building a tech ecosystem

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BUILDING A TECH ECOSYSTEM

David J. RobinsonJon DudleyNate GreenThe Montrose Group, LLC

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• The Montrose Group, LLC• Defining a Tech Ecosystem• Industry Cluster• Capital Access • Advisors• Workforce• Broadband• Buy Local• Incubator

Topics



• 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

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BUILDING A TECH ECOSYSTEMDavid 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


BUILDING A TECH ECOSYSTEMJon 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

http://montrosegroupllc.com/wp-content/uploads/2013/12/JonDudley_.jpg


BUILDING A TECH ECOSYSTEMNate 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



Cluster Strategy to Determine

Industry FocusBuild a capital access system

Recruit early stage company

advisors

Develop and fund a STEM workforce

development program

Develop and fund a broadband

networkNegotiate a Buy Local Campaign

Develop and fund operation of

incubator/research park

The Montrose Group, LLC’s Role with a Tech Ecoystem



Why Tech?Why

Ecosystem?

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High-Tech Energy Globalism

Advanced Services

Advanced Manufacturin

gWWW,MONTROSEGROUPLLC.COM

Five Drivers of Economic Development


BUILDING A TECH ECOSYSTEMHigh-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


BUILDING A TECH ECOSYSTEMNot 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



Tech Ecosystem

Industry Cluster

Capital Access

Advisors

Workforce

Broadband

Buy Local



• 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

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Growing Industrie

s

Regional Strengths

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Industry Cluster Analysis

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ID National Industry Clusters

Define Geographic Region

Choose Benchmark Communiti

es

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

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Elements of an Industry Cluster Analysis



Bio techno logy

Business

Products

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Computers

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Consumer P

roducts

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Electronics/ I

nstrumenta

tion

Financia l Serv

ices

Hea lthca

re Serv

ices

Industria l/E

nergy

IT Services

Media and Enter ta

inment

Medica l Devices a

nd Equipment

Network

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Semiconductors

So ftware

Te lecommunications

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0,90

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What tech industry is hot?2015 VC Investments



• Build a regional fund• Tap into state and federal

government sources• Build an angel network

Capital Access



• 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



• 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



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



• 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



• 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



• 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



• 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



• 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



• 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



• 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)



• 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



• 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

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• 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




Launching Angel Group Operations • Recruitment• Communications• Backgrounds/Educational Needs• Time Commitment• Meeting structure• Sponsorship• Collaboration with Other Angels• Promotion



Deal Sourcing

Deal Screening Coaching Presentation

sDue

Diligence

Investment Terms and

Negotiations

Liability and Risk

Angel Deal Identification and Investing



Access to information and measuring success

Tracking investments and follow-on financing

Board seats and Mentoring Exits

Angel Follow-on Relationships



• Role• Development• Five Rules

Team of Advisors



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



• 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



Membership Model

Special Access to

Tech Companies

Limited Time Agreed Upon Plan

Compensation

Development of Tech Advisors



• 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

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• 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




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



• 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

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• 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



•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



•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



•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



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

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• 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

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• 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



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



• 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: [email protected]

building a tech ecosystem

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