The Charlottesville area has been the country’s fastest-growing market for venture capital investment since 2010, according to a national report.
The number of companies receiving venture capital funding, according to a report from the National Venture Capital Association, increased roughly 55 percent annually from 2010 to 2015, the highest growth rate of any market in the nation.
The amount of investment dollars pumped into the local market grew by about 157 percent during the same time period, to about $28 million in 2015. The largest investments went to technology companies.
A combination of favorable tax policies for investors and an emphasis on commercializing research breakthroughs at the University of Virginia helped spur the growth, said Tracy Greene, executive director of the Charlottesville Business Innovation Council.
“The university is driving a lot of the growth,” she said. “A lot of the funding stems from academic research.”
Over the past few years, UVa has tried to streamline the process of commercializing new inventions and technology. It’s now easier for researchers to bring technology to the market, said Dr. Richard Shannon, the university’s executive vice president for health affairs.
“The first thing is the university has really revamped its technology transfer office to make it much more friendly to researchers and entrepreneurs,” Shannon said.
Six of the nine companies that received venture funding in 2015 were UVa entities, and two of them had other connections — one of them is run by an alum, the other arose out of the iLab at the Darden School of Business.
The resulting increase in venture capital investment, in turn, made the city more attractive to scientists and engineers, Shannon said, which has only amplified the growth. New entrepreneurship programs at the Darden School and the McIntire School of Commerce have helped encourage students to put ideas to work, as well, he said.
The Center for Innovative Technology also was involved with most of the companies receiving venture capital funding. The center works to promote the technology industry around the state, and since 2004 it has invested seed money in numerous technology and life-science companies around the state, including local biotechnology and semiconductor companies.
The list of local businesses benefiting from the center’s GAP Venture Fund includes ADI Engineering, Cavion and iTi Health.
Alex Euler, the center’s investment director, also is a founding member of the Charlottesville Angel Network, a group of local investors who help fund startup companies in the area.
As the market in Charlottesville has grown, he said, word is spreading that it’s a good place for tech startups — it has a high concentration of talented people, a nice location and access to a major university, he said.
“All the ingredients are there,” Euler said.
The boom was years in the making, said Jeffrey Gallagher, CEO of the Virginia Biotechnology Association. Biotechnology has been one of the industries driving Charlottesville’s venture capital growth. It took nearly a decade for the area to build up a funding infrastructure for tech startups, he said, but it has finally taken off in recent years.
Other universities are looking at what UVa did as a model, hoping to capture some of the same momentum, Gallagher said.
“I talk with people around the country and it’s well-recognized that something special is happening in Charlottesville,” he said.
The question is whether Charlottesville can build on this growth. The companies that received startup investment money will need more funding in the later stages, and there is no guarantee the investments made during the growth period will pan out.
Euler said the Charlottesville area’s growing reputation is attracting more investors. They’re beginning to see the region as a hotbed for innovation, he said.
“I think the outlook is pretty good,” Euler said.
Source: Charlottesville area is fastest growing for startup investment in U.S. – Work It, SoVa: News
