• Family of Seed-Stage Venture Funds
• Virginia Investment Focus
• Convertible Debt & Equity Fund
• Spin-Outs from Virginia Research Institutions
• “Double-Bottom Line” Fund
• Deep Engagement with Portfolio Companies
GAP Investment Criteria
Management Team / Founder Full-Time Commitment Integrity, Passion, Creativity Coach-ability Record of High Achievement
Investment Stage Seed-Stage Focus Up to 36 Months Prior to Series-A Pre-prototype – Newly-Launched
Technologies
Investment Range GAP Investment
< $200K; >$100K Tranched < $1M Concurrent Syndication < $1M Previous Financing Follow-On Investment up to $250K
Innovation Investment < $75K per Company > $50K Requires IAB Review
Proprietary Advantage Unique Technology Defensible IP Position Difficult-to-Replicate
Scalability Markets with Big Buying Power Potential for Dominant Market Position
Returns Angel -VC Multiples
Industries Technology BioLife Energy
Geographic Focus Virginia-Only
Track Record
81 New Companies Seeded
7 Spin-Outs from Universities and Federal Labs
13X Private : Public Funding Secured
8 Portfolio Companies Exited
4X Named “Top 100 Venture Fund”
Value Creation for …
EntrepreneursCo-InvestorsCommonwealth of Virginia
R&D Service Line
• Deliver technology solutions to solve national and regional challenges• Coastal ocean observing• Remote sensing technologies for mine safety• Vessel detection
• Maintain a statewide research and technology roadmap
• Established the Innovation & Entrepreneurship Measurement System
• Manage the Commonwealth Research Commercialization Fund
R&T Roadmap - Legislation
§ 2.2-2221.2. Commonwealth Research and Technology Strategic Roadmap
Develop the Roadmap…to use to identify research areas worthy of institutional focus and Commonwealth investment in order to promote commercialization and economic development efforts in the Commonwealth
§ 2.2-2233.1. Commonwealth Research Commercialization Fund (CRCF)
Awards from the Fund shall only be made to applications that further the goals set forth in the Commonwealth Research and Technology Strategic Roadmap
R&T Roadmap
• Identify key industry sectors for potential investment
• Identify basic and applied research opportunities with commercial promise in these sectors
• Encourage commercialization and economic development in these sectors
• Help ensure that investments in research are made prudently in focused areas with significant potential for commercialization and economic growth
Findings
• Wireless RF• Cognitive radio• Nuclear plant life• Med isotopes• Integrated comms• Sensor / measurement
• M&S• National defense / homeland security• Smart grid and analytics• Biofuels• Aerospace• Health IT
• Cyber security• Data management / analytics• Smart grid and analytics• Surface engineering• Biotechnology• Med devices
• Power electronics• Smart construction• Bioinformatics• Remote patient care• Intermodal ports• Smart sensing
• Health IT• Data imaging• Hybrid conversion• Energy storage• Uranium mining• Nano solar cells
• Energy storage• Biomass conversion• Drug research• Biothreat defense• Information assurance• Educational software
• Defense intelligence• Cyber security• Information assurance• Biotech• Health IT• Med devices
• Secure telework• Defense logistics• Cyber security• Information assurance• Green tech • Green construction
• Coal bed methane conversion• Biomass • Plug-less power• Personalized medicine• Tobacco-cultured vaccine• Application software
• Cyber security• National defense• Smart grid• Semiconductors• Bioinformatics• Health IT
Roadmap Application
Strategic planningValue Add
Investment vetting
Research recruiting
Scholar recruiting
NewCo formation
Investor recruiting
Fed program dev
VEDP
CR
CF
Toba
cco
Com
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Uni
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ities
In
dust
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Loca
litie
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IT
Company recruiting
RESEARCH
PROOF OFCONCEPT
ORINVENTION
EARLY STAGE
DEVELOPMENT
PRODUCTDEVELOPMENT PRODUCTION
Accelerating Commercialization
GAP Fund
Eminent Researcher Recruitment Fund
Research Matching Fund
Facility Enhancement Loan Fund
Commercialization Fund
SBIR Matching Fund
Commonwealth Research &Technology Strategic Roadmap
STTR Matching Fund
Commonwealth Research Commercialization Fund (CRCF)
• Advanced Manufacturing• Aerospace• Communications• Cyber Security• Energy• Environment• Information Technology• Life Sciences• Modeling & Simulation (M&S)• Nuclear Physics• Transportation
2012 Program Profile
181 proposals were received, representing all ten tech council regions
$35.5M in funding was requested
47 grants were awarded
$5.8M funding was provided
Funding was 100% matched by recipient
• Security for wireless devices – active defense mechanism
43 grants were awarded• Portable device for bone imaging – battlefield and emergency trauma analysis $3M funding was provided• Simulation software – 3D modeling for homeland security
Funding was 100% matched by recipient
2013 Program Profile
100+ proposals submitted, with $7.4M requested
Driving innovation and economic growth in Virginia through technology-based research and commercialization
Roadmap: Key Industry Sectors
Example CRCF Project Profile and Impact
Focus areas included young companies; proof of concept work; cyber security, M&S, IT for K-16 ed, life sciences
• Novel compounds – new therapeutic strategy to halt or reverse diabetes
Broadband Service Line
• Operate Commonwealth’s office of Telework Promotion and Broadband Assistance
• Provide demand generation and infrastructure development services
Program areas
Broadband Mapping
• Availability data collection
• Availability mapping
• Refresh cycle is 6 months
Capacity Building
• “Connectedness” data collection
• Sources for assessment – hospitals, doctors, schools, businesses
Technical Assistance
• Community workshops
• Digital literacy programs
Special Projects
• Stakeholder coordination to deploy
Environmental sensors
Smart grid
Innovation & Entrepreneurship in Virginia
Entrepreneurs and startups account for 30% of new jobs in the Commonwealth
• Provide strategic vision for growing the I&E sector of Virginia’s economy
• Develop, track, analyze and report on key I&E metrics• Recommend statewide initiatives designed to capitalize on industry
and research strengths• Assess national priorities and programs that offer opportunities to
Virginians • Support regional organizations and initiatives focused on I&E• Current programs include:
o Innovation & Entrepreneurship Measurement System (IEMS)o Virginia Performs Scorecardo “Virginia Blueprint” economic development strategic plano STEMo Veterans Employment Initiative
Blueprint Virginia Economic Drivers:
Educational Excellence Workforce Readiness Robust Infrastructure Supporting Advanced Manufacturing Attractive Business Climate Technology, Innovation and Startups Small Business and Entrepreneurship Quality, Cost-effective Healthcare Energy Diversity & Security
Goal - Build a statewide consensus among private and public sector leaders regarding investment priorities