Why Everyone’s Betting on Virginia: The New U.S. Capital of Innovation

The bright morning wind skips off Chesapeake Bay and whistles through the historic ironwork and brick frontages of Norfolk’s seafront. Hunter Walsh bowls into his office in Hampton Roads’ cluster of converted warehouses for our meeting. He wraps his tweed jacket tight around him. Even at this pre-breakfast hour, he’s a ball of energy.

The farmer-turned-start-up-incubator is an infectious talker. “I’m the son of sixth-generation farm owners,” he says. “My family have farmed here since the 1840s. The thing is, they were great at growing stuff, terrible at turning it into a business. I had a dream of turning it into a multimillion-dollar business, but it wasn’t easy to change things, with three generations in charge.”

Walsh left the farm at 23 and headed for the growing tech-first cities of the Virginia coast. Today, his cash crop is start-ups. He is one of the directors at 757 Collab, an acclaimed incubator and hothouse that’s at the heart of Virginia’s thriving innovation scene. His journey from family farm to the heart of America’s most exciting new innovation hotspot mirrors Virginia’s own trajectory.

Amazon’s HQ2 at Metropolitan Park, Arlington / Photo: Courtesy of Amazon

The state’s transformation over the past five years is striking. It currently holds the award as the most attractive state in America to set up business operations, according to CNBC. In recent years Amazon, Microsoft, Apple and Boeing have all opened major offices here—in Amazon’s case, its stunning second head office, HQ2, after considering 238 locations across the U.S. It is, says one tech investor, “a scramble to get set up there.”

Today, Virginia is the world’s data center capital, with more data processing than anywhere on Earth—a staggering 10 percent of our planet’s total capacity, fueled in part by a local AI boom.

These developments are also driving the need for an innovation ecosystem—for smaller, agile businesses to sniff out opportunities or problems, and solve them, creating a fertile environment for start-ups.

In fact, Virginia is now a top-five state for venture capital funding. According to the governor’s office, it’s creating almost 10,500 high-growth/high-wage start-ups a year—one roughly every 50 minutes—with hot sectors including sustainable energy, high tech, life sciences, aerospace and defense.

The emergence of high tech also requires renewable, green energy. Cue Virginia’s burgeoning offshore wind farms, which supply its own tech sector and others from the coastal waters of the Eastern Seaboard. “Virginia’s offshore wind farm energy capability wouldn’t be unusual for Europe,” says Jason El-Koubi, CEO of the Virginia Economic Development Partnership (VEDP). “But in the States, it’s way ahead.” That need for clean energy is also bringing the world’s first grid-scale nuclear fusion power plant to the state capital, Richmond. Its key investors? Jeff Bezos, Bill Gates, and Google.

Meeting the Moment

Virginia’s role as an innovation hotbed can’t be under-stood without knowing the subtleties of its relationship with neighboring Washington, D.C. Without a major-tier city of its own, and with the Pentagon, Dulles Airport, the CIA, FBI and more situated in Northern Virginia, the commonwealth has long been D.C.’s more experimental, greenfield site.

Photo: Courtesy of United Airlines / MWAA

“Virginia is this wildly creative laboratory,” says one former military technologist now working in what he calls Richmond’s “Silicon Dominion.”

“It’s here where the wildest dreams of government get brought to life, more so than Silicon Valley or Houston. Entrepreneurs here have a really good feel for what needs doing, rather than chasing VC funding for a quick exit or trend-chasing. Tech here listens. And because we’re next to D.C., there’s a huge lobbying, management consultancy, and strategic insight sector here. That’s the connecting tissue.”

He reminds me that while NASA’s Wallops Flight Facility, tucked away on Virginia’s Eastern Shore, is lower-profile than Cape Canaveral, its launches—a mix of uncrewed comms satellites, commercial prototypes and research projects from government departments or local universi-ties such as Virginia Tech—are agile, investable and bring government, academia and private innovation together as collaborators, not competitors.

This purpose-first mindset goes far beyond the usual “hard-nosed” policy beneficiaries. I spend some time chatting with Jessica Quillin, author of the influential Fashion Strategy Weekly industry newsletter and cofounder of a strategic advisory consultancy that helps lifestyle, fashion and luxury brands connect with their audiences in deeper ways.

Frith First-Year Makerspace, Blacksburg / Photo: Courtesy of Peter Means

“Before fashion and luxury, I cut my teeth in government consulting,” she says. “It was all about thinking how to make for better living, better government, a better world. That seeps into your mindset. So when I help luxury fashion brands, I can offer greater purpose orientation and thought leadership, too.

