HD37 - The Creation of New High-technology Industries in Virginia


Executive Summary:
The main objective of the VRTAC Sub-committee on ‘The Creation of New High-technology Industries in Virginia’ is to make very specific policy recommendations that will enhance the Governor’s endeavors to position the Commonwealth as an emerging leader in technology-based research and commercial accomplishments both nationally and globally.

This sub-committee was consciously formed with a highly experienced team of members from the State General Assembly, the top research institutions and successful private sector establishments in Virginia. Hence, it has been a sincere and diligent effort of the sub-committee to utilize the diverse knowledge and expertise of its members in making recommendations. These recommendations are the end results of six months of extensive research, periodic meetings with not just the sub-committee members but also with other key officials, vice presidents of research and development, leaders of technology transfer, successful entrepreneurs and venture capitalists from both Virginia and other competing states. As a result of these extensive efforts, the sub-committee has identified three critical issues that Virginia must immediately address, in order to burgeon out from its current leadership in federal funding and high-technology employment to becoming a highly sought after state for investments in high-technology research, development and commercialization. The three critical issues are:

1. Recognizing and building the existing regions of technological leadership in the Commonwealth, while addressing the imperative need to further spur the development of private equity capital targeted at early-stage technology companies in Virginia.

2. Bridging the physical gap between research universities and technology businesses in Virginia.

3. Recognizing the importance of the mission of CIT and funding that mission.

The sub-committee report further explains why these issues can act as impediments to Virginia’s economic growth and how they can be transformed to catalysts of success.

More than 90% of the new technology start ups in Virginia are funded by private sources while fewer than 7% spin out from the SBIR programs and less than 1% from university labs. (‘Technology-Based Businesses’, December 2002 report of the joint force appointed by Secretary of Technology and Secretary of Commerce and Trade). To create new knowledge intensive industries that would spur technological and economic advancement in both the public and the private sectors in Virginia, it is vital that the policy makers (technology facilitators), the universities (technology developers) and the corporate sponsors (technology marketers) collaborate and discharge their roles in building a high-technology state. The recommendations of this sub-committee are focused around building those collaborations and are as follows:

1. Extend Virginia’s already “business-friendly” climate to address stage two (growth oriented) venture-backed businesses to secure their establishment of headquarters and/or key operational units in Virginia.

2. Create an “Invest Virginia” program to mobilize investments in Virginia-based venture capital funds from private sources through use of selective investment incentives.

3. Provide Virginia code changes and allocate baseline funding for the Center for Innovative Technology of at least $7.65 million annually.

4. Develop Virginia’s nanotechnology sector, focusing on industry leadership in nanomanufacturing.

5. Recommend SCHEV conduct a study of alternative ways to create a world-class science and technology-focused research and post-graduate educational institution in Northern Virginia, which can leverage the expertise in Virginia’s leading science and engineering departments across all of the state universities.

6. Eliminate barriers between Virginia universities and industry.

7. Revise leave of absence policies and reward faculty with bonuses to increase quality of research and education in Virginia universities.

The recommendations in this report are just the beginning of creating the necessary environment for growth and include establishing several key working groups that will continue to study and focus on making specific recommendations in the future.