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Q&A: EY senior partner Marc Andersen discusses DC investment trends

What trends are investors keeping their eyes on? What makes DC investment unique? Andersen share his thoughts.

Marc Andersen. (Courtesy photo)

While it’s no Wall Street, DC’s finance world offers plenty of ways to plug in  — be it a personal investment, landing some VC or other avenues.

But it can be pretty difficult to demystify the world of local and regional investment, with so many threads and moving parts. So, we asked a finance pro.

Marc Andersen is a senior global client service partner at EY, the global investment and banking giant also known as Ernst & Young, who’s based in Northern Virginia. He spoke to about what makes the DC market so special, what we can look out for and how founders can get the most out of the local ecosystem.

This conversation has been edited for length and clarity.

How would you describe the current investment environment in DC?

Andersen: DC is really interesting from a specific market perspective. It’s anchored by the single largest consumer of products and services in the world: the federal government. The ecosystem [manifests] around that, in terms of the people who provide direct service to that ecosystem and those who support them. As well, there’s a pretty interesting investment in biotech and other [somewhat] adjacent sectors.

The importance of that is it constantly drives investment in innovation because, even in periods of growth or periods like the challenges coming out of COVID, the government responds. It’s an interesting client, if you will, or an interesting resource for the market.

If you take a step back from the region, you really see, from an academic standpoint, schools like George Mason, Virginia Tech University and a lot of schools have built up a public-private partnership — sometimes formally, sometimes informally. It’s about providing resources: tech-ready, tech-enabled, tech-specific resources because there’s this never-ending demand for talent in this market.

And companies, as they assess their own portfolios and who they want to be, they want to be understanding of both the weight and the power of the government as a client, as well as the ability to commercialize some of the offerings tied to this market. So even in slow periods, DC is a good market.

What trends are you seeing in the market?

Coming out of COVID, we all have our feet now a little bit. We’re starting to get: what does the way forward look like? Now, it’s just a different way of working for us.

From a specific company perspective, especially on the technology side, we’re still on the very early cusp of driving change through things like 5G or quantum computing and things like that where there’s a lot of great things happening. There’s this massive consumption around government, government-related and sometimes commercial offerings, but we’re still really on the cusp of innovations and the investment associated with some of that innovation — both in terms of driving talent through the labor force and simply making those investments.

DC had its biggest investment year ever in 2021. How do you expect this year to measure up? Is it cooling off?

I don’t think DC cools off in the way that other markets may cool off, simply because of the anchor of the client and some of the problems people are trying to solve. In fact, it could even pick up, where people start to look at: where do I want to place bets? And DC is probably a more certain bet, relative to other markets or other types of things you’re trying to solve, especially in tech, cyber and some of those very specific kinds of solutions.

So I don’t necessarily see it cooling off. It may maintain. It could even grow a little.

What’s appealing about the DC market for investors?

You start with a framework, business-friendly environments by local governments. We have really strong education resources and commitment by those institutions. So there’s a purposefully connective tissue between those academic institutions, the employers and the government to create a workforce. So you have a business-friendly environment and a commitment to education and development. And the other thing that keeps people here is you have companies here because of the government’s desire to bring in additional companies, and you have opportunities. So this engine feeds on itself.

What trends are you keeping your eye on?

With the investments being made in technology around 5G and the applications that will enable or create, and then this cusp we’re on of quantum computing, which will just change the speed and the ability of computing, the ability to solve problems — that opens up a whole new world. The ability to move faster, move better, move information sooner. 

I think we’ll continue to go down that path. And then, we’re still early in the development of applications to monetize 5G, quantum, and they’ll be again, like anything else: you’ll do it and you’ll arrive at a place where you’ll see differently. Or you’ll be able to apply it differently. So I think that’s the next around-the-corner thing that’s coming for people.

What advice do you have for local companies and founders?

One is to take a step back and maybe understand the opportunity that DC and DC tech present in terms of the marketplace, the resources, the business environment and what a great place it is for employees to live or to play. It’s simply outstanding, and that’s attractive. 

And then, understand, too, one of the things that’s interesting around DC is the ecosystem itself, how people team and interact together. There’s a tremendous amount of resources, so get involved, meet people, understand the opportunities.

DC’s a very open environment where people want to collaborate and want to reach in to be successful. So there’s an opportunity to be a part of that.

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