As the federal government pulls back on its spending, threatening the strength of the Washington area recovery, interest is growing in nurturing entrepreneurs and young companies that might one day pick up the slack.
A multitude of organizations across Maryland, Virginia and the District have made it their mission to cultivate and advance this group, often with the idea that they will produce high-growth companies and create jobs that in turn generate tax revenue.
This week marks the one-year anniversary of the Startup America Partnership, a national initiative created by President Obama and chaired by former AOL chief executive Steve Case that aims to promote private-sector investment in entrepreneurship.
Three regional chapters of the partnership are preparing to lay down roots. Groups in Virginia and the District will officially kick off their efforts Tuesday, with Maryland slated to follow shortly thereafter.
The Startup America Partnership began to form regional outposts across the country in the middle of last year to spur the creation of fast-growing companies in areas beyond established hotbeds such as Silicon Valley, New York and Boston.
“The genesis for it is when we look across the country and we see all the start-up activity that’s happening, there are high-growth companies in literally every pocket of the country,” said Donna Harris, managing director for Startup Regions.
The region has room to grow. An annual analysis by the Kauffman Foundation, a nonprofit devoted to entrepreneurship and education, ranked the Washington area eighth in the nation for the number of people per 100,000 residents who started a business in 2010 and worked on it 15 hours or more in a given month. That puts the metropolitan area behind cities such as Chicago, Houston and Miami.
Top among the local groups’ goals will be to better integrate young firms into the Washington area’s more established industries.
Local investor Jonathan Aberman has been at the helm of Startup Virginia. He said entrepreneurs in the Washington region should build companies that address the needs of large, locally based firms, such as Marriott or Lockheed Martin, that might eventually act as acquirers.
“It’s a lot easier to sell to someone who is down the street than it is to sell to someone across the country,” Aberman said.
Although those established giants may have money and often need new technology, they don’t always have the same appeal to start-ups as the social media and Internet companies that populate California or New York.
“Do I think that entrepreneurs look and think, ‘I want to develop products for Boeing’? No,” Aberman said. “But I think entrepreneurs want to grow companies that they can sell for a lot of money but also have fun and be impactful.”
But even as the three groups set out with similar goals, a nagging undercurrent in this region is its division among three distinct jurisdictions. Maryland, Virginia and the District compete vigorously and often unabashedly for companies and their tax revenue.
“I think [the divisions] are exacerbated for understandable reasons, and that’s the tax base,” said Mark Walsh, founder of an advertising firm called Genius Rocket, who is working on Startup Maryland. “Silicon Valley exists in one state. Here you have three specific budgets . . . and that makes a natural fist fight for who gets that tax base.”
But regional organizers for the Startup America Partnership say they won’t be bogged down by divisions.
“I don’t know of any entrepreneurs who aren’t going to cross the river for a great client or a great investor or vice versa,” said Startup D.C. organizer Evan Burfield, who founded an information-technology services company called Synteractive. “That’s a political issue. It’s not an entrepreneur’s issue.”