A new kind of accelerator has eyes for Crystal City and it'll share a building with 1776
This article was originally posted on Washington Business Journal.
SineWave Ventures wants to bring money and ideas together. Vornado’s got the office space to make it happen. And Arlington County wants to back the pairing to boost jobs, tax revenue and the economy.
The three are working together on The Venture Hub, which will locate at Vornado Realty Trust’s (NYSE: VNO) 2231 Crystal Drive in Crystal City — the same building where stalwart incubator 1776 leases space.
Yanev Suissa, the former New Enterprise Associates venture capitalist who founded SineWaves in 2015, said his vision is to create a work space where investors, startups and corporate reps work together.
The Venture Hub will attract five venture funds in various industries — health care, education or e-commerce, for example — to lease 10,000 square feet. Venture Hub and the funds will then provide space to companies they back. The project differs from 1776, he said, “where any [member] can lease space.”
“Someone has to be backed by one of the venture capitals or partners,” such as a Booz Allen Hamilton or Google, Suissa said.
Greater Washington, he said, is lacking when it comes to the infrastructure required to scale a startup beyond the angel investor stage. This concept, he said, "will make it more effective."
Arlington County will give the program $250,000 in economic development grants over five years, expecting a net increase in taxes of $180,000 over 10 years. The county board is expected to authorize the grants on Saturday.
As part of the deal, SineWave, the funds and the companies that receive money must create at least 391 full-time jobs and review plans annually for at least 10 Arlington-based businesses seeking funding. If SineWave has not achieved 90 percent of its lease, new job and funding targets after five years, SineWave must repay the grants.
Victor Hoskins, director of Arlington Economic Development, said the county’s investment will pay off in focusing the region’s economy away from the federal government.
“Yes, Arlington will get revenue, jobs and fill up office space,” he said. “But it is an avenue for a government-focused economy to turn toward one that is commercial focused.”
The project will also boost Vornado’s vision of Crystal City as a center for innovation, said Vornado/Charles E. Smith President Mitchell Schear. Vornado has for several years invested in that idea, going back to its seeding of Paul Singh’s Crystal Tech Fund. In 2015, 1776 acquired Singh’s other firm, Disruption Corp., and then 1776 set up space at 2231 Crystal Drive.
Schear told me on Wednesday that he sees The Venture Hub as a complement to 1776, not competition.
“We are adding another layer to the ecosystem,” he said. “ As we continue to build out the ecosystem there are elements that feed off of one another. We have been trying to attract startups — working with Eastern Foundry, WeWork, and obviously, 1776. We have made a series of moves to attract startups to Crystal City. There is not a natural hub for venture capital in this region. We can cluster them together and they can work with one another."
“The long game for us is we have plenty of space,” he added. “The hope is the companies at various levels of growth will scale up and be happy in our Crystal City ecosystem.”