On Thursday, the D.C.-based 2030 Group—a coalition of influential, local business leaders exploring the potential for growth in the D.C.-area—released a detailed, 53-page report about how the D.C.-area can evolve into a strong economic hub for innovative businesses. While progress has been made, the report describes that there is a significant amount of work left to secure the area’s status as a top destination for business, commerce and innovation.
Headed up by Amplifier Ventures’ Jonathan Aberman, the report makes some interesting and important points about how far the D.C. tech scene has come and also what needs to be done so that it succeeds in the future. Alongside this narrative is a methodical series of recommendations poised by the group, which may be applicable to both business owners and policy makers in the region.
In order to construct this report, more than 120 individuals from the local entrepreneurial community were interviewed.
The 2030 Group also employed the help of numerous academic personnel, research consultants, data scientists, entrepreneurs and venture capitalist.
With that all being said, we know you don’t have time to casually comb through a 53-page report. Instead, here’s a brief, TL;DR (too long didn’t read) version of what was said and why it is important.
Alright, let’s get started.
We’re primed for success
- The D.C.-area boasts a good crop of companies, today. More specifically, “over the last 20 years, the Greater Washington Region has consistently had more companies on the Inc. 500 list of the nation’s fastest-growing businesses than any other region.” Now it’s about leveraging that group to create more companies, greater wealth and the next great technology.
Top talent and brands tend to leave though
- Since 1996, 105 companies based in the region have been sold for more than $1 billion each. Of those sold brands, only 16 were acquired by buyers based in the D.C.-area. “When established, non?local companies buy up the region’s successful new businesses, they often shift the purchased business’ operations to their home region. This robs the region not only of potentially profitable, job-creating businesses, but also of the management and operational talent that moves with the business,” the 2030 report contends. In recent weeks, two local tech heavyweights in Cvent and Opower were acquired for $1.65 billion and $525 million, respectively. It remains unclear how their parent companies will shift operations in the future.
Federal funding is huge for D.C.-area business AND it’s in jeopardy
- As part of the aforementioned federal funding, the U.S.’ defense budget is an important catalyst in fueling the growth and development of numerous local businesses—affected industries include data analytics, cybersecurity and defense tech contractors like General Dynamics. In short, the issue is that recent moves from the Department of Defense (DoD)—namely in the establishment of outpost offices in Boston and Silicon Valley—threatens the home-field advantage that many local firms have enjoyed until today. Without that Federal cash, many companies may fall on hard time and even less will sprout up. Diversify that pipeline for funding will be something to consider moving forwards, but how it should be done is another question entirely.
And in that light, venture capital dollars aren’t nearly as influential as Fed money for DC Tech
- While VC investment into the larger DC Tech scene has remained relatively stable at an upwards incline, according to data provided to DC Inno by the National Venture Capital Association, that funding still only totaled $1.4 billion last year. The U.S.’ federal IT and cybersecurity budget dwarfs that number by more than 70 times. In other words, let’s not lose focus on what this region boasts as an advantage. The Greater Washington Region’s venture capital market is relatively small compared to others, nationally, as it ranked 8th in 2015. D.C. tech is trending in the right direction but let’s not bet everything on VC activity.
What needs to be done (in addition to addressing the above):
We’ve got 1776 and others, but how good are they?
- At the moment, the region’s incubators and accelerators are not being held to a quantifiable measure. There needs to be some sort of indication for the quality of companies that these firms are helping produce. A standard score card of sorts would be a welcomed addition that would provide insight into both success, efficiency and quality, which could then be spun for PR purposes.
Buy local, support local
- Big businesses should be buying from local, smaller partners. Whether it’s healthcare, biotech or b2b marketing, the region’s business diversity offers a cohort of potential partnership that can stimulate commerce, locally. One of the ways to organize and make these connections is a dedicated innovation agency (see below).
Creating a dedicated agency (maybe?)
- The report suggests that the region could benefit from some sort of dedicated agency and/or consortium with the specific mission of “advocating for and fostering the connection of entrepreneurial, innovation-based technology businesses with larger companies in the region.” In some ways, organizations like the Washington DC Economic Partnership (WDCEP) and the Loudoun County Economic Development Authority are already championing similar missions but the existence of an overarching, cross county entity does not exist. In theory, this organization could also design a long-term innovation roadmap; offering a transparent game plan for years to come.