RD283 - Virginia Biotechnology Research Partnership Authority Financial Statements - June 2021 (Audited)
This past year was the first full fiscal year under my leadership as President and CEO of Activation Capital. As a new transplant to the region, I felt it important to begin my tenure with a regional assessment. My goal was to better understand its assets, needs, and the unique role Activation Capital could play to help grow the Commonwealth of Virginia’s startup ecosystem. This process continues to be challenging during a pandemic where “business as usual" is a distant memory and the “new norm" is yet to materialize fully. Although we continue to manage the uncertainty of COVID-19, we established a strategic direction that places a greater focus on our strengths and on achieving operational excellence.
My decision to double-down on our existing work in the life sciences sector and ecosystem development was informed by our organizational strengths, the needs documented through stakeholder conversations across the state, and the projected growth areas in our region. I observed a clear opportunity to achieve organizational ambitions by evolving how we execute both internally and in our work with the broader community. This “operational pivot" is our near-term focus and an important precursor to a bigger, bolder future. I have set three priorities to help position Activation Capital for success: a) Grow impact from our core strengths in infrastructure, content, and convening, b) Strengthen our core business, and c) Grow our leadership in generating ecosystem results.
GROW IMPACT FROM OUR CORE STRENGTHS
Upon stepping into the CEO role, growing the organization’s impact was a top priority. My assessment determined that our growth strategy should be rooted in the organization’s historic strengths in infrastructure, programming, and convening and should be expanded in bold ways. As a result, we took the first steps in that direction across the organization.
Infrastructure – We will continue operating and activating spaces but add results-focused programming that helps mature business ventures.
The VA Bio+Tech Park (Park), our life sciences and advanced-technology campus, has been home to an important cluster of entrepreneurs for nearly 30 years. We continue to be despite the COVID-19 pandemic. Our offices and wet lab spaces are operating at full capacity and continue to experience new demand for lab space. We added ten new companies to the Biotech Center during this fiscal year. We also celebrated the relocation of Aditxt into 25,000 square feet of space in the Park this year. The company is expected to add 300 employees to our tech community over the next three years.
However, the pandemic-related disruptions across the commercial real estate industry forced the organization to reexamine the 8L building project that commenced three years ago. We conducted a new market analysis to quantify demand for life sciences space in the region. We looked comprehensively at how the 34-acre Park could be best utilized for the long-term growth of the regional innovation economy. As a result of what we learned, we established a bigger vision to evolve the Park into an innovation district with life sciences as its core. The conditions in Richmond are ripe for such an evolution: a) the prior work on 8L, b) the growth in research funding at Virginia Commonwealth University (VCU) to $363 million, c) the growing number of health and bioscience-related assets in downtown Richmond, and d) the new City Center plan advanced by the City of Richmond to refocus on an innovative live, work, play community to catalyze growth.
Entrepreneurial Content/Programming - We will narrow our focus and offer fewer, more targeted resources to help grow the quantity and quality of tech entrepreneurs in the region.
Historically, we hosted two signature conferences annually. This year, we hosted a hybrid “Up River" in October 2020 before ultimately deciding to sunset the UpRiver/ DownRiver conference series. In its place, we launched “Pitch Virginia" - a one-day pitch competition highlighting students, main street, and high-growth companies. Support from Capital One will enable $15,000 to be awarded to aspiring entrepreneurs. Blending small businesses with high growth into one event will enable us to experiment with a more cohesive approach to growing the Central Virginia entrepreneurial ecosystem.
Ecosystem Development - We will invest more resources to help cultivate a life sciences specialization that positions the region competitively.
The Park was created with a mission to grow life sciences and advanced technology entrepreneurship. Life sciences is a resilient sector with clear leaders across the U.S. Yet, more than 70% of invention disclosures from VCU represent new intellectual property in life sciences. The region’s challenge has been defining a unique role and positioning in this competitive sector. As a result, Activation Capital participated in a strategic planning effort funded by GO Virginia Region 4 and VCU’s College of Engineering to study and design a strategy to create an Advanced Pharmaceutical Manufacturing Cluster in Central Virginia. As momentum gains around the initiative, we will have an opportunity to help develop a globally competitive regional specialization in this area.
STRENGTHEN OUR CORE BUSINESS
To position Activation Capital for future growth, we have begun to optimize our core business in order to produce better results from existing assets. The first objective was to redesign the organization’s functional areas and create new business infrastructure to protect its revenue streams and improve its ability to execute.
