1. Virginia’s Technology Future Technology, Innovations and Startups Council Josh Levi Vice President of Policy Northern Virginia Technology Council June 24, 2013 Richmond, VA 1

2.  Highly educated workforce  World class institutions of higher education  Low tax state  Attractive regulatory environment  Right to work  Reliable, available and affordable energy  Excellent ports and international airport  Well Managed State/AAA bond rating  Open to innovative public-private partnerships Commonwealth of Virginia Supports and Promotes Business 2

3. Why Technology?  Technology industry drives growth  Technology increasingly important in state government  Technology keeps Virginia businesses competitive  Technology and innovation drive effective and efficient solutions to problems  We are already ahead! Virginia’s technology successes have already distinguished us as a global technology center and a top destination for technology businesses and workers 3

4. Virginia Is National Technology Business Leader  1 st in highest concentration of high tech employees in the nation  3 rd in high tech services  4 th in number of tech workers  5 th in high tech payroll  6 th in # of high tech establishments Source: The TechAmerica Foundation, 15th edition of Cyberstates 4

5. Virginia Is National Technology Business Leader Also…  1 st in STEM job growth from 2002-2012  1 st in STEM job concentration  1 st in high tech share of all businesses  1 st in fast growing firms  2 nd in computer systems design employment  2 nd in private sector scientists and engineers  3 rd in e-government  4 th in engineering services employment  6 th overall in ITIF’s State New Economy Index  7 th in venture capital as percent of worker earnings  8 th in internet and telecommunication services Source: The TechAmerica Foundation, 15th edition of Cyberstates United States Chamber of Commerce, Enterprising States 2013 The Information Technology & Innovation Foundation, The 2012 State New Economy Index 5

6. Source: CHMURA Economics & Analysis, Virginia Economic Trends, 2 nd Quarter 2013 Report All IndustriesHigh - Tech 2012Q3VA Virginia Technology Employment 84% 16% Total Employment: 3,621,476 High-Tech Employment: 594,306 6

7. Source: CHMURA Economics & Analysis, Virginia Economic Trends, 2 nd Quarter 2013 Report 2012Q3VA Virginia Technology Wages 69% 31% Total Wages: $45.24B High-Tech Wages: $14.19B 7 All IndustriesHigh - Tech Tech workers earned an average wage of $98,920 93 percent more than Virginia’s average private sector wage Tech workers earned an average wage of $98,920 93 percent more than Virginia’s average private sector wage

8.  Aerospace  Big Data/Data Analytics  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 Virginia Has Strong And Diverse Technology Industry 8

9.  Center for Innovative Technology (CIT)  Virginia Innovation and Entrepreneurship Investment Authority (IEIA)  Nation’s First Cabinet – Level Secretary of Technology  Chief Information Officer to Manage State IT (CIO)  Virginia Information Technologies Agency (VITA)  Joint Commission on Technology and Science (JCOTS)  Senate Committee on General Laws and Technology  House Science and Technology Committee  Advisory councils including:  Aerospace Advisory Council  Broadband Advisory Council  Modeling and Simulation Advisory Council Virginia’s Government has Embraced Technology 9

10.  Aggressive computer crimes laws  Early leader in e-government  Commercial law to support e-commerce  State investments to build research capacity  Broadband deployment policies and investments  Telework promotion and incentives  Technology procurement policy  Technology tax incentives The Commonwealth of Virginia Supports & Promotes Technology Business 10

11. Dual Emphasis Economic Development Strategy is Key  Emphasis 1: Enhance Tools To Attract Companies Seeking To Relocate, Expand, Establish R&D Operations  Includes:  Governor’s Opportunity Fund  Virginia Jobs Investment Program  Virginia Investment Partnership Act  Virginia Economic Development Incentive Grants  VEDP Marketing and Overseas Offices  Major Business Facility Jobs Tax Credit  Worker Training Incentives  Department of Business Assistance Program Activity 11

12.  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 12

13. Mature Business Lifecycle 13

14. Commerc ialization StartupGrowthMaturity Research 14  Direct Research Funding From The Commonwealth  Capital Investments To Provide Space/Capacity  Commonwealth Research and Technology (R&T) Strategic Roadmap  CRCF: Eminent Researchers Component  CRCF: Matching Funds Component  Higher Education Equipment Trust Fund  R&D Income Tax Credit  R&D Sales Tax Exemption

15. Commerc ialization StartupGrowthMaturity Research 15  CRCF: SBIR/STTR Match Component  CRCF: Commercialization Program  CRCF: Facilities Enhancement Loan Program  BOVs May Delegate Faculty Conflict Of Interest Waivers To University Presidents  BOVs May Assign Title Of University IP

