Washington, DC, Home To Virtuous Cycle Of Growth
According To 2016 Startup Census Report
Fosterly compiled a one-of-a-kind startup census to better understand the dynamics of the Greater Washington, DC region, where I’m based. Over the course of six months, Fosterly surveyed hundreds of DC startups and analyzed the data to produce an all-inclusive report.
DC has shifted from a government town to a more diverse innovation hub. The majority of the region’s startups were founded within the last five years. Twenty-five percent founded in 2016 alone. This recent growth in new startups could be directly correlated to the draw of entrepreneurs to once promising, VC-backed behemoths such as LivingSocial. After raising $800 million and being valued at $4+ billion, LivingSocial went from being a unicorn to a unicorpse. Fosterly states:
Many factors have influenced the rapid increase of entrepreneurial activity our region is currently experiencing. The early successes of AOL and Blackboard attracted new investors, developed talent and created millionaires that drove the creation of new businesses and investments in the region.
This beneficial cycle of events has created positive effects on the next — A virtuous cycle of growth. The young 20-somethings that once moved (or stayed) to work at the LivingSocial’s of the region acquired career capital and have now launched their own startups in a variety of industries. Software is now the most prevalent industry in the region, followed by marketing and advertising, information technology and services and Internet. The founders of these companies hail from all over the globe, with as many (13.9%) born out of the country as native to DC. Below are more interesting findings from the report:
This tracks with the surge in tech focused startups setting up shop in the Washington area in the past five to ten years. Another good indicator of the region’s concentration of tech entrepreneurs is the DC Tech Meetup which has grown to over 18,000 members since 2011 and ranks as one of the largest Meetups in the world.
In the past, many students would graduate and immediately relocate to a different city unless they pursued a career in policy or public service. Topping the list with 9% of founders, University of Maryland has contributed a large portion of entrepreneurial talent to the local startup community. A well established computer science program and respected business school, University of Maryland has educated many successful entrepreneurs including Kevin Plank, billionaire founder of Under Armour.
The Washington region’s proximity to federal agencies, labs, and NGOs provide our startups a unique advantage, but only 12% of participants in the Fosterly Census report research grants or awards as a source of funding. The U.S. Small Business Administration operates a grant program (SBIR) that issued over 3,400 grants totaling more than $2B in 2016.
Nearly half of D.C. metro startups report majority woman or minority ownership. This well above the national average according to the U.S. Census Bureau.
You can view the full 74-page report by clicking here.
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