Building a Tech Ecosystem
- 1. BUILDING A TECH ECOSYSTEM David J. Robinson Jon Dudley Nate Green The Montrose Group, LLC 9/20/2015 WWW.MONTROSEGROUPLL.C.COM 1
- 2. BUILDING A TECH ECOSYSTEM • The Montrose Group, LLC • Defining a Tech Ecosystem • Industry Cluster • Capital Access • Advisors • Workforce • Broadband • Buy Local • Incubator Topics 9/20/2015 WWW.MONTROSEGROUPLLC.COM 2
- 3. BUILDING A TECH ECOSYSTEM • National TBED Leaders • Negotiated over $1B in tech commercialization funding for public and private entities • Developed early stage capital funds • Serves as early stage company advisors • Gained workforce development funding • Gained funding for regional and statewide broadband networks • Served as strategy advisor for research park developments • Senior level consultants with decades of public and private sector experience The Montrose Group, LLC 9/20/2015 WWW.MONTROSEGROUPLLC.COM 3
- 4. BUILDING A TECH ECOSYSTEM David J. Robinson, Principal of the Montrose Group, LLC •Principal of The Montrose Group, LLC, an economic development and government relations consulting company •Over 20 years of economic development and public policy experience •Adjunct Professor of Economic Development at the Ohio State University •Author of Economic Development from the State & Local Perspective (2014) and The Energy Economy (2015), Palgrave MacMillan •Managed a government relations practice group in large Columbus law firms •Served as a member of the Ohio House of Representatives; •Worked as an economic development executive for Ameritech Ohio •Served as Press Secretary for Columbus Mayor Greg Lashutka •Acted as General Counsel for the Ohio Chamber of Commerce 9/20/2015 WWW. MONTROSEGROUPLLC.COM 4
- 5. BUILDING A TECH ECOSYSTEM Jon Dudley •Director of Technology Commercialization and Grant Writing for The Montrose Group, LLC, an economic development and government relations consulting company •15 years of TBED Experience •Operations Manager, Ohio Third Frontier •Program Manager, Ohio Third Frontier •Manager, Governor’s Office of Science & Technology, Ohio Governor Bob Taft 9/20/2015 WWW.MONTROSEGROUPLLC.COM 5
- 6. BUILDING A TECH ECOSYSTEM Nate Green •Director of Economic Development, Montrose Group, LLC, an economic development and government relations consulting company •Over 15 years as an Economic Development Leader •Piper Jaffray •JobsOhio •Ohio Department of Development •Pickaway Progress Partnership •Cleveland-Cuyahoga County Port Authority 9/20/2015 WWW.MONTROSEGROUPLLC.COM 6
- 7. BUILDING A TECH ECOSYSTEM Cluster Strategy to Determine Industry Focus Build a capital access system Recruit early stage company advisors Develop and fund a STEM workforce development program Develop and fund a broadband network Negotiate a Buy Local Campaign Develop and fund operation of incubator/research park 9/20/2015 WWW.MONTROSEGROUPLLC.COM 7 The Montrose Group, LLC’s Role with a Tech Ecoystem
- 8. BUILDING A TECH ECOSYSTEM Why Tech? Why Ecosystem? 9/20/2015 WWW.MONTROSEGROUPLLC.COM 8
- 9. BUILDING A TECH ECOSYSTEM High-Tech Energy Globalism Advanced Services Advanced Manufacturing 9/20/2015 WWW,MONTROSEGROUPLLC.COM 9 Five Drivers of Economic Development
- 10. BUILDING A TECH ECOSYSTEM High-Tech Jobs = High-Wage Jobs •STEM jobs average $77,880 •Only 4 of the 97 STEM occupations had below average wages •Entrepreneurial regions have 125% higher employment growth & 58% higher wage growth 9/20/2015 WWW.MONTROSEGROUPLLC.COM 10
- 11. BUILDING A TECH ECOSYSTEM Not Just About Capital Access •Growing Connected Industry Focus Essential •Baby Boomer Workforce Crisis •Rural Broadband Challenge •Professional Advisors Critical for Start-Ups •Customers Matter More Than Funding 9/20/2015 WWW.MONTROSEGROUPLLC.COM 11
- 12. BUILDING A TECH ECOSYSTEM Tech Ecosystem Industry Cluster Capital Access Advisors Workforce Broadband Buy Local 9/20/2015 WWW.MONTROSEGROUPLLC.COM 12
- 13. BUILDING A TECH ECOSYSTEM • Pick the hot industry no matter what your region’s strengths • Only urban centers can build tech jobs • You have to have a global research university in your backyard • All it takes is a venture capital fund • If you build the tech companies the workforce will follow Five Myths of Building a Tech Ecosystem 9/20/2015 WWW.MONTROSEGROUPLLC.COM 13
- 14. BUILDING A TECH ECOSYSTEM Growing Industries Regional Strengths 9/20/2015 WWW,MONTROSEGROUPLLC.COM 14 Industry Cluster Analysis
