RD489 - Virginia-Israel Advisory Board FY2017 Annual Review

Executive Summary:

1. The VIAB invested a significant amount of its resources in FY2017 to building relationships that will lead to sustainable growth that translates into investment and job growth in the Commonwealth. One key program includes leveraging the MOU that was signed between the Strauss Group and Virginia Tech during the Governor’s trip to Israel in July 2016. As a result of the program which took place in January 2017, seven companies presented to a team of Virginia Tech experts and four of these companies visited Virginia within four months of the program.

2. A second major initiative brings the largest private Israeli HMO hospital, Macabbi, into a cooperation agreement with the Carilion ecosystem in Roanoke. The agreement is designed to lead to cooperation in translational research which in turn leads to commercialization in the Roanoke region. Another goal is the creation of a $100 million new Venture Capital fund that can bring a steady flow of high-quality deals to Roanoke. The build-out of each successful company will take place in Roanoke and thus serve as a sustainable job creator based on innovation.

3. During FY2016, the VIAB invested considerable effort to launch Project Turbine. An Israeli energy company with strong financial backing and success in Israel and Europe is convinced, after having met the Governor in 2016, that Virginia can offer a unique opportunity for entry into US market. The goal of the company is to build multiple facilities of either wind, solar or hybrid solar & wind that will add up to 500 MW of power or more. Unfortunately, Virginia does not offer many wind opportunities. The company is currently identifying and negotiating with potential local partners. Finding the partner has become a prerequisite for successful entry into the market. The VIAB remains cautiously optimistic they will succeed and continues to provide support for the project.

4. EPC, a manufacturer of an onsite waste treatment facility for remote locations, received final approval for activation of their first US unit in Tazewell, Virginia. The company plans to establish marketing, company headquarters and manufacturing/assembly in the region during FY2018 or FY2019. A major vendor of EPC is also expected to build a production facility in the region based on EPC’s anticipated successful sales efforts.

5. OSG of Greenville announced in September 2017 that they will expand their facility and create an additional 55 jobs with the potential for more jobs in the future.

6. Two companies that were part of the Virginia-Israel Life Science Commercialization Center that the VIAB initiated in 2010 in Richmond, ImmunArray and Cupron, continue to grow and expand in Virginia and beyond.

7. A new cooperation agreement to conduct joint R&D projects in Agriculture that will lead to commercialization was signed between Hebrew University and Virginia Tech.

8. The first phase of the Chickpea research at VSU had disappointing results. The VIAB worked with the Secretary of Agriculture to shift the research to Virginia Tech along with modest State funding for Chickpea development. It is now clear that to develop a chickpea that can grow in Virginia's relatively moist climate, a full multi-million dollar breeding program is necessary for the development process.

9. During the Governor’s visit in July 2016, Tessa Dairy announced a $500,000 gift of their micro dairy production facility to Virginia Tech which will provide the company with a showcase facility from which they expect to expand into the US. Details have been finalized, and delivery should take place in FY2018.

10. Aquaculture continues to be a major focus for the VIAB. The VIAB initiated Project Jonah, which is projected to be a major transformational project creating 426 jobs in Southwest Virginia. The scope of the project has changed, and there have been delays in raising the necessary capital. The VIAB has voiced concerns about this and the management changes that have taken place over the past two years.

11. Independent of Project Jonah, the VIAB has been working with three other aquaculture companies with proven innovations. The VIAB organized a visit to Israel for Virginia Tech’s Aquaculture expert, Dave Kuhn, Ph.D., along with two other Virginia Tech Agriculture experts, for a working visit to Israel in January 2017. The Virginia Tech team visited these companies and others. Four of the companies subsequently visited Virginia for discussion about potential expansion into Virginia.

12. The number of new jobs created during FY2017 is 128. This number would have doubled had Project Sunshine commenced operation as anticipated. The 128 new jobs represent additional tax revenue to the Commonwealth of $426,880 on a tax base of $7.42 million.

13. From FY2000 – 2017, the VIAB has been involved with activities adding approximately 2,179 new jobs to Virginia's workforce. These jobs have generated approximately $74.9 million in state tax revenues. If we discount this amount by a conservative 78% for multiple parties involved in the facilitation process, the amount of tax revenue generated by the VIAB is $16.48 million which represents a 563% return on Virginia’s investment in the VIAB over the past 17 years.

14. The current pipeline of jobs is 434 over the next 1 – 3 years without Project Turbine which we are aggressively pursuing and are optimistic that we will close in FY2018. Project Turbine can bring an additional 1,100 jobs over the next 1-4 years.

15. The State Auditor of Public Accounts completed the VIAB Audit for FY2017 and reported no issues.