16. Commerc ialization StartupGrowthMaturity Research 16  Virginia’s Business One Stop  CIT GAP Funds  Mach37™ Cyber Accelerator  Angel Investment Tax Credit (Qualified Equity And Subordinated Debt)  Capital Gains Tax Exclusion  Sales Tax Exemption For Software Publishers  Refundable R&D Tax Credit  R&D Sales Tax Exemption

17. Commerc ialization StartupGrowthMaturity Research 17  Provide highly skilled STEM workforce for growth businesses  594, 306 tech employees 2012Q3  More than 18,700 students were enrolled in information technology programs and over 3,600 degrees and certificates were awarded in the 2010-2011 academic year (SCHEV)  Commonwealth STEM Industry Internship Program  SySTEMic Solutions

18. Commerc ialization StartupGrowthMaturity Research 18 (continued)  Targeted State Incentives:  Semiconductor Manufacturing Performance Grant Program  Data Center Incentives  Sales Tax Exemption For Downloaded Software  Telecom And Internet-related Incentives  Green Jobs Tax Credit  Discretionary Performance Grants  Local Personal Property Tax Incentives For: Biotechnology Broadband Data centers

19. Commerc ialization StartupGrowthMaturity Research 19  Tax And Regulatory Predictability

20.  Big Data Analytics  Biotechnology  Computers/Telecommunications/ IT  Cybersecurity  Data Center Infrastructure and Investment  Green Technology and Alternative Energy  Health IT  Modeling & Simulation  Nanotechnology  Security and Information Assurance  Space and Aerospace Leveraging our Competitive Advantage in Targeted Industry Sectors 20

21. Virginia’s Technology Future Technology, Innovations and Startups Council Josh Levi Vice President of Policy Northern Virginia Technology Council June 24, 2013 Richmond, VA 21

22. Technology, Innovation and Startups June 24, 2013

23. CIT accelerates the next generation of technology and technology companies Our objective is to be globally recognized as the innovator, builder and premier provider of services that accelerate technology company development Mission

24. Accelerate federal funding for small businesses Operate technology sourcing and management consulting practice Operate Office of Telework and Broadband Promotion Operate the GAP Fund Provide demand generation and infrastructure services Service Lines and 2013 Objectives Deliver technology solutions via R&D programs Maintain a statewide research and tech roadmap Administer the Commonwealth Research Commercialization Fund

25. RESEARCH PROOF OF CONCEPT OR INVENTION EARLY STAGE DEVELOPMENT PRODUCT DEVELOPMENT PRODUCTION Areas of Operation

26. CIT GAP Funds Overview Family of Seed-Stage Venture Funds Virginia Investment Focus Convertible Debt & Equity Fund Spin-Outs from Virginia Research Institutions “Double-Bottom Line” Fund Deep Engagement with Portfolio Companies

27. GAP Investment Criteria Management Team / Founder Full-Time Commitment Integrity, Passion, Creativity Coach-ability Record of High Achievement Investment Stage Seed-Stage Focus Up to 36 Months Prior to Series-A Pre-prototype – Newly-Launched Technologies Investment Range GAP Investment $100K Tranched < $1M Concurrent Syndication < $1M Previous Financing Follow-On Investment up to $250K Innovation Investment < $75K per Company > $50K Requires IAB Review Proprietary Advantage Unique Technology Defensible IP Position Difficult-to-Replicate Scalability Markets with Big Buying Power Potential for Dominant Market Position Returns Angel -VC Multiples Industries Technology BioLife Energy Geographic Focus Virginia-Only

28. GAP Funds – Leverage Value (all) 13x

29. Track Record 81 New Companies Seeded 7 Spin-Outs from Universities and Federal Labs 13X Private : Public Funding Secured 8 Portfolio Companies Exited 4X Named “Top 100 Venture Fund” Value Creation for … Entrepreneurs Co-Investors Commonwealth of Virginia

30. R&D Service Line Deliver technology solutions to solve national and regional challenges Coastal ocean observing Remote sensing technologies for mine safety Vessel detection Maintain a statewide research and technology roadmap Established the Innovation & Entrepreneurship Measurement System Manage the Commonwealth Research Commercialization Fund

