PORTSMOUTH, Va. (WAVY) — For too long the Hampton Roads economy has depended on military defense spending, tourism, and the Port of Virginia, and now the area is realizing that is not enough.
According to the U.S. Bureau of Labor Statistics’ information on job growth since 2009 by metro area, Hampton Roads is dead last in job growth among all peer cities, including Richmond and Detroit.
“Of all metropolitan areas in the country between 1 and 3 million people, what you’ll find is that Hampton Roads ranks last,” said Bob Crum, the executive director of the Hampton Roads Planning District Commission.
“The first thing we did was create Reinvent Hampton Roads,” says local business leader John “Dubby” Wynne who helped create Reinvent Hampton Roads and whose mission is to strengthen and diversify the Hampton Roads Economy. “Our localities are working together to scale up small and midsize companies,” Wynne says.
Start-ups are being scaled up through programs like 757 Angels, which in just over three years has become the fastest growing Angel Group in America.
757 Angels has raised over $30 million in private equity money to support entrepreneurs who are diversifying the Hampton Roads economy.
757 Angels has already helped fund 15 companies in Hampton Roads. Anne Conner is on the 757 Angels board of directors, “If we create higher paying jobs in Hampton Roads, this economy will flourish. How do you create higher paying jobs? You nurture and develop small and medium enterprises.”
One such 757 Angels company is ivWatch in Hampton. One of its products, the ivWatch Model 400, now has FDA clearance and quickly alerts you when an IV has missed a vein and is leaking drugs into surrounding tissue. It’s estimated that 150 million IVs are placed in people every year, and 1 in 6 will fail. That is stunning, and has been considered “acceptable but unacceptable.”
President and CEO Gary Warren has received investment capital from many sources, including 757 Angels.
“What it did was formalized a group relationship between these accredited investors and it gets the word out in the community,” Warren said.
The word is out, ivWatch’s average non-executive salary is about $82,000, nearly double the average salary in Hampton Roads.
More importantly Warren employs 41 people and is trying to solve a major medical problem while creating a large biotech firm.
“My dream is in 10 years, this is a 1,000 person company and we have plans to get there.”
You must also get workers to move here from other areas of the country like they are doing at xTuple in Norfolk, which produces business management software.
“We have had good success bringing people form California, Boston, New York. About a third of our people have moved to Norfolk, ” says xTuple’s president and CEO Ned Lilly. “A guy moved here from California from Oracle. He moved his family to Chesapeake … he moved here because he liked the cost of living, and he liked our business, of course.”
xTuple employs 30 people and credits 757 Angels for its success, “They helped us grow and expand our product base … if they hadn’t helped, we’d still be slugging it out at a lower level, and we wouldn’t have been able to grow like we have … we have created high wage jobs, technology jobs, and that’s what we have been able to do as a result of 757 Angels.”
757 Angels is just one example on how to diversify Hampton Roads.
Reinvent Hampton Roads President and CEO Jim Spore sent a letter out on January 2, 2018, listing all the initiatives that moved forward in 2017.
During this past year the following initiatives moved forward:
1. Hampton Roads Entrepreneurial Eco-System Assessment: This comprehensive look at the status of the entire entrepreneurial ecosystem in Hampton Roads mapped system components, included lessons from other ecosystems in competitive regions, and described best practices nationally. The analysis concluded that we have gaps in the identified “acceleration pathway”. The region needs a first class business accelerator and the establishment of an associated Seed Fund to provide timely resources to promising companies exiting the accelerator and prior to obtaining venture capital.
2. U.S. Commerce Department ‘I-6’ Grant: As part of the eco-system analysis that identified a gap associated with the need for an effective business accelerator, an application was prepared to the U.S. Department of Commerce for potential grant funding to create the accelerator. The effort achieved unprecedented collaboration between five cities, six universities and the private sector. In October, we were notified that our grant request was one of 17 approved nationally. The operation of the accelerator will be advised by an “Innovation Council” that will bring stake holders and experts together to guide this important work and improve the business start-up culture in Hampton Roads.
