Building a Tech Ecosystem

BUILDING A TECH
ECOSYSTEM
David J. Robinson
Jon Dudley
Nate Green
The Montrose Group, LLC
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BUILDING A TECH ECOSYSTEM
• The Montrose Group, LLC
• Defining a Tech Ecosystem
• Industry Cluster
• Capital Access
• Advisors
• Workforce
• Broadband
• Buy Local
• Incubator
Topics
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• National TBED Leaders
• Negotiated over $1B in tech commercialization funding for public and private
entities
• Developed early stage capital funds
• Serves as early stage company advisors
• Gained workforce development funding
• Gained funding for regional and statewide broadband networks
• Served as strategy advisor for research park developments
• Senior level consultants with decades of public and private sector experience
The Montrose Group, LLC

David J. Robinson, Principal of the Montrose Group, LLC
•Principal of The Montrose Group, LLC, an economic development and
government relations consulting company
•Over 20 years of economic development and public policy experience
•Adjunct Professor of Economic Development at the Ohio State University
•Author of Economic Development from the State & Local Perspective
(2014) and The Energy Economy (2015), Palgrave MacMillan
•Managed a government relations practice group in large Columbus law
firms
•Served as a member of the Ohio House of Representatives;
•Worked as an economic development executive for Ameritech Ohio
•Served as Press Secretary for Columbus Mayor Greg Lashutka
•Acted as General Counsel for the Ohio Chamber of Commerce
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Jon Dudley
•Director of Technology Commercialization and Grant
Writing for The Montrose Group, LLC, an economic
development and government relations consulting
company
•15 years of TBED Experience
•Operations Manager, Ohio Third Frontier
•Program Manager, Ohio Third Frontier
•Manager, Governor’s Office of Science & Technology,
Ohio Governor Bob Taft

Nate Green
•Director of Economic Development, Montrose Group, LLC,
an economic development and government relations
consulting company
•Over 15 years as an Economic Development Leader
•Piper Jaffray
•JobsOhio
•Ohio Department of Development
•Pickaway Progress Partnership
•Cleveland-Cuyahoga County Port Authority

Cluster Strategy to
Determine Industry
Focus
Build a capital
access system
Recruit early stage
company advisors
Develop and fund a
STEM workforce
development
program
Develop and fund a
broadband network
Negotiate a Buy
Local Campaign
Develop and fund
operation of
incubator/research
park
The Montrose Group, LLC’s Role with a Tech Ecoystem

Why Tech?
Why
Ecosystem?

High-Tech Energy Globalism
Advanced
Services
Advanced
Manufacturing
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Five Drivers of Economic Development

High-Tech Jobs = High-Wage Jobs
•STEM jobs average $77,880
•Only 4 of the 97 STEM occupations had
below average wages
•Entrepreneurial regions have 125% higher
employment growth & 58% higher wage
growth

Not Just About Capital Access
•Growing Connected Industry Focus Essential
•Baby Boomer Workforce Crisis
•Rural Broadband Challenge
•Professional Advisors Critical for Start-Ups
•Customers Matter More Than Funding

Tech
Ecosystem
Industry
Cluster
Capital
Access
Advisors
Workforce
Broadband
Buy Local

• Pick the hot industry no matter what your region’s strengths
• Only urban centers can build tech jobs
• You have to have a global research university in your
backyard
• All it takes is a venture capital fund
• If you build the tech companies the workforce will follow
Five Myths of Building a Tech Ecosystem

Growing
Industries
Regional
Strengths
Industry Cluster Analysis

ID National
Industry
Clusters
Define
Geographic
Region
Choose
Benchmark
Communities
Determine
Location
Quotients
and
Competitive
Measures
Provide Initial
SWOT
Analysis
Select
Clusters to
Measure
Mid Cluster
Review
Industry
Focus Group
Input-Output
Tables
Value/Supply
Chain
Analysis
Shift-Share
Analysis
•Staffing Patterns
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Elements of an Industry Cluster Analysis

BUILDING A TECH ECOSYSTEM3,987,446,600
435,146,000
204,501,200
1,643,490,900
235,154,800
1,124,255,000
305,293,100
1,799,825,500
1,870,369,300
3,930,937,800
1,289,566,600
124,130,300
40,525,000
182,464,700
345,826,700
12,953,863,100
526,378,800
WHAT TECH INDUSTRY IS HOT?
2015 VC Investments

• Build a regional fund
• Tap into state and federal
government sources
• Build an angel network
Capital Access

