RD144 - Center for Innovative Technology Operating Plan Fiscal Year 2010


Executive Summary:
Introduction

Fiscal Year 2009 was the fourth year of execution of an operating plan that did not significantly change from the prior year’s plan. This contrasts to CIT’s history, when plans were annually rebuilt to respond to funding fluctuations and mission re-definition. Achieving plan stability over a five- to seven-year horizon has allowed CIT to maximize program value and return on invested capital.

During 2009 CIT delivered on its stated goals. The Connect service line supported new private-sector and Virginia state clients, the GAP Funds provided funding to a broadening portfolio of high potential companies, the Research and Development service line transitioned key projects to the federal government for continued development, and the Broadband service line contributed to rural broadband penetration and telework promotion.

Operating Environment

Annually, CIT reviews the economic climate for technology and technology company creation. As in 2008, the following observations have been validated:

1. Advanced technology fields including nanotechnology, biotechnology, energy, and health informatics require pursuit of specific market segments in order to establish a market leadership position.

2. Changing economic and geopolitical environments create the need to stimulate innovation for new solutions to challenges in energy production and consumption.

3. Federal funds play a significant role in supporting the capital requirements of many early-stage technology companies.

4. There is a significant void in angel and early-stage investment capital for seed-stage companies nationally as well as in the Commonwealth.

5. Early-stage companies and large-scale technology consumers have a difficult time identifying each other, which prevents technology assimilation and young company growth.

6. Access to affordable broadband is mandatory to support rural economic development.

In addition to the above observations, management considered the following developments while shaping the 2010 operation direction.

1. Green technology as a research and market sector discipline provides significant opportunity for establishment and development in Virginia.

2. The contracting global economy will continue to provide significant funding challenges for CIT in terms of Commonwealth appropriations.

3. The American Recovery and Reinvestment Act of 2009 represents an opportunity for CIT to secure new federal contracts.

Direction

After carefully reviewing environmental factors that are relevant to CIT’s mission, management determined that the programmatic direction for 2010 should be very similar to the 2009 direction, but include some fine-tuning. These adjustments are:

* For expense management and organizational alignment by scientific discipline instead of target market, research programs in the defense (Institute for Defense and Homeland Security) and non-defense areas will be consolidated into one research and development unit.

* The economic downturn is placing increased demands on support services for GAP portfolio companies, shifting CIT’s emphasis from new investments to existing portfolio companies.

* Continually reduced funding from the Commonwealth necessitates the pursuit of private funding sources for GAP investment programs.

* All operating groups in CIT will coordinate and support the pursuit of new funding opportunities provided by the American Recovery and Reinvestment Act.

For 2010, the CIT mission of “accelerating the next generation of technology and technology companies” coupled with the objective to “achieve national recognition as the premier services provider engaged in technology company creation and company growth” will focus the organization on expanding its programs and in return make the Commonwealth the next innovation hub in the United States.

2010 Goals

CIT’s 2010 goals and corresponding service lines are as follows:

Research and Development service line

Goal 1: Create new industry clusters in advanced technologies.

Goal 2: Solve national technological challenges through world-class R&D solutions.

Entrepreneur service line

Goal 3: Secure global leadership in the development of entrepreneurial technology ventures.

Connect service line

Goal 4: Secure global leadership in the identification and assimilation of innovative technologies.

Broadband service line

Goal 5: Expand the use and application of broadband technologies in rural and underserved areas.

American Recovery and Reinvestment Act

On February 17th, 2009, President Obama signed the American Recovery and Reinvestment Act (ARRA). The ARRA created funding for state and local governments that will help offset tax revenue reductions resulting from the economic recession by creating new jobs. Governor Kaine responded to the signing of the ARRA and related federal funding opportunities by forming a statewide information resource and information dissemination service. CIT is actively participating in opportunity and proposal development with Virginia’s Department of Education, Department of Mines, Minerals and Energy and state entities involved in broadband deployment. In addition to supporting statewide proposal efforts, CIT management is monitoring competitive grant announcements and has submitted several multi-million dollar proposals. While at the time of this writing it is too early to report the level of success these proposals achieved, CIT management considers the ARRA to be a significant funding opportunity.