WASHINGTON – Traditionally viewed as a government town, Washington and the capital region are undergoing an extensive entrepreneurial and startup renaissance.
What began in Northern Virginia—an epicenter of telecommunications startups in the 1990s—has more recently transformed into a software powerhouse and radiated into the rest of the capital region.
Not surprisingly, Washington’s entrepreneurial scene is based in technology developed for education, health care, transportation, the environment and other industries regulated and overseen by the federal government. And it’s growing.
“Washington D.C. is a magnet for young ambitious people who want to change the world, and that’s a great recipe for entrepreneurship,” said Jeff Reid, founding director of Georgetown University’s Entrepreneurship Initiative.
Washington fared relatively well during the recession because the government, which drives the economy in the capital region, never stopped spending. For that reason, Reid said, entrepreneurs are flocking to the Greater Washington area.
Jennifer Ives, director of business investment at Arlington Economic Development in Arlington, Va., just across the Potomac River from Washington, said the region’s startup success began in NOVA—partly because Virginia has favorable tax codes for starting one’s own business. She said Arlington is saturated with technology companies working in fields like education and health care.
In fact, Aneesh Chopra, former chief technology officer for President Barack Obama’s administration, commonly calls Arlington the “the new Palo Alto.”
Now Virginia’s success is spreading to other areas in the region, specifically the District of Columbia.
With the high density of technology engineers employed by the government at entities such as the National Security Agency, Reid said it is no surprise the region’s technology field is expanding.
Bennett Richardson, chief management officer at the Washington-based tech startup that developed Hinge, a smartphone dating app, said there is “world class tech talent” to be found in the nation’s capital. He said Washington is an especially attractive place to build his company because the community is so supportive compared to other technology hubs like San Francisco and New York City. “It’s a rising tide lifts all boats kind of thing,” he said. “Anybody who does well in D.C. reflects better on the D.C. tech ecosystem.”
The fundamental building block of a vibrant startup culture, especially one that relies heavily on technology, is the presence of young people, Reid said. Washington, with its universities and young government staffers, has no shortage of 20-somethings.
But, to a young person with a good idea, interacting with the government can be a daunting and confusing task.
That’s where companies like 1776 come in. Co-founded earlier this year by Evan Burfield and Donna Harris, serial entrepreneurs with seven previous startups between them, 1776 provides accelerator services for startups trying to break into those regulated fields. It seeks to connect those same businesses with politicians, experts, lobbyists, NGOs and professionals who work on the inside.
“Typically, none of those groups are interacting with the startup ecosystem,” Burfield said. “And yet, when we think about issues like education and health care, some of the most interesting and disruptive ideas are coming from startups.”
The government’s presence in Washington should be viewed as an attraction for the new companies, Reid said, rather than a deterrent. Most governors come to Washington multiple times a year, many countries have a presence, and nearly every large technology firm has a lobbying operation in the city.
Reid also said the U.S. government is the “biggest customer in the world,” giving out grants and contracts to companies all over the country. Jonathan Perrelli, managing director of Fortify Ventures, an outfit that provides funding and consultant services to startups, said after 9/11, nearly one million jobs were created to aid the homeland security effort.
1776 plans to open later this month a 15,000 square-foot co-working office building where employees of startups can rent space and be surrounded by like-minded people. The campus—so-called by 1776—in downtown Washington will serve as office space for young companies. It will also host talks and meet-and-greets with experts and investors, similar to the model used by DC Tech Meetup, a popular endeavor which brings together nearly 1,000 innovators, entrepreneurs and investors monthly.
Bennett Richardson said working in proximity to other startups is helpful because he can be around other companies going through many of the same challenges.
Thus far, 1776 has received strong interest in its new “campus” and has rented out the entirety of the building space even before it has opened.
“Hopefully there will always be many things going on, but having one place downtown—it’ll create a critical mass that will grow on itself,” Reid said.