There is plenty of money that flows to places other than Silicon Valley. Believe it or not, Washington, D.C. is in the top ten global markets for venture capital (VC) investment.
In 2015, the Washington-Arlington-Alexandria metropolitan statistical area (MSA) had $924 million invested into 93 companies. It ranked 9th for total funds invested and 7th for quantity of companies.
Of course, this is certainly less than the $21 billion invested in the San Francisco-Silicon Valley MSA. However, DC is the 3rd largest center for VC outside of California, after New York and Boston.
While that may not come as surprise for those well versed in the entrepreneurship stats of the Maryland-DC-Virginia (MDV) area, it struck me as a bit surprising.
When many Americans think of Washington D.C. et. al, most envision an army of bureaucrats, old-money crooks, yes-men and reformed academics—reformed by political grid-lock that is. I’m from Chicago, so I’ll call my bias up front, but that’s largely the image beyond the Beltway.
However, that view dismisses the truth. Washington, D.C. steals millions of the brightest minds from across the country.
According to WalletHub, the region is the runner up for the best educated area in the country. It’s second only to the isolated and academically homogeneous Ann Arbor, Michigan—home of the University of Michigan.
This intelligent lot (pat yourself on the back, you’re probably one of them…) is left concentrated in one relatively small, easy-to-commute area. It’s no New York, but at least the Metro’s relatively clean.
If you put that many bright, talented minds together, you’re bound to spark innovation. It’s like the snowball effect—talent breeds talent, after all.
Whether because of it or in preparation, I-270 is a well known as a biotech hub, and sports the signs to match. GlaxoSmithKline, BioReliance, Supernus, and Meso Scale (while not all new VC-funded companies) are all major biotech employers.
In total, there are 10,000 private sector employees and 49,000 government employees in 170 biotech companies clustered around I-270 alone. More impressive are the 90,000 people employed by 1,200 IT companies in the same cluster.
There are constant plans for tech corridors within the District, as well. DC Innovates has dubbed a strip of Georgia Ave. between Mt. Vernon Square and Kansas Ave. as the “Digital DC Tech Opportunity Corridor.”
There have also been big plans to turn St. Elizabeth’s East Campus in Anacostia into a tech hub. While it’s most notable for attracting the new Wizard’s practice facility, the plans are much broader.
One website uses what they call a location quotient (LQ) to determine the concentration of professions in a variety of cities. If the national LQ for each profession is 1, then the Washington, D.C. area has an LQ of 24.61 for political scientists, 12.61 for economists, and between 7 and 9 for social scientists, mathematical scientists, legal support workers and astronomers. In fact, the same folks claim that 52% of the jobs in DC (1.7 million) are a direct or indirect result of the U.S. Federal Government.
That at once explains the brilliant workforce here, but also begs the question—who are the innovators that are driving venture capital investment?
Considering the lack of a serious “financial” industry here in D.C., ranking in the top ten homes for VC deployment is a particularly surprising status. That means that the non-feds make up a particularly potent sector of business creation and development.
There are also government contractors that require capital to scale up quickly to fulfill new contracts, to be sure. And as I mentioned, the biotech and info tech industries have a particularly good home for growth here in DC.
There are also a slew of other small innovative companies that have been churned out by the city’s business incubators, accelerators and co-working spaces. One company, CoFoundersLab, was designed to get business founders to find each other—like entrepreneurial match-making.
Both because of and in spite of the massive impact the government has here in DC on jobs, there is a large innovative business development culture. While this is still a company town, the well-educated populous, lively urban atmosphere, and the plethora of area experts make it a great town to start and grow businesses.