Spurred on by a venture capital fund of more than $1 billion and some aggressive incentives, West Virginia is luring new business to the Mountain State.
The West Virginia Economic Development Authority (WVEDA) has qualified seven professionally managed venture capital funds focused upon entrepreneurship in West Virginia. These funds come in the form of direct investment, to stimulate the facility for venture capital financing in the Mountain State.
This effort, in fact, has leveraged potential capacity in excess of $575 million among qualifying entities such as Small Business Investment Companies (SBICs), which draw upon matching Federal dollars. State investments have been placed with SBICs, traditional venture funds and pre-seed entities in order to maximize the impact of the program and broaden the scope of the state’s initiative.
In addition, accredited private institutions and individuals are also encouraged to make investment in Qualified WV Venture Capital Companies pursuant to Chapter 5E, Articles 1 and 2 (the “VC Programs”) of the West Virginia Code. Tax credits are available annually, for up to 50% of an investment, for institutions and individuals investing in WVEDA-qualified venture capital entities, which will in turn make debt and equity financing available to entrepreneurs principally located in the state. Additional venture capital companies may be qualified periodically, as appropriate.
Qualified West Virginia Venture Capital Companies must maintain staffed full-time offices in the state in addition to investing funds obtained through the VC Programs in West Virginia businesses pursuant to specific Rules and Regulations promulgated by the Authority.
Among the venture capital players in West Virginia are Adena Ventures, which has pumped about $2 million into central Appalachia; Anthem Capital, which seeks opportunities in IT/telecom and healthcare/life sciences, among other sectors; INNOVA, an initiative of the West Virginia High Technology Consortium Foundation (a statewide commercialization group focused exclusively on West Virginia innovators; and Toucan Capital, which specializes in seed and early-stage investments in novel, emerging technologies with broad potential to create multiple products.
West Virginia offers a Direct Loan Program for applicants seeking a loan from the WVEDA in the minimum amount of $50,000 and a maximum amount of $10,000,000.
The WVEDA has a two-tiered pricing system. For loans of $50,000 to $800,000, the interest rate is the New York Prime rate minus 4 percent. Loans above $800,000 are priced at a rate equal to the U.S. Treasury Note rate of equivalent maturity (as quoted daily in the Treasury Bonds, Notes and Bills Section of the Wall Street Journal) plus three-quarters percent. In both instances, the loans are fixed at closing and the interest rate has a floor of 4 percent and no ceiling. Additionally, the two tiers cannot be used in conjunction with each other. (For criteria see box).
HUNTINGTON COUNTY IS A BEVY OF ACTIVITY
In April of this year, Alcon, Inc, a subsidiary of Novartis, and the world’s largest producer of intraocular lenses, dedicated their new 100,000-square-foot, $40-million Monarch facility, in Huntington, WV. This new facility will have a total of 1000 employees when fully staffed. This facility was constructed on an industrial site located in the HADCO Business Park. HADCO is the local development council. Alcon, which produces 6 million lenses annually, now has facilities in Huntington totaling 300,000 square foot.
The Huntington area’s unique geographic location and natural resources provide an ideal venue for specific industry applications. The region is one of the most diversified metalworking areas in the U.S. For over 100 years, supply contracts with defense, oil and gas, healthcare, automotive, aerospace, and transportation industries have been served from this strategic metalworking location.
The world’s largest nickel alloy plant supplies international markets from their Huntington location, and holds over 50 metallurgic patents. The region is also home to two steel mills and three steel service centers. A metal plating specialty plant provides high quality nickel, chrome and silver electroplating. Seventeen machine shops supply precision bending, forming, foundry, and fabricating capabilities to support a wide variety of local supply chain providers. Area industries include Armco Steel, Ashland Petroleum, Steel of West Virginia, and Special Metals.
Huntington is an expanding center for transportation and logistics. Products move efficiently through the area thanks to an extensive transportation network of rail, air, water, and highway transit. The Tri-State region is able to reach 44 percent of the U.S. industrial market and 37 percent of the U.S. consumer market within a day’s drive. Huntington is a major rail hub for CSX and Norfolk Southern. The Heartland Corridor Project, which includes a planned inter-modal terminal at Prichard, WV, will serve as an integrated logistics center, offering enhanced and effective distribution services.
Two airports serve the region—Huntington’s Tri-State and Charleston’s Yeager. Huntington Tri-State is the fastest growing airport in the region, and is ranked in the top 10 of Most Competitively Priced Small Airports. A Fed Ex regional hub is located at the Huntington Tri-State airport. Nonstop service and direct connections to 10 major US cities and international destinations are available daily.
The Port of Huntington/Tristate is one of the largest inland port in the United States. It is home to numerous chemical and petroleum production facilities including the largest inland, and fourth largest, petroleum refinery in the nation.
BIOTECH/BIOMED GETS BIG IN CABELL COUNTY
Biotechnology also is an emerging industry in West Virginia. Over the past seven years, Cabell County has experienced a 33 percent increase in biotech employment. Marshall University in Huntington is a main biotech economic engine.
Marshall University’s focus on ongoing research and development in the biotech focus areas of forensics, cancer/medical research, and environmental biotech resulted in investments exceeding $100 million in new biotech facilities and infrastructure.
HADCO formed a partnership with Marshall University to form the Biotech Alliance to assist in the commercialization and marketing of biotech companies. HADCO also partnered with Marshall University to develop a biotechnology incubator. HADCO obtained $1 million in federal funding to create the 4,000-square foot research facility. Generous grant funding supports the incubator to provide marketing, legal, accounting, and tenancy services to entrepreneurial companies as they transition their products to the market.
Nearly 20% of the regions workforce is engaged in medical activities. The area is home to the world’s largest manufacturer of intraocular lenses, a leading developer and manufacturer of orthopedic devices, and a market leader in the production and packaging of topical antiseptics.
Eight hospitals, a medical school, the largest private physician practice in West Virginia, a comprehensive cancer center, leading heart institute, and an array of highly specialized services are available in the Tri-State region.