Penned by Will Dickson, Activation Capital Advisor
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Activation Capital, headquartered in Richmond, Virginia, is a leading life sciences innovation ecosystem development organization. By integrating entrepreneurship programs with strategic space-making, it optimizes the translation and value of regional life science discoveries. Its premier entrepreneurial initiative, Frontier BioHealth, is an educational and support program offering highly specialized training, targeted mentorship, and relationship-building to help scale startups in pharmaceuticals, biotech, medical devices, and health-focused consumer products companies.
Activation Capital plays a crucial role in providing essential education, networking opportunities with mentors and investors, and showcasing opportunities for its regional cluster. In collaboration with statewide entrepreneur support organizations, it accelerates growth and maturation for individual entrepreneurs. As an independent nonprofit corporation operating on behalf of the Virginia Research Biotechnology Partnership Authority, Activation Capital is committed to advancing life sciences and other cutting-edge technologies through scientific research, commercialization, and ecosystem development, all while attracting and creating 21st-century jobs and companies.
Through our ecosystem strategy, particularly via Frontier BioHealth—a nonprofit accelerator funded in part through a grant with the U.S. Small Business Administration (SBA)—Activation Capital contributes uniquely to America’s entrepreneurial landscape. While traditional funding sources like venture capital and federal R&D funding play established roles, Activation Capital aims to demonstrate how regionally-focused initiatives can support broader national priorities in health and economic opportunity.
Background
Regional ecosystem development priorities differ slightly from those of the federal government and the interests of private capital investors. Federal programs, like the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) grants, focus on supporting small business technology development without seeking financial returns.[1] While there is enthusiasm for success, there is no expectation for businesses to provide direct returns on this investment. This is only the case when the federal government is both an R&D funder and an end customer. For example, the U.S. Army SBIR program assesses success based on the Army’s later acquisition of funded technologies. Most agencies, including R&D funders in the National Institutes of Health (NIH), assume that domestic investment to jumpstart technology development will contribute to gross domestic product (GDP) in the long run. Recipients of SBIR/STTR grants typically operate independently while reporting their progress to the federal government, without giving up equity or board control, and receive additional mentoring and business support. This setup de-risks technical and operational challenges, making small businesses more attractive for private investment.
In contrast, private investors expect financial performance, not just technical accomplishments. Investors provide financial capital in exchange for holding a small business accountable for substantial financial returns, often taking board seats and sometimes key management positions. This unique exchange of capital for control can accelerate market adoption for some startups.
Non-profit ecosystem development organizations like Activation Capital typically operate incubators and accelerators to help startups launch, thrive, and survive. Regional retention is also a priority, leading these organizations to build and manage real estate to provide workspace for startups in their region. Typically funded by federal, state, and local grants, ecosystem development organizations support startups as part of a broader community or economic engine building initiative. Their mission is to foster regional growth of startups or focus on a specific technology sector, with the ultimate objective of creating a self-sustaining ecosystem that attracts out-of-state startups and established companies.
By integrating investments from federal, private, and ecosystem development organization sources, a comprehensive risk and control strategy is developed to serve regional interests.
Goalposts
As an independent authority of the Commonwealth of Virginia, Activation Capital’s goals align closely with the state’s priorities:
- Support Regional Development: Promote long-term regional goals that stem from entrepreneurship and the development of novel biohealth technologies (i.e. biotechnology, pharmaceuticals, and medical devices) derived from deep-tech R&D. Technology-differentiated businesses create high-paying jobs (boosting tax revenue), enhance regional infrastructure (improved quality of life), and help establish a regional ‘brand’ to certain hubs (attracting highly educated talent).
- Resource Stewardship: Responsibly steward the resources made available from the Commonwealth and Federal governments to fund activities, using them both ethically and inclusively to benefit all citizens in the future.
- Achieve Tactical Metrics: Drive economic growth by attracting capital, creating jobs through entrepreneurship, and aiding company relocations to the region.
A regional ecosystem development organization needs to achieve various objectives: ensuring technical success for client or member companies, driving financial success for regional startups, optimizing available space, and effectively utilizing public sector funding while attracting private investment to fully realize its mission. How can a regional ecosystem development organization effectively achieve this balance to drive long-term economic and technological growth?
Assets
A regional ecosystem development organization like Activation Capital can uniquely leverage powerful assets that align with federal and private sector interests:
- Academic Institutions: These hubs serve as cultural institutions and organic sources of new technology. Regional economic development hubs are almost always built on a solid foundation of academic strength, providing a pipeline of discovery and intellectual property essential for launching startups and entrepreneurial enterprises.
- Land Authority: As a state authority, Activation Capital can uniquely administer and empower land use in alignment with the public interest. Activation Capital is empowered (and entrusted) to plan, develop, construct, and equip projects, set rents and fees, and issue bonds for qualifying projects.[2] It is a state subdivision that acts with powers similar to a city or county to build and grow the life science ecosystem.
- Regional Culture: Regions have staying power; a recent Census Bureau study showed that 80% of Americans live within 100 miles of where they grew up.[3] The network effect of relationships and cultural norms helps differentiate one region from another, easily visible to outsiders or frequent travelers. A critical factor in the success of ecosystem development is retaining locally grown startups and regional entrepreneurs, preventing them from becoming opportunities for other states.
