by James A. Bacon
Governor Glenn Youngkin has made quite the audacious claim: his administration has created 10,000 new high-growth and high-wage startup companies in Virginia, a faster pace of startups than seen under any previous Virginia governor in the last 15 years. That would be an impressive accomplishment if it stands up to scrutiny.
“At the beginning of my administration, I pledged to reinvigorate job growth and foster an environment for 10,000 new startups in Virginia and we’ve achieved it in record time,” Youngkin said in making the announcement this morning. “Through our Compete to Win strategy, we’ve reached this incredible milestone by driving innovation, fostering entrepreneurship, bolstering our talent pipeline, providing needed tax relief, and truly creating an environment where startups and businesses can thrive.”
First, let me say, 10,000 startups are great news. We should all celebrate the fact that Virginia is climbing out of the economic doldrums. If we want to create an Opportunity Society, as opposed to a society mired in grievance, victimhood and resentment, it is imperative to have an economy that creates jobs and business opportunities for all.
But my first journalistic instinct when appraising any such claim, whether it comes from Youngkin, Ralph Northam, Terry McAuliffe or anyone else is: prove it. When a governor says that his administration “created” X number of jobs, persuade me that the economic resurgence is due to his policies and would have fallen short without them.
Let’s take a look at Youngkin’s backup for his claims.
In Virginia, 10,337 new high-growth and high-wage startups have been created in Virginia during 2022-2023 as of December 31, 2023, according to the announcement. Where did those numbers come from?
From Chmura Economics & Analytics, a Richmond consulting firm that specializes in econometric analysis. Chmura is a credible organization with a long track record of economic analysis and forecasting. It is nonpartisan, having worked with different Virginia administrations for many years. If Chmura says there are 10,000 “high growth” and “high paying” jobs, I’m willing to believe her. Unfortunately, the announcement does not link to the Chmura report, so we cannot see what caveats it might contain…. and might have been overlooked in the PR rollout.
With that source unavailable, we turn to Team Youngkin’s explanation. The announcement points to the success of Virginia companies in raising venture capital.
Chmura’s consulting team and the National Venture Capital Association (NVCA) also report that Virginia was ranked #8 in the country for highest venture capital investment dollar activity during 2023. This is Virginia’s highest national ranking, and the first time it has reached the top 10, during at least the past 10 years since 2014. Capital from the private sector supports both the launch and growth of startup companies in Virginia.
Surely, success in attracting venture-capital investment is an encouraging sign. But one obvious question is how many Virginia firms got venture funding in 2023. A dozen? Two dozen? Three dozen? Whatever the number, it is assuredly less than one hundred. Where did the other 10,000 companies raise their capital?
What about the Virginia Innovation Partnership Corporation (VIPC)? Youngkin, the announcement noted, joined VIPC at the PR rollout. And it quoted Joe Benevento, CEO of VIPC: “It’s exciting to celebrate Virginia’s success in driving new startup growth and attracting venture capital investment.”
VIPC operates as the independent non-profit corporation on behalf of the Virginia Innovation Partnership Authority (VIPA). This is what VIPC says it does:
As part of its operations, VIPC manages internal investment funds which make direct equity investments in tech-/innovation-led, early-stage/growth startup companies and in venture capital fund managers, provides research commercialization grants to universities and entrepreneurs, and offers resource and funding support for entrepreneurial ecosystems, innovation networks, and public-private partnerships at local, state, federal levels.
Very good. I’d like to know how many companies VIPC has invested in or helped raise money for, how many are still in business, and how many jobs they’ve created.
Virginians have been working since at least the 1980s, with mixed success, to build an innovation ecosystem in the hope of stimulating entrepreneurial growth and job creation. Forty years later, we have yet to create anything resembling an Austin or a Research Triangle. In my observation, an entity like VIPC has limited ability on its own to bend the curve. But if I’m wrong, show me!
Let me emphasize: I’m not criticizing Youngkin’s economic-development policies. Indeed, I think his “Compete to Win” strategy is sound. But when he (or any other governor) takes credit for “creating” 10,000 businesses, I want to see some proof that his efforts made the decisive difference. As of today, no such proof is in evidence.
President Joe Biden taught us to look critically at boastful economic claims when he asserted during the presidential debate that he had created 15,000 jobs (he meant 15 million). It was laughable to take credit for the hiring rebound that took place after he had reversed job-killing COVID-19 restrictions, and everybody knows it. Youngkin can hew to a higher standard of proof, and the public should insist that he do so.
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