“Don’t forget that Northern Virginia is the home of consultancy, lobbying and insight shops that forward-think for Washington, D.C.,” she continues. “So many of us touch that world at some time: I worked for Gartner here; my cofounder husband worked for the World Bank in D.C. Booz Allen Hamilton, Northrop Grumman and Capital One are all headquartered here. Virginia is a thought hub, and that really shapes the values of people here, in every walk of life. It means a more humanistic approach than, say, Silicon Valley.”

Better Connected

Virginia’s surging growth is also the result of the Covid pandemic’s move toward enabled networking. In 2022, demographer Simon Kuestenmacher coined a new term. The shapes of cities, he said, were changing in a world driven by hybrid and remote working and network technology. Traditionally, cities had been “fried-egg-shaped”—nutritious economic yolk clustered in the center, people commuting in every day from the surrounding areas. They are now transforming into “scrambled eggs”—multiple smaller pockets of yolk, dispersed throughout, nourishing a thriving, dispersed network.

For the first time, professionals from Washington, D.C, and even Boston and New York, could remain connected to work while enjoying a higher quality of life.

Photo: Courtesy of Thomas Jefferson’s Monticello

VEDP’s El-Koubi got his start reshaping infrastructure in his native Louisiana, post-Hurricane Katrina. He says the shift in Virginia’s makeup has been swift. “The famous Northeast Megalopolis, the Boston-to-D.C. corridor, suddenly stretches down into Virginia,” he says. “And way beyond Richmond, out into the coast, and down to Virginia Tech and James Madison campuses.”

Virginia’s quality of life, countryside, coast, transport networks, and smaller, distributed centers make it a potential new model for a state. One in which we burn less fuel, strain infrastructures less, and put less demand on a single megacity. Neighborhoods thrive. Talent and opportunity is free to spread outward.

Linden Vineyards / Photo: Courtesy of Linden Vineyards

This is a daily reality for Adam Copeland, working in international higher education through his Virginia-based company, AC Global. He lives in Harrisonburg, in the Shenandoah Valley, and is one of a wave of highly qualified professionals who are taking advantage of hybrid working to seek higher life quality at lower costs, while maintaining easy proximity to Washington, D.C., and the megalopolis.

“Two hours from Washington, D.C., two hours from Richmond,” he enthuses. “Plus the coast, with the Norfolk/Hampton Roads innovation centres, tourism, import-export. So you’ve got government contracts, innovation, defense department innovation. Plus the lifestyle. Virginia’s not the largest state, but it has so much diversity in a small radius. There’s a ski resort with nine ski lifts 20 minutes from my house. I could drive to Virginia Beach in the morning, then drive back here in the afternoon and go skiing. The wineries are now agritourism and event venues—my wife and I got married in one.

“It has the diversity of California, but not the living costs—and that’s a magnet, especially for professionals, who can work hybrid and want green space,” he continues. “It’s a really educated state, with a huge talent network on hand.”

A New Virginia Rising

Richmond’s 1717 building towers above the ghost signs, street art, flagstoned paving and rusted iron railroad bridges below. From its sixth floor, you can see the James River and surrounding postindustrial music venues on one side and the historic Poe Museum house on the other. If you need a physical symbol of how the state has transformed itself from agriculture to innovation, this former tobacco warehouse—now Startup Virginia’s six-floor agile workspace for founders—is it.

Swiss-British transplant Richard Wintsch is Startup Virginia’s CEO. He’s excited by the state’s “talent clusters.”

“Instead of everyone massing around an industrial center, competing for funding from the same sources, there are all these thriving bubbles—campuses, start-up networks, tech campuses—throughout,” he says. “We work together. If we meet a start-up in a sector we think 757 Collab has more capability to support, we refer to them. What we have here is a really distributed, campus-based, networked state—whatever walk of life you’re in.”

It’s quite a turnaround—how the Commonwealth of Virginia, the Mother of States, keeper of traditions and home to military and government hierarchies, transformed itself into something strange and wonderful. Because out here in the reclaimed tobacco warehouses and fields, the coastal wind farms and countryside campuses, a new model is taking shape of what a state can be. A place for those who live or work there, for future-watchers, technologists and demographers, visitors, the curious and the inspired.

It could just be the blueprint for tomorrow. Call it the  Network State…or call it the future.