Josh Levi Vice President of Policy October 13, 2010 jlevi@nvtc | nvtc

Keeping Virginia’s Competitive Edge

Small Business Legislative Update

The Impact On Entrepreneurs

Josh Levi

Vice President of Policy

October 13, 2010

[email protected] | www.nvtc.org

The Northern Virginia Technology Council Is The Membership And

Trade Association For The Technology Community In Northern

Virginia And Is The Largest Technology Council In The Nation.

Who We Are

NVTC Members Are From All Sectors Of The Technology Industry

Including:

Our Membership Companies

Aerospace

Bioinformatics

Biotech/Life Sciences

Cyber Security

Data Centers

Education IT

Green IT

Health IT

Information Technology

Internet

Modeling and Simulation

Nanotechnology

Professional Services/

Government Contracts

Semiconductors

Software

Systems Integration

Telecommunications

Size Of Technology Member Companies

By Number Of Employees In Region

26%

50%

4%

6%

4%2%

5%

1 to 9 10 to 74 75 to 149 150 to 249

250 to 499 500 to 999 1000+

Launched In 2004

Educational Programs

Mentoring And Advising Opportunities

Networking Events And Activities

Online Guidance And Resources

For More Information Contact Kristin D’Amore At [email protected]

NVTC Public Policy Advocacy

Focus Since 1991

Membership Driven

Centered On Tech Industry Needs/Concerns

Emphasis On Commonwealth Of Virginia

Successes Thrust Virginia Into Broad Technology Leadership Position

Highly Educated Workforce

World Class Colleges And Universities

Low Tax State

Attractive Regulatory Environment

Right To Work

Reliable And Affordable Energy

Access To Ports And International Airport

Well Managed State/AAA Bond Rating

Open To Innovative Public-Private Partnerships

Commonwealth Of Virginia Supports And Promotes Business

Named The “Best State For Business” By Forbes Four Years In A Row (2006-2009)

Ranked America's “Top State For Business” By CNBC (2007 And 2009); Took The No. 2 Spot In 2008 And 2010

Ranked “No. 1 Pro-Business State” By Pollina Corporate Real Estate Inc. (2003, 2007, 2009 And 2010)

Ranked The Second “Best State For Business” By Directorship Magazine (2009)

Ranked The Second “Best State To Start A Business” By U.S. News And World Report (2009)

Ranked The Second “Top Overall Growth Performer” By The United States Chamber Of Commerce, "Enterprising States: Creating Jobs, Economic Development, And Prosperity In Challenging Times” (2010)

Virginia As National Business Leader

Virginia As A National Technology Business Leader

Private Sector Statistics

1st In Concentration Of High-Tech Workers 2nd For Entrepreneurs Starting Businesses2nd For Total Federal Procurement 2nd For Fastest Growing Firms3rd In High-Tech Services4th For Economic Development For Nanotechnology4th In Engineering Services Employment5th In Number Of High-Tech Workers 5th For High-Tech Payroll5th In High-Tech Employment Growth6th For High-Tech Average Wages6th For Number Of High-Tech Firms

Sources: 2008 State New Economy Index, National Science Foundation, Cyberstates 2009 And 2010, Lux Research, U.S. Census Bureau, U.S. News & World Report, Federal Procurement Data System

Source: CHMURA Economics & Analysis, Virginia Economic Trends, 1st Quarter 2010 Report

All Industries

High - Tech

2009Q2 VA Employment

2009Q2 VA Wages

84%

16%

69%

31%

Total Employment: 3,558,351

High-Tech Employment:585,051

Total Wages: $41.68b

High-Tech Wages: $13.04b

Technology In Virginia's Economy

Source: CHMURA Economics & Analysis, Virginia Economic Trends, 1st Quarter 2010 Report

All Industries

High - Tech

2009Q2 NOVA

Employment

2009Q2 NOVA Wages

73%

27%

55%

45%

Total Employment: 1,239,569

High-Tech Employment:331,183

Total Wages: $19,134,180

High-Tech Wages: $8,608,377

Technology In Northern Virginia's Economy

Aggressive Computer Crimes Laws

Broadband Deployment Policies And Investments

Commercial Law To Support E-Commerce

Early Leader In E-Government

Legacy Of Rejecting Internet Sales And Services

Taxes

State Investments To Build Research Capacity

Telework Promotion

Technology Procurement

Technology Tax Policy And Incentives

Virginia Supports And Promotes Technology Business

Dual Emphasis Economic Development Strategy Is Key Emphasis 1: Enhance Tools To Attract Companies

Seeking To Relocate, Expand, Establish R&D Operations

Doubled Governor’s Opportunity Fund

$6M To Expand International Marketing Efforts

Lower Threshold For Major Business Facility Tax

Credit

Increase Worker Training Incentives

Bolster Department Of Business Assistance

Program Activity

State Industrial Mega-Site Fund

Green Jobs Tax Credit

Emphasis 2: Employ Comprehensive “Grow Your Own”/New Company Formation Strategy

Position Virginia As:A Leader In Next-Generation Tech

Company Formation And Innovation

Top Destination For Entrepreneurs, Early Stage Investors, Innovators

Dual Emphasis Economic Development Strategy Is Key

Emphasis 2: Employ Comprehensive “Grow Your Own”/New Company Formation Strategy

Recent Policies Help Promote Virginia As A Top Destination For Innovation, Entrepreneurs And Small Technology Companies