- 15. BUILDING A TECH ECOSYSTEM ID National Industry Clusters Define Geographic Region Choose Benchmark Communities Determine Location Quotients and Competitive Measures Provide Initial SWOT Analysis Select Clusters to Measure Mid Cluster Review Industry Focus Group Input-Output Tables Value/Supply Chain Analysis Shift-Share Analysis •Staffing Patterns 9/20/2015 WWW,.MONTROSEGROUPLLC.COM 15 Elements of an Industry Cluster Analysis
- 16. BUILDING A TECH ECOSYSTEM3,987,446,600 435,146,000 204,501,200 1,643,490,900 235,154,800 1,124,255,000 305,293,100 1,799,825,500 1,870,369,300 3,930,937,800 1,289,566,600 124,130,300 40,525,000 182,464,700 345,826,700 12,953,863,100 526,378,800 WHAT TECH INDUSTRY IS HOT? 2015 VC Investments 9/20/2015 WWW.MONTROSEGROUPLLC.COM 16
- 17. BUILDING A TECH ECOSYSTEM • Build a regional fund • Tap into state and federal government sources • Build an angel network Capital Access 9/20/2015 WWW.MONTROSEGROUPLLC.COM 17
- 18. BUILDING A TECH ECOSYSTEM •Leverage assets from public and private sector •Make investments in high-growth and high-wage companies •Job creation and high-degree of commercialization potential •Outside review of technology and business plan •Board of advisors determines funding •Investors receive ROI in the form of company equity and dividends •Focus investment on industry cluster tied to region •Done in conjunction with Innovation Center Building a Regional Fund 9/20/2015 WWW.MONTROSEGROUPLLC.COM 18
- 19. BUILDING A TECH ECOSYSTEM •Case Study: BioSTL •$30M seed and pre-seed fund •Funded by Washington University-St. Louis, BJC HealthCare and St. Louis Life Sciences Project •Designed to transform innovations from startup and young companies into new jobs and commercialization •Making small to medium size investments in high- growth companies in Bio Sector in STL area Building a Regional Fund 9/20/2015 WWW.MONTROSEGROUPLLC.COM 19
- 20. BUILDING A TECH ECOSYSTEM 9/20/2015 WWW.MONTROSEGROUPLLC.COM 20 Tapping Into State and Federal Resources • US EDA Regional Innovation Strategies Program • i6 Challenge Grants •Proof of Concept Centers and Commercialization Centers. •Can be physical or virtual and priority set for rural communities •Centers for innovation for entrepreneurship and tech commercialization •$500,000 grants •Converting research into viable enterprise •Must Support: •Entrepreneurship •Regional Collaboration •Commercialization of Research
- 21. BUILDING A TECH ECOSYSTEM 9/20/2015 WWW.MONTROSEGROUPLLC.COM 21 •Provide funding for technical assistance to support feasibility, planning, formation, or launch of cluster based seed capital funds •Cannot capitalize a seed fund •Up to $250,000 per applicant •Can jumpstart or expand an existing fund •Applicants must focus on: •Early stage support for innovation based, growth oriented companies: less than 3 years old that are commercializing or improving technology of a product or service •Plan for sustainability: how the fund plans to make equity investments in companies •Demonstrated ecosystem and downstream support: connections with commercialization centers, incubators and training programs. Connections with next level funding sources. Seed Fund Support Grants
- 22. BUILDING A TECH ECOSYSTEM 9/20/2015 WWW.MONTROSEGROUPLLC.COM 22 •Catalytic investments to build, design, or engineer critical infrastructure and facilities that will help implement regional development strategies. •Prior awards include: business incubators and accelerators, technology- based facilities, wet labs, science and research parks, and telecommunications infrastructure and development facilities •Must be aligned with a regional Comprehensive Economic Development Strategy (CEDS) •Average award size is $1.4M; awards range from $200,000 to $3,000,000 US EDA Public Works Program
- 23. BUILDING A TECH ECOSYSTEM 9/20/2015 WWW.MONTROSEGROUPLLC.COM 23 •Collaborative regional innovation: projects that support innovation clusters •Public-private partnerships •National strategic priorities: clean energy, green tech, sustainable manufacturing, IT infrastructure (broadband, or smart grid), innovation in science, healthcare, alternative fuels tech •Global competitiveness •Environmentally sustainable development •Economically distressed and underserved communities Public Works Projects must align with one of the following