Functional Redesign - Activation Capital is not funded through annual state appropriations. As a result, our Finance and Accounting function is critically important to sustaining the organization and funding its long-term growth. Therefore, we allocated considerable time this fiscal year to redesign this function with outside experts’ support. This redesign included migrating to cloud-based systems to improve operational efficiencies, reduce costs, and position the organization to pursue new revenue streams. We also added finance and real estate expertise to the team to help grow revenue through existing real estate channels and identify new revenue growth channels. These additions were particularly important as we continue to deepen our focus on growth opportunities in life sciences real estate. Together, these changes helped us increase operating revenue by $120,000. Finally, to achieve agility in how we operate, we will continue upgrades to IT, Operations, and Marketing functions over the next fiscal year – migrating to new technologies and methodologies.
GROW OUR LEADERSHIP IN ECOSYSTEM DEVELOPMENT
Achieving operational excellence will enable the organization to expand its reach and grow its impact in the future.
Refocus on Ecosystem Results - This year, we shifted our goal to becoming the most effective, results-generating ecosystem development leader in the state. We reworked our mission statement, which now reads, “Grow Virginia’s community of advanced tech entrepreneurs and empower them to solve the world’s toughest problems." Our goal is to increase the number of entrepreneurs using technology to solve the biggest challenges with world-changing products and services. Our key measure of success is the number of entrepreneurs/ventures that our region creates and helps become sustainable businesses. Achieving that goal requires focus.
Design Regional Entrepreneurial Pipeline -This year, we set a goal to map a clear pathway for entrepreneur development by identifying and linking university, business, and community programs. As a result, we will engage the Activation Council, VCU Innovation Gateway, and various other stakeholders differently to develop an inclusive pipeline to grow the number of entrepreneurs. During the Summer, I will add a new role to the team to oversee the development and implementation of this strategy.
This year we also stepped into our role as the organizing entity for GO Virginia Region 4’s entrepreneurship strategy. Accepting this role will enable us to help build the programmatic connections across the Central Virginia entrepreneurial ecosystem. In addition, we will oversee the development of an integrated entrepreneurship strategy for the entire region in the coming year, with input from key stakeholders. In the meantime, we have begun work with VCU da Vinci Center, VCU REAL, and the Jackson Ward Collective to create the VCU Entrepreneurship Academy. This initiative proposes a new model for delivering 21st-century innovation and entrepreneurship skills through four modules in design thinking, digital literacy, business model canvas, and art of the pitch. Completing the Academy will earn Credly badges and provide the entrepreneur with a chance to be located in the new Shift Retail Lab at VCU, which will provide real-time customer feedback and is a first-of-its-kind space for the ecosystem.
Design Pathways for Diverse Founders in Tech Entrepreneurship - Activation Capital was awarded a grant from Altria to design a capacity-building program to grow diversity and inclusion in Central Virginia’s Startup Ecosystem. The strategy and pilot program design will continue through the next fiscal year and seek to add on-ramps for black and brown founders into the broader entrepreneurial ecosystem. We will add diversity & inclusion expertise to the team to effectively execute on this priority.
Strengthen Capacity & Results Orientation of Entrepreneur Support Organizations (ESO) - Our mission is to grow the number of successful high-growth entrepreneurs operating in the Commonwealth of Virginia. This fiscal year, we continued to provide administrative, financial, and expert support to help achieve this goal.
• Grant Funding Through the Ecosystem Direct Investment Fund (EDIF), we invested in programming administered by key ESOs to accelerate high-growth technology ventures. This year’s awardees included Lighthouse Labs, Startup Virginia, VCU Ventures, the Dominion Energy Innovation Center (DEIC), and 757 Collab – totaling up to $833,000 in support.
o DEIC launched a new Energy Accelerator to educate and connect startups to Dominion Energy.
o Startup Virginia launched the Idea Factory to support aspiring entrepreneurs.
o Lighthouse Labs grew the number of accelerator applicants to 363 applicants - its hightest to date.
o 757 Collab launched 757 Startup Studios to house and support entrepreneurs.
• Early-Stage Funding - Riverflow Growth Fund, of which Activation Capital is a founding limited partner, made its first investment, providing $250,000 to DrugViu, an artificial intelligence-driven population health platform. Focused on supporting startups in the health innovation and multi-market tech sectors, the goal of Riverflow is to help startups survive the challenging time between angel funding and Series A funding. The ecosystem development work, coupled with the investments and work Riverflow Growth Fund brings investors to Virginia, is critical in growing entrepreneurship in the region and across the Commonwealth.
This year has been a year of resetting. While we had unexpected challenges, Activation Capital is better positioned to take advantage of new opportunities and help transform Central Virginia’s regional ecosystem. We look forward to working with our board, regional organizations, and the Commonwealth in these endeavors.
/s/ Chandra Briggman