3. Hampton Roads Access to Capital Analysis: This report examined the adequacy and ease of access to capital in the region to, in part, ascertain if problems exist in this important component of the entrepreneurial eco-system.
4. Entrepreneur-In-Residence: This partnership between the State of Virginia, NASA, Tech Center LLC and Reinvent Hampton Roads has placed an entrepreneur at NASA Langley for the purpose of increasing the commercialization of research efforts emanating from the federal lab. The initial intellectual property discovery phase of the project is complete with several promising commercial business opportunities identified. An effort to expand this program to the opportunities at Jefferson Lab will occur throughout next year as well.
5. Site Inventory Project: The lack of an adequate inventory of “shovel ready” industrial sites has been repeatedly identified as a serious constraint to landing new employers into Virginia and our region. This project represents a partnership between the Hampton Roads Planning District Commission (HRPDC), the Hampton Roads Economic Development Alliance (HREDA), our private utility providers and Reinvent Hampton Roads to create a regional inventory of available industrial sites. Site assessments will also identify what needs exist to bring sites to a “shovel ready” condition. Phase one of the project (size 100 acres+) is nearing completion and will be presented to the HRPDC on January 18th. A second phase is planned that will identify smaller sites. Once sites are identified and evaluated, we envision outlining specific projects to upgrade deficiencies to improve site readiness. We are coordinating with Virginia Economic Development Partnership (VEDP) to assure integration of our regional inventory into the State system.
6. TCC Suffolk Property: As an example of follow-up steps associated with the previously described site inventory project, Reinvent Hampton Roads, through the efforts of the TCC Real Estate Foundation and the City of Suffolk has been part of the activities to bring this key parcel owned by the Real Estate Foundation to a development ready condition. Lessons learned through this process can be applied to other parcels identified in the site inventory.
7. Port of Virginia Opportunity Strategy: Reinvent Hampton Roads is partnering with seven cities, the Virginia Port Authority, VEDP and the Virginia Maritime Association to conduct a comprehensive look at ways to attract jobs and additional business activity to the Port. Leveraging and expanding the impact of the Port asset can be a large economic benefit for the Commonwealth and our Region. The strategy is on track for completion by mid-January.
8. Regional Workforce Gap Analysis: Working with our partners, HREDA, Opportunity Inc., and the Peninsula Council for Workforce Development we completed an analysis of the Regional Workforce. The project goal is to implement specific steps to close identified workforce gaps and develop an integrated workforce development model as a regional strength to assist in attracting new businesses to Hampton Roads.
9. Regional “Dashboard” Project: In conjunction with the United Way of South Hampton Roads, ODU College of Business, HREDA and HRPDC we are creating a comprehensive regional dashboard that will track a wide array of indicators of regional performance that will be available to all interested parties. This effort was made possible in large part by financial support from the Hampton Roads Community Foundation. The information sharing associated with this effort will be invaluable in tracking trends, encouraging improved alignment and collaborative policy setting throughout the region.
10. Regional Industry Cluster Scale-Up Project: Following completion of the regional economic analysis conducted for Reinvent Hampton Roads by ODU/GMU we began the effort to establish a methodology to encourage the scale-up of existing small to medium sized companies in our identified clusters. This approach utilizes the Core Value assessment tool and contracted scale-up business advisory services within Reinvent and from GENEDGE. The goal of this effort is to identify smaller companies capable of rapid growth and job creation (doubling in five years). We have reached out to our city/county partners for client referrals and funding to be able to offer these services to companies in participating jurisdictions. Our goal is to enroll seventeen companies by the end of 2018.
11. Industry Cluster Steering Committees: Related to the scale-up process described above, we have (or are just creating in some clusters) small steering committees of individuals engaged in our various Regional Clusters. These committees, typically of six to eight members, have been tasked with: 1) conducting a situational analysis of the cluster; 2) identifying potential firms that might be interested in participating in the scale-up process and; 3) developing specific recommendations for the cluster which, if implemented, would improve the business environment and performance in the cluster, thereby encouraging the creation of additional high paying jobs. This process is underway, with several steering committees completed and others planned for completion during the spring of 2018.