31. R&T Roadmap - Legislation § 2.2-2221.2. Commonwealth Research and Technology Strategic Roadmap Develop the Roadmap…to use to identify research areas worthy of institutional focus and Commonwealth investment in order to promote commercialization and economic development efforts in the Commonwealth § 2.2-2233.1. Commonwealth Research Commercialization Fund (CRCF) Awards from the Fund shall only be made to applications that further the goals set forth in the Commonwealth Research and Technology Strategic Roadmap

32. R&T Roadmap Identify key industry sectors for potential investment Identify basic and applied research opportunities with commercial promise in these sectors Encourage commercialization and economic development in these sectors Help ensure that investments in research are made prudently in focused areas with significant potential for commercialization and economic growth

33. Findings Wireless RF Cognitive radio Nuclear plant life Med isotopes Integrated comms Sensor / measurement M&S National defense / homeland security Smart grid and analytics Biofuels Aerospace Health IT Cyber security Data management / analytics Smart grid and analytics Surface engineering Biotechnology Med devices Power electronics Smart construction Bioinformatics Remote patient care Intermodal ports Smart sensing Health IT Data imaging Hybrid conversion Energy storage Uranium mining Nano solar cells Energy storage Biomass conversion Drug research Biothreat defense Information assurance Educational software Defense intelligence Cyber security Information assurance Biotech Health IT Med devices Secure telework Defense logistics Cyber security Information assurance Green tech Green construction Coal bed methane conversion Biomass Plug-less power Personalized medicine Tobacco-cultured vaccine Application software Cyber security National defense Smart grid Semiconductors Bioinformatics Health IT

34. Roadmap Application Strategic planning Value Add Investment vetting Research recruiting Scholar recruiting NewCo formation Investor recruiting Fed program dev VEDP CRCF Tobacco Comm. Universities Industry Localities CIT Company recruiting

35. RESEARCH PROOF OF CONCEPT OR INVENTION EARLY STAGE DEVELOPMENT PRODUCT DEVELOPMENT PRODUCTION Accelerating Commercialization GAP Fund Eminent Researcher Recruitment Fund Research Matching Fund Facility Enhancement Loan Fund Commercialization Fund SBIR Matching Fund Commonwealth Research &Technology Strategic Roadmap STTR Matching Fund

36. Commonwealth Research Commercialization Fund (CRCF) Advanced Manufacturing Aerospace Communications Cyber Security Energy Environment Information Technology Life Sciences Modeling & Simulation (M&S) Nuclear Physics Transportation 2012 Program Profile 181 proposals were received, representing all ten tech council regions $35.5M in funding was requested 47 grants were awarded $5.8M funding was provided Funding was 100% matched by recipient Security for wireless devices – active defense mechanism 43 grants were awarded Portable device for bone imaging – battlefield and emergency trauma analysis $3M funding was provided Simulation software – 3D modeling for homeland security Funding was 100% matched by recipient 2013 Program Profile 100+ proposals submitted, with $7.4M requested Driving innovation and economic growth in Virginia through technology-based research and commercialization Roadmap: Key Industry Sectors Example CRCF Project Profile and Impact Focus areas included young companies; proof of concept work; cyber security, M&S, IT for K-16 ed, life sciences Novel compounds – new therapeutic strategy to halt or reverse diabetes

37. Broadband Service Line Operate Commonwealth’s office of Telework Promotion and Broadband Assistance Provide demand generation and infrastructure development services Program areas Broadband Mapping Availability data collection Availability mapping Refresh cycle is 6 months Capacity Building “Connectedness” data collection Sources for assessment – hospitals, doctors, schools, businesses Technical Assistance Community workshops Digital literacy programs Special Projects Stakeholder coordination to deploy Environmental sensors Smart grid

39. Innovation & Entrepreneurship in Virginia Entrepreneurs and startups account for 30% of new jobs in the Commonwealth Provide strategic vision for growing the I&E sector of Virginia’s economy Develop, track, analyze and report on key I&E metrics Recommend statewide initiatives designed to capitalize on industry and research strengths Assess national priorities and programs that offer opportunities to Virginians Support regional organizations and initiatives focused on I&E Current programs include: o Innovation & Entrepreneurship Measurement System (IEMS) o Virginia Performs Scorecard o “Virginia Blueprint” economic development strategic plan o STEM o Veterans Employment Initiative

40. Blueprint Virginia Economic Drivers:  Educational Excellence  Workforce Readiness  Robust Infrastructure  Supporting Advanced Manufacturing  Attractive Business Climate  Technology, Innovation and Startups  Small Business and Entrepreneurship  Quality, Cost-effective Healthcare  Energy Diversity & Security Goal - Build a statewide consensus among private and public sector leaders regarding investment priorities