- 24. BUILDING A TECH ECOSYSTEM 9/20/2015 WWW.MONTROSEGROUPLLC.COM 24 •Supports industrial expansion in MO resulting in significant capital investments and high-paying jobs in targeted biotech and high-tech clusters, especially those leveraging MO’s agriculture industry •Secured low-interest loan awards up to $3M •Applications currently closed State Programs – Missouri High-Tech Industrial Expansion Program
- 25. BUILDING A TECH ECOSYSTEM 9/20/2015 WWW.MONTROSEGROUPLLC.COM 25 •Pre-seed funding to overcome principal financing challenges of launching start-ups leveraging discovery and talents at MO’s public and private universities and other research organizations •Equity or convertible debt awards up to $100k •Applications currently closed State Programs – Missouri TechLaunch
- 26. BUILDING A TECH ECOSYSTEM 9/20/2015 WWW.MONTROSEGROUPLLC.COM 26 •Accelerates private investments in MO-based start-ups and increases overall investment impacts of third-party investments through seed capital and venture capital awards matching other capital investments •Equity or convertible debt awards up to $500k (Seed Capital) and $2.5M (Venture Capital) •Applications currently closed State Programs – Seed Capital Co- Investment & Venture Capital Co- Investment Programs
- 27. BUILDING A TECH ECOSYSTEM 9/20/2015 WWW.MONTROSEGROUPLLC.COM 27 •Investments expanding support system for entrepreneurs commercializing new technologies or enhancing MO’s innovation economy growth capacity •Grant awards up to $500k •Applications currently closed State Programs – Missouri Building Entrepreneurial Capacity (MOBEC)
- 28. BUILDING A TECH ECOSYSTEM 9/20/2015 WWW.MONTROSEGROUPLLC.COM 28 •Promotes assistance to Ohio companies in developing next generation products or services within certain targeted industry sectors •75% of allowable costs from $500,000 to $1,500,000 •Term of 5-7 years; rate fixed at closing based on credit and economics of project State Programs – Ohio Innovation Ohio Loan Fund
- 29. BUILDING A TECH ECOSYSTEM 9/20/2015 WWW.MONTROSEGROUPLLC.COM 29 • Goal is to increase the availability of professionally managed capital and associated services to accelerate the growth of early-stage Ohio technology companies • Provides loans to capitalize funds that have attracted the support of other non-state investors • Target investments to pre-seed technology-based businesses • Application period currently open State Programs – Ohio Pre-Seed Fund Capitalization Program
- 30. BUILDING A TECH ECOSYSTEM •Angel v. Fund Investor •Community Assessment •Industry Focus •Building the Framework •Membership and Culture •Organizational Structure •Legal Structure •Investment Structure •Funding Angel Organization Build an Angel Network 9/20/2015 WWW,MONTROSEGROUPLLC.COM 30
- 31. BUILDING A TECH ECOSYSTEM Launching Angel Group Operations •Recruitment •Communications •Backgrounds/Educational Needs •Time Commitment •Meeting structure •Sponsorship •Collaboration with Other Angels •Promotion 9/20/2015 WWW.MONTROSEGROUPLLC.COM 31
- 32. BUILDING A TECH ECOSYSTEM Deal Sourcing Deal Screening Coaching Presentations Due Diligence Investment Terms and Negotiations Liability and Risk 9/20/2015 WWW.MONTROSEGROUPLLC.COM 32 Angel Deal Identification and Investing
- 33. BUILDING A TECH ECOSYSTEM Access to information and measuring success Tracking investments and follow-on financing Board seats and Mentoring Exits Angel Follow-on Relationships 9/20/2015 WWW.MONTROSEGROUPLLC.COM 33
- 34. BUILDING A TECH ECOSYSTEM •Role •Development •Five Rules Team of Advisors 9/20/2015 WWW.MONTROSEGROUPLLC.COM 34
- 35. BUILDING A TECH ECOSYSTEM Role for Tech Advisors •Professional Team •Lawyers •Accountants •Public Relations •Financiers •Mentoring •Strategic Thinking •Industry Experience •Investor Preparation •Access to Capital Contacts •Credibility in the Marketplace 9/20/2015 WWW.MONTROSEGROUPLLC.COM 35
- 36. BUILDING A TECH ECOSYSTEM • Albany Medical Center-Biomedical Acceleration and Commercialization Center • Connections to: • Industry Executives • Clinical and Business Advisory Board • Access to Hospital Professionals, Medical Staff and Researchers • Speaker Series • Venture Capital Roundtable Team of Advisors- Case Study 9/20/2015 WWW.MONTROSEGROUPLLC.COM 36
- 37. BUILDING A TECH ECOSYSTEM Membership Model Special Access to Tech Companies Limited Time Agreed Upon Plan Compensation 9/20/2015 WWW.MONTROSEGROUPLLC.COM 37 Development of Tech Advisors
- 38. BUILDING A TECH ECOSYSTEM •Gain the right mix of professionals •Remember the importance of industry experience •Set the ground rules at the start related to time and services to be provided •Keep it strategic •Keep the advisors engaged 5 Rules for Building Tech Advisory Board 9/20/2015 WWW.MONTROSEGROUPLLC.COM 38