12. Virginia Growth and Opportunity Program: Reinvent Hampton Roads is the designated support organization for our region (Region 5), that is comprised of the 17 cities/counties of Hampton Roads plus the two counties comprising the Eastern Shore. Under the Commonwealth’s innovative GO VA program each region has a guiding Regional Council. Our Regional Council was appointed in the spring of 2017 and is comprised of 28 business, education and government leaders from throughout the region. The Council was required to develop an Economic Growth and Opportunity Plan, which was adopted by the Regional Council on August 25th and subsequently approved by the GO VA State Board in September. The Plan serves as a guide to:
a) Identify economic opportunities, needs and challenges facing the region;
b) Establish priorities among identified opportunities, and
c) Outline needed enhancements where GO VA funds can support collaborative programs or projects between two or more localities or regions in order to create more higher paying jobs.
The Regional Council established a process calling for the submission and review of collaborative grant proposals. The review process enlisted numerous subject matter professionals to assist the Council in reviewing applications for submission to the State GO VA Board for consideration on December 12, 2017. Of the nine GO VA regions statewide, twelve grant proposals were submitted. Five of those proposals originated from our region and included:
1. Hampton Roads Cybersecurity Education, Workforce, and Economic Development Alliance Collaboration Laboratory (HRCyber Co-Lab) – Approved
2. Virginia’s Digital Shipbuilding Workforce Program – Approved
3. 757 Seed Fund – Deferred
4. Unmanned Systems Development Facility – Deferred
5. Regional Broadband Infrastructure –
Two additional proposals were not recommended for funding at the regional level. The State Board approved two of our recommendations in December and deferred action on the remaining three proposals pending submission of additional information or policy guidance from the General Assembly.
We have submitted additional information and hope to receive further grant approvals at the February meeting of the GO VA State Board.
At the beginning of last year the Reinvent Hampton Roads Advisory Committee was expanded and transformed into a 14 member Board of Directors. During the year we welcomed four new Board members including Jennifer Boykin, Kevin Murphy, Bob Sasser and Harry Lester. We very much appreciate their willingness to serve and guide the Reinvent Hampton Roads effort. At our October 31st Workshop the Board identified seven areas that they believe offer the best opportunities for job creation, economic growth and attention during 2018. Those areas include:
1. Broadband (access, analytics, AI, data centers, business)
2. Port Economic Development
3. Medical Center of Excellence (plus Bioscience)
5. Entrepreneurial Ecosystem
6. Integrated Workforce Development System
In conclusion, during 2017, working with our numerous partners we put in place, many of the concepts previously identified. The year ahead offers significant opportunities to see the implementation and fruits of earlier collaborations. I want to thank all of those that have worked with us to offer the promise of a better economic future for our region and for all our citizens.
With Pride in Our Region, James K. Spore
Spore mentioned Go Virginia above, which is the statewide initiative for Growth and Opportunity in each region, including Hampton Roads.
So far four projects have received a total of $1.5 million, including a $150,000 grant for a unmanned systems testing and demonstration site in York County.
This grant money will be matched by six communities on the Peninsula and Gloucester County.
York County’s Economic Development Director Jim Noel met with 10 On Your Side at the property.
“We think we have true assets to … succeed. We have existing companies that can grow. It’s not only unmanned systems, it is cybersecurity, it is advanced manufacturing, in all these areas we think we have a great story to tell in Hampton Roads,” Noel said.
Telling the story of Hampton Roads is part of what it takes to sell Hampton Roads, to strengthen and improve the region’s economy from over-dependence on the military, tourism, and the port.
They are all important, but more needs to be done.
10 On Your Side has been reporting what’s wrong with Hampton Roads, and what we are doing about it, and next week we’ll look into what’s right with Hampton Roads and how the tough work of economic development is starting to pay off big time.
See the first part of this series here.