By Dave Oberting
In his five year economic development strategy document, DC Mayor Vince Gray set the goal of making the District of Columbia the largest technology center on the eastern seaboard. That puts us in competition with places like Research Triangle Park in North Carolina, New York, and Boston. For guidance on how the District government can foster the development and growth of its own technology industry, we can look to the tech powerhouse closer to home, northern Virginia.
Through organizations like the Northern Virginia Technology Council (NVTC), the Center for Innovative Technology (CIT) and documents like the Commonwealth Research and Technology Strategic Roadmap, NoVA has formalized its technology strategy and growth plans, which helps guide the actions of northern Virginia policymakers. With the help of these organizations and strategies, northern Virginia focuses not just on supporting and seeding startups, but on commercializing their technology.
NVTC is the membership and trade association for the technology community in NoVA. It has about 1,000 members from all sectors of the technology industry. It provides public policy advocacy on a broad range of technology issues at the local, regional, and federal levels. While the District’s tech community is smaller and younger, it’s never too early to organize a nascent industry to make progress on public policy priorities. My organization, Economic Growth DC works on legislation and regulation that impacts technology industry growth on a daily basis. It is always helpful to those efforts to have another organized ally. The voice of one small company doesn’t carry much weight, but 500 of them speaking with one voice carries quite a bit.
CIT is a non-profit economic development organization and it administers the Commonwealth Research Commercialization Fund (CRCF), which is a publicly funded vehicle for advancing research, development and, most importantly, the commercialization of Virginia technology to drive economic growth. The Virginia legislature appropriated $4.8 million for this fund in fiscal years 2013 and 2014. Commercialization is critical because that is the point at which a 20 person startup becomes a 200 or 2,000 person company. Your app can be whiz-bang, but if you don’t have a strategy for bringing it to market, your company will never be much more than an idea.
CIT also administers the CIT Gap Funds, which provide taxpayer funding to promising startups in the form of seed and early stage investments in Virginia based technology. It is important to note that the Virginia state government does not make these investments directly. It makes use of the non-profit CIT to make investment decisions. CIT is staffed with experienced investment professionals and they help to avoid the politicization that can occur with direct government investment.
In addition to these targeted incentives, Virgiania makes good use of tax and regulatory policy. It has also created a very favorable legal climate. Once a business hits about 200 employees, people become both its biggest asset and its biggest liability. Favorable employment law plays a key role in what makes Virginia the #1 state in the country for business as ranked by Forbes magazine. The District was not ranked in their survey, but Maryland was 18th. CNBC has a similar survey that puts Virginia at 5th and Maryland at 40th. It’s safe to say that DC is somewhere between Virginia and Maryland.
So what is there to learn from our nearest competitor? First, they have a coherent technology strategy that guides the efforts of policymakers at the state and local level. Secondly, they’ve built strong institutions that are designed explicitly to foster technology industry growth and make wise use of taxpayer funds. Importantly, they’ve kept those institutions outside of the government bureaucracy. And finally, they’ve created a legal and regulatory scheme that fosters faster growth.
To achieve Mayor Gray’s technology industry goals, the District can learn a lot from our nearest competitor. There are a number of things that can be done without taxpayer money, such as a revision of labor laws, but the District should not shy away from using a limited amount of taxpayer money to build the institutions that lead to long-term growth.
Dave Oberting is the Executive Director of Economic Growth DC, a political and economic advocacy organization focused on the District of Columbia and its economy. Follow him on Twitter @GrowthDC, or email him at email@example.com.