1. Keeping Virginia’s Competitive Edge Small Business Legislative Update The Impact On Entrepreneurs Josh Levi Vice President of Policy October 13, 2010 jlevi@nvtc.orgjlevi@nvtc.org | www.nvtc.orgwww.nvtc.org

2. 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

3. 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

4. Size Of Technology Member Companies By Number Of Employees In Region

5.  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 kdamore@nvtc.org kdamore@nvtc.org

6. 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

7.  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

8.  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

9. Virginia As A National Technology Business Leader Private Sector Statistics  1 st In Concentration Of High-Tech Workers  2 nd For Entrepreneurs Starting Businesses  2 nd For Total Federal Procurement  2 nd For Fastest Growing Firms  3 rd In High-Tech Services  4 th For Economic Development For Nanotechnology  4 th In Engineering Services Employment  5 th In Number Of High-Tech Workers  5 th For High-Tech Payroll  5 th In High-Tech Employment Growth  6 th For High-Tech Average Wages  6 th 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

10. Source: CHMURA Economics & Analysis, Virginia Economic Trends, 1 st Quarter 2010 Report All IndustriesHigh - 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

11. Source: CHMURA Economics & Analysis, Virginia Economic Trends, 1 st Quarter 2010 Report All IndustriesHigh - 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

12.  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

13. 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

14.  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

15. 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

16.  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

17.  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 Technology  Drives Private Sector Capital Investment At A Rate Of 13x Public Outlay Promote Virginia As A Top Destination For Innovation, Entrepreneurs And Small Technology Companies

18.  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

19.  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

20.  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

21.  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 http://www.dmbe.virginia.gov/swamcert.html  Register With eVA As A Vendor eVA 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.www.eva.virginia.gov Doing Business With VITA

22. 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

23. 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

24. Keeping Virginia’s Competitive Edge Small Business Legislative Update The Impact on Entrepreneurs Josh Levi Vice President of Policy October 13, 2010 jlevi@nvtc.orgjlevi@nvtc.org | www.nvtc.orgwww.nvtc.org