•Leverage assets from public and private sector
•Make investments in high-growth and high-wage companies
•Job creation and high-degree of commercialization potential
•Outside review of technology and business plan
•Board of advisors determines funding
•Investors receive ROI in the form of company equity and dividends
•Focus investment on industry cluster tied to region
•Done in conjunction with Innovation Center
Building a Regional Fund

•Case Study: BioSTL
•$30M seed and pre-seed fund
•Funded by Washington University-St. Louis, BJC
HealthCare and St. Louis Life Sciences Project
•Designed to transform innovations from startup
and young companies into new jobs and
commercialization
•Making small to medium size investments in high-
growth companies in Bio Sector in STL area
Building a Regional Fund

Tapping Into State and Federal Resources
• US EDA Regional Innovation Strategies Program
• i6 Challenge Grants
•Proof of Concept Centers and Commercialization Centers.
•Can be physical or virtual and priority set for rural communities
•Centers for innovation for entrepreneurship and tech commercialization
•$500,000 grants
•Converting research into viable enterprise
•Must Support:
•Entrepreneurship
•Regional Collaboration
•Commercialization of Research

•Provide funding for technical assistance to support feasibility, planning, formation, or
launch of cluster based seed capital funds
•Cannot capitalize a seed fund
•Up to $250,000 per applicant
•Can jumpstart or expand an existing fund
•Applicants must focus on:
•Early stage support for innovation based, growth oriented companies: less than 3
years old that are commercializing or improving technology of a product or service
•Plan for sustainability: how the fund plans to make equity investments in companies
•Demonstrated ecosystem and downstream support: connections with
commercialization centers, incubators and training programs. Connections with next
level funding sources.
Seed Fund Support Grants

•Catalytic investments to build, design, or engineer critical infrastructure
and facilities that will help implement regional development strategies.
•Prior awards include: business incubators and accelerators, technology-
based facilities, wet labs, science and research parks, and
telecommunications infrastructure and development facilities
•Must be aligned with a regional Comprehensive Economic Development
Strategy (CEDS)
•Average award size is $1.4M; awards range from $200,000 to
$3,000,000
US EDA Public Works Program

•Collaborative regional innovation: projects that support innovation clusters
•Public-private partnerships
•National strategic priorities: clean energy, green tech, sustainable
manufacturing, IT infrastructure (broadband, or smart grid), innovation in
science, healthcare, alternative fuels tech
•Global competitiveness
•Environmentally sustainable development
•Economically distressed and underserved communities
Public Works Projects must align with one of the following

•Supports industrial expansion in MO resulting in
significant capital investments and high-paying jobs
in targeted biotech and high-tech clusters, especially
those leveraging MO’s agriculture industry
•Secured low-interest loan awards up to $3M
•Applications currently closed
State Programs – Missouri High-Tech
Industrial Expansion Program

•Pre-seed funding to overcome principal financing
challenges of launching start-ups leveraging
discovery and talents at MO’s public and private
universities and other research organizations
•Equity or convertible debt awards up to $100k
State Programs – Missouri TechLaunch

•Accelerates private investments in MO-based start-ups
and increases overall investment impacts of third-party
investments through seed capital and venture capital
awards matching other capital investments
•Equity or convertible debt awards up to $500k (Seed
Capital) and $2.5M (Venture Capital)
State Programs – Seed Capital Co-
Investment & Venture Capital Co-
Investment Programs

•Investments expanding support system for
entrepreneurs commercializing new technologies
or enhancing MO’s innovation economy growth
capacity
•Grant awards up to $500k
State Programs – Missouri Building
Entrepreneurial Capacity (MOBEC)

•Promotes assistance to Ohio companies in
developing next generation products or services
within certain targeted industry sectors
•75% of allowable costs from $500,000 to
$1,500,000
•Term of 5-7 years; rate fixed at closing based
on credit and economics of project
State Programs – Ohio Innovation
Ohio Loan Fund

• Goal is to increase the availability of professionally
managed capital and associated services to accelerate
the growth of early-stage Ohio technology companies
• Provides loans to capitalize funds that have attracted
the support of other non-state investors
• Target investments to pre-seed technology-based
businesses
• Application period currently open
State Programs – Ohio Pre-Seed
Fund Capitalization Program

•Angel v. Fund Investor
•Community Assessment
•Industry Focus
•Building the Framework
•Membership and Culture
•Organizational Structure
•Legal Structure
•Investment Structure
•Funding Angel Organization
Build an Angel Network

Launching Angel Group Operations
•Recruitment
•Communications
•Backgrounds/Educational Needs
•Time Commitment
•Meeting structure
•Sponsorship
•Collaboration with Other Angels
•Promotion