100% Capital Gains Tax Exemption For Technology Investments

CIT Early Stage GAP Fund VA Angel Investor Technology Tax

Credits VA One Stop Business Permitting Portal

Dual Emphasis Economic Development Strategy Is Key

Capital Gains Tax Exclusion 100% Capital Gains Tax Exclusion For Founders

And Investors In Qualifying Tech Startups

3 Year Window

Targeted Toward Statewide Technology, Biotechnology, Energy Companies

Entrepreneurs And Investors Can Come To Virginia To Start And Invest In Early Stage Tech Companies Over The Next Three Years With No Long Term Capital Gains Tax Liability

Strongly Promote Virginia As A Top Destination For Innovation And Technology Startups

CIT/GAP Fund $1.5M In Additional Funding To Bolster CIT’s

Early Stage GAP Fund Early Stage Fund To Underwrite Critical And

Immediate First Financing For High Growth, High Expectation Early Stage Companies

Targeted Toward Statewide Technology, Biotechnology, Energy Startups

Public-Private Partnerships Model CIT Does Due Diligence And Validates Science

And TechnologyDrives Private Sector Capital Investment At A

Rate Of 13x Public Outlay

Promote Virginia As A Top Destination For Innovation, Entrepreneurs And Small Technology Companies

Angel Investor Tax Credit Encourage And Leverage Early Stage Investments

In Technology Startups

Targeted Toward Statewide Technology, Biotechnology, Energy Startups

50% Of Qualified Business Investments, Up To $50,000 Credit Per Investor

For Calendar Year 2010, Funding For The Program Was Increased From $3M To $5M

Strongly Promote Virginia As A Top Destination For Innovation, Entrepreneurs And Small Technology Companies

1975: Virginia Opened Its First Minority Business Office

1980s: Agencies Began Establishing Goals For Minority Business Spending

2003: A Study Commissioned By Governor Warner Found That Less Than One-Half Of One Percent (< 0.5%) Of State Contracts In Virginia Were Directed Towards Minority Owned Businesses

Small, Women- And Minority-Owned Businesses In Virginia

2005: Governor Warner Called For The State To Direct 40% Of Its Goods And Services Needs To SWaM Businesses In Executive Order 103

2006: Governor Kaine Signed Executive Order 33 Expanding The Commonwealth’s Efforts To Enhance Opportunities For SWaM Businesses

Spring 2008: The Commonwealth Reached 40% Goal And Number Of SWaM Certified Businesses Up From 4,000 (2006) To 15,800

August 2010: Governor McDonnell Created The Governor’s Supplier Diversity Advisory Board To Revitalize Procurement Policy, Expand Opportunities To SWaM Businesses

Small, Women- And Minority-Owned Businesses In Virginia

Before A Business Can Participate In VITA's IT Procurement Activities As A SWaM Certified Business, It Must:

Obtain Certification As A SWaM Business From The Department Of Minority Business Enterprise (DMBE).http://www.dmbe.virginia.gov/swamcert.html

Register With eVA As A VendoreVA Is Virginia's Online Procurement Initiative. Current And Potential Suppliers Of IT Products And Services To The Commonwealth Of Virginia Must Register With eVA, At www.eva.virginia.gov.

Doing Business With VITA

Impact Of Defense Secretary Gates’ Announced DoD Cuts On Virginia

Source: CLARITY Advisor, Special Report On DoD Funding Cuts, Deltek, Inc.

Deltek: Clarity Advisor

Cuts Will Hit Federal Professional, Administrative and Management Support Services (PAMS)

The Government Spent $73.3B In The PAMS Category In FY2009

DoD Spent $45.9B In The PAMS Category In FY2009 $10.8B Went To Contracts Performed In Virginia $3.8B Went To Contracts Performed In California

Impact Of Defense Secretary Gates’ Announced DoD Cuts On Virginia

Source: CLARITY Advisor, Special Report On DoD Funding Cuts, Deltek, Inc.

Deltek: Clarity Advisor

10% Cut Would Cost Firms Working In Virginia At Least  $1.1B In FY2011 (≈ 11,000 Jobs)

10% Cuts In FY2012, FY2013 To Follow

Will Impact: Firms Holding DoD Contracts Funded From

Federal Supply Group (PAMS) Subcontractors Working For Those Firms Suppliers To Both At Least 200 Firms Receive 90% Or More Of Their

Prime Contract Funding From This One Category

Keeping Virginia’s Competitive Edge

Small Business Legislative Update

The Impact on Entrepreneurs

Josh Levi

Vice President of Policy

October 13, 2010

[email protected] | www.nvtc.org