- 39. BUILDING A TECH ECOSYSTEM •Globalism & Demographics Creating Skilled Workforce Shortages •Aging Baby boomers •Low Millennials Rate Reducing Workforce •600,000 Manufacturing Jobs Open •56% of technology executives cannot fill jobs •Big growth in STEM, health care and financial services STEM Workforce 9/20/2015 WWW,MONTROSEGROUPLLC.COM 39
- 40. BUILDING A TECH ECOSYSTEM Workforce Network • Industry Cluster Analysis • Skills Gap Analysis • Business-Education Connection • Funding • Occupational Marketing Workforce Incentives • Market Opportunity • Project Definition • Economic Incentives Analysis • Project Intro • Incentive Negotiations • Government Monitoring Workforce Pipeline • Industry Cluster/Labor Shed • Workforce Committee • Student Aptitude • Vocational Training Program • Company Connection and Apprenticeship • Sustainable Funding 9/20/2015 WWW.MONTROSEGROUPLLC.COM 40
- 41. BUILDING A TECH ECOSYSTEM •North Carolina bio manufacturing, industry based training program •Partnership with NC State University, NC Central University and University of North Carolina •Certificate, associate and bachelors degrees connected to bio manufacturing •Funded with $70M in state tobacco settlement NC BIO IMPACT 9/20/2015 WWW.MONTROSEGROUPLLC.COM 41
- 42. BUILDING A TECH ECOSYSTEM • Investment per subscriber in rural broadband systems averaged $2,921 compared with $1,920 in urban location • Regional Broadband Network/Wi-Fi • Private Carrier v. Public Carrier Models • Aggregation of Data Customers Broadband 9/20/2015 WWW.,MONTROSEGROUPLLC.COM 42
- 43. BUILDING A TECH ECOSYSTEM •State of Ohio Capital Bill •Bondable Project •Economic Development or Arts Project •Local Ranking Process •State Legislation •$100,000-$2,000,000 Broadband State Funding 9/20/2015 WWW.MONTROSEGROUPLLC.COM 43
- 44. BUILDING A TECH ECOSYSTEM •Rural Broadband Access Loan & Loan Guarantee •Funding for construction, improvements or acquisition of facilities and equipment needed for broadband service speed •$100k - $20M loans •applications July 30 - September 30, 2015 Broadband USDA Funding 9/20/2015 WWW.MONTROSEGROUPLLC.COM 44
- 45. BUILDING A TECH ECOSYSTEM •Community Connect Grants •Extends broadband service access to help rural residents utilize the internet for jobs, education, healthcare, public safety and community development •$100k - $3M loans •Applications currently closed Broadband USDA Funding 9/20/2015 WWW.MONTROSEGROUPLLC.COM 45
- 46. BUILDING A TECH ECOSYSTEM Lake County, Florida • Municipal broadband network with fiber optic connections to hospitals, doctor offices, private businesses, and 44 schools • Lake County experienced approximately 100 percent greater economic growth since making its municipal broadband network available to businesses and municipal institutions in the county 9/20/2015 WWW.MONTROSEGROUPLLC.COM 46
- 47. BUILDING A TECH ECOSYSTEM •Connecting regional, large corporations with local, early stage start-ups for business development opportunities • Creates customer opportunities for early-stage tech start-ups and potential funding sources Buy Local 9/20/2015 WWW.,MONTROSEGROUPLLC.COM 47
- 48. BUILDING A TECH ECOSYSTEM • LEAP • A program where corporations provide an innovation challenge and startups compete for a pilot • STEP • A program where startups identify their top prospects and Cintrifuse curates access Cincinnati’s Cintrifuse 9/20/2015 WWW.MONTROSEGROUPLLC.COM 48
- 49. BUILDING A TECH ECOSYSTEM 5 Tips to Building a Buy Local Tech Company Campaign • Build a critical mass of large company partners • Ensure early stage tech companies are ready for a large influx of business • Create clear and regular communications between big and small companies • Connect mid-level leadership of large companies with top-level leadership of early stage companies • Develop measures and metrics for determining success of campaign 9/20/2015 WWW.MONTROSEGROUPLLC.COM 49
- 50. BUILDING A TECH ECOSYSTEM •Don’t jump without a strategy in place •Recognize this is a multi-pronged approach •Plenty of money available from local, state and federal government sources •Existing corporate and university resources are critical •You don’t have to be Silicon Valley to succeed 5 Conclusions about Building a Tech Ecosystem Questions: drobinson@montrosegroupllc.com 9/20/2015 WWW.MONTROSEGROUPLLC.COM 50