Deal
Sourcing
Deal
Screening
Coaching Presentations
Due
Diligence
Investment
Terms and
Negotiations
Liability and
Risk
Angel Deal Identification and Investing

Access to information and
measuring success
Tracking investments and follow-on
financing
Board seats and Mentoring Exits
Angel Follow-on
Relationships

•Role
•Development
•Five Rules
Team of Advisors

Role for Tech Advisors
•Professional Team
•Lawyers
•Accountants
•Public Relations
•Financiers
•Mentoring
•Strategic Thinking
•Industry Experience
•Investor Preparation
•Access to Capital Contacts
•Credibility in the Marketplace

• Albany Medical Center-Biomedical Acceleration and
Commercialization Center
• Connections to:
• Industry Executives
• Clinical and Business Advisory Board
• Access to Hospital Professionals, Medical Staff and Researchers
• Speaker Series
• Venture Capital Roundtable
Team of Advisors- Case Study

Membership
Model
Special Access
to Tech
Companies
Limited Time
Agreed Upon
Plan
Compensation
Development of Tech Advisors

•Gain the right mix of professionals
•Remember the importance of industry experience
•Set the ground rules at the start related to time and
services to be provided
•Keep it strategic
•Keep the advisors engaged
5 Rules for Building Tech Advisory Board

•Globalism & Demographics Creating Skilled
Workforce Shortages
•Aging Baby boomers
•Low Millennials Rate Reducing Workforce
•600,000 Manufacturing Jobs Open
•56% of technology executives cannot fill jobs
•Big growth in STEM, health care and financial
services
STEM Workforce

Workforce Network
• Industry Cluster
Analysis
• Skills Gap Analysis
• Business-Education
Connection
• Funding
• Occupational Marketing
Workforce Incentives
• Market Opportunity
• Project Definition
• Economic Incentives
Analysis
• Project Intro
• Incentive Negotiations
• Government
Monitoring
Workforce Pipeline
• Industry Cluster/Labor
Shed
• Workforce Committee
• Student Aptitude
• Vocational Training
Program
• Company Connection
and Apprenticeship
• Sustainable Funding

•North Carolina bio manufacturing, industry
based training program
•Partnership with NC State University, NC
Central University and University of North
Carolina
•Certificate, associate and bachelors degrees
connected to bio manufacturing
•Funded with $70M in state tobacco
settlement
NC BIO IMPACT

• Investment per subscriber in rural
broadband systems averaged $2,921
compared with $1,920 in urban
location
• Regional Broadband Network/Wi-Fi
• Private Carrier v. Public Carrier Models
• Aggregation of Data Customers
Broadband
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•State of Ohio Capital Bill
•Bondable Project
•Economic Development or Arts Project
•Local Ranking Process
•State Legislation
•$100,000-$2,000,000
Broadband State Funding

•Rural Broadband Access Loan & Loan Guarantee
•Funding for construction, improvements or
acquisition of facilities and equipment needed for
broadband service speed
•$100k - $20M loans
•applications July 30 - September 30, 2015
Broadband USDA Funding

•Community Connect Grants
•Extends broadband service access to help
rural residents utilize the internet for jobs,
education, healthcare, public safety and
community development
•$100k - $3M loans
Broadband USDA Funding

Lake County, Florida
• Municipal broadband network with fiber optic connections to hospitals,
doctor offices, private businesses, and 44 schools
• Lake County experienced approximately 100 percent greater economic
growth since making its municipal broadband network available to
businesses and municipal institutions in the county

•Connecting regional, large
corporations with local, early stage
start-ups for business
development opportunities
• Creates customer opportunities for
early-stage tech start-ups and
potential funding sources
Buy Local
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• LEAP
• A program where corporations
provide an innovation challenge and
startups compete for a pilot
• STEP
• A program where startups identify
their top prospects and Cintrifuse
curates access
Cincinnati’s Cintrifuse

5 Tips to Building a Buy Local Tech Company Campaign
• Build a critical mass of large company partners
• Ensure early stage tech companies are ready for a large influx of business
• Create clear and regular communications between big and small
companies
• Connect mid-level leadership of large companies with top-level leadership
of early stage companies
• Develop measures and metrics for determining success of campaign

•Don’t jump without a strategy in place
•Recognize this is a multi-pronged approach
•Plenty of money available from local, state and federal government
sources
•Existing corporate and university resources are critical
•You don’t have to be Silicon Valley to succeed
5 Conclusions about Building a Tech Ecosystem
Questions: drobinson@montrosegroupllc.com

Building a Tech Ecosystem

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