State and federal grant funding serves as the fuel for non-profit ecosystem development organizations to harness these assets, driving community growth and innovation.
Tactics
Activation Capital strategically leverages the capabilities and perspective of an ecosystem development organization, combined with the economic advantages of a state authority, to maximize the impact of entrepreneurship in the region in the short- and long-term.
Close collaboration with academic institutions like local universities and community colleges is key. In Richmond, Virginia Commonwealth University (VCU) is the primary organic source of life science discovery and invention, providing a timely opportunity to harness this resource. In just the previous five years, VCU’s R&D funding has surged to $464M, marking a 71% increase.[4] This growth is highlighted by the university’s specialization in life sciences R&D and its robust medical program. This provides the technical foundation for the region and an anchor point in the capital of the Commonwealth. Additionally, Virginia State University (VSU), a regional HBCU, is emerging as an R1 research university. Brightpoint Community College and Reynolds Community College play a vital role in developing technical workforce development, while the University of Richmond strengthens the regional talent pool with its strong business and entrepreneurship programs.
Central Virginia is leveraging its assets and strategic location. Proximity to our nation’s capital positions the region advantageously along the east coast, near port cities for global distribution and within short travel distances to other life sciences innovation hubs in Massachusetts, Pennsylvania, Maryland, and North Carolina. Central Virginia offers affordable space for manufacturing and scale-up, bolstered by investments in infrastructure and parallel tech ecosystem developments by organizations like the Dominion Energy Innovation Center, Lighthouse Labs, and Startup Virginia.
Activation Capital also invests in real estate, particularly life sciences-specific co-working facilities, supporting aspiring entrepreneurs. Creating and fostering a vibrant community through in-person events and networking opportunities is vital for long-term cohesion, as evidenced by the success stories from Silicon Valley and Boston/Cambridge. Space-making is an essential ingredient in ecosystem development, complementing entrepreneurship programs to support founders, create startups, and provide them a place to build both their dreams and the jobs that strengthen the regional economy.
Our entrepreneurial programming for new founders and startups aligns with the Richmond region’s goals. Frontier BioHealth, Activation Capital’s inaugural accelerator launched in 2024, is a zero-equity program focused on the unique needs of ‘deep tech’ commercialization in the life sciences sector. As a grant-funded, non-profit program, Frontier BioHealth does not provide funding to startups but rather it offers highly sought-after services and experiential learning opportunities. To compete with venture-funded accelerator programs, Frontier BioHealth must ‘punch above its weight’ in the quality of these offerings. The program is enhanced by nationally recognized startup accelerator operators and niche specialty consulting services on how to access federal funding and navigate the regulatory landscape within life sciences technologies.
The focus of the first cohort, with a combination of Virginia-based and non-Virginia based companies, offers a chance to test relocation hypotheses, address industry-specific startup needs, and begin to market the region to global startup hubs. The introduction of additional initiatives, including the Start-the-Journey pre-accelerator, aims to prepare early-stage entrepreneurs, while plans for topic-specific cohorts with local partners seek to address diverse industry needs and attract global attention to the region’s growing innovation hub.
Conclusion – What’s Next?
The Richmond region has a history of life sciences startups, but it’s now set for strategic growth and ecosystem cultivation. Activation Capital is leveraging a hypothesis-driven approach to accelerate companies, recruit and relocate talent, engage corporate partners, and attract capital, tailored to the region’s unique tech specializations and entrepreneurial spirit. America is currently experiencing a surge of federally-funded initiatives supporting innovation centers in emerging markets, with similar hubs popping up in smaller markets (e.g. New Mexico, Alabama, and Oklahoma). Through programs like Frontier BioHealth, Start-the-Journey, NSF Engines, and SBA Build Back Better investments, Activation Capital is committed to fostering a dynamic life sciences ecosystem in Richmond.
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About the Author
Will Dickson, an advisor for Activation Capital, is a deep-tech startup executive with expertise in designing and scaling accelerator programs focused on product development.
About Activation Capital
Activation Capital is a leading innovation ecosystem development organization providing social, knowledge, and financial capital to clusters, entrepreneur support organizations, and entrepreneurs – accelerating their progress through development and maturation. Activation Capital, an independent nonprofit corporation of the Commonwealth of Virginia, operating on behalf of the Virginia Research Biotechnology Partnership Authority, is on a mission to grow life sciences and other advanced technology innovation by promoting scientific research, commercialization, and ecosystem development that attracts and creates 21st-century jobs and companies. It operates the 34-acre Virginia Bio+Tech Park – the hub of life science and technology innovations in Central Virginia. It oversees the Cluster Accelerator for Advanced Pharmaceutical R&D and Manufacturing and supports developing and expanding the region’s startup ecosystem. For more information, visit www.activation.capital.
[1] For the purpose of conciseness, this article does not address public policy tools or pure-play financial tools (i.e. loans) the federal government makes available to private industry. The focus is limited to financial incentives that are made available to technology-differentiated businesses that are more likely to scale than non-tech enabled businesses.
[2] https://activation.capital/about/history/
[3] https://www.census.gov/library/stories/2022/07/theres-no-place-like-home.html
[4] https://news.vcu.edu/article/2023/09/vcu-sets-a-record-for-sponsored-research-funding