The greater Washington area is huge and growing bigger for entrepreneurship, some experts believe there are big strides the region can take to propel it further. One of these experts is Esther Lee, former holder of two business-centered positions in both the Obama and Northam administrations, and current CEO of innovation hub and nonprofit Refraction.

ABERMAN: Tell us a bit about Refraction.

LEE: Refraction is a nonprofit innovation hub where we nurture, and mentor, and support startups, and high growth businesses, as they scale up, so that they can create jobs for this region. I think you probably know, in the last 30 years, all net new jobs in this country were created by startups. And so, it’s really important for this region, and every region in the United States, to focus on: how do we grow and strengthen the innovation ecosystem in this region? I think we’re lucky that, in the last 10 years in Northern Virginia, and I think these numbers actually extrapolate to the greater Washington region, we’ve created something like 7500 startups that market beyond just their local area.

So this is beyond restaurants and retail businesses. Those startups created 57,000 jobs in 10 years. At the same time, total tradable sector jobs increased by only 21,000 jobs, which means that, if it weren’t for startups, we would have lost 36,000 jobs. This is another reason why, while it’s great to get great companies like Amazon and others to come locate here, and we’re very lucky in this region to have big companies, I think we have 15 Fortune 500 companies based in the greater Washington region, and we were able to get Northrop Grumman and Hilton and Amazon and others to move here.

But it’s also important that our region focuses on supporting and doing more to make entrepreneurs successful, especially in technology. I think you know that tech jobs have a much higher job multiplier, so every check tech job I think creates five non-tech jobs, that’s including skilled and unskilled: lawyers, hairdressers, waiters, and such. And so, that’s more than three times manufacturing jobs. So it’s really important for this region, and while we’re doing a good job, I think it’s a mixed picture.

ABERMAN: I think it’s a mixed picture too, and to the point that you just made, the number of jobs you identified, that’s actually larger than the total number of jobs that Amazon is projected to bring our region over the next 20 years. So, that’s a big number. What does a place like Refraction do to actually promote startup formation and growth?

LEE: We’re first and foremost a community. As you know, and this is why Silicon Valley is as successful as it is, it is a tight community of entrepreneurs, mentors, investors, and others that help each other, and it is through that tight knit community where people are running into each other, they’re neighbors, people have ideas. Especially serial entrepreneurs, who have had those experiences, are able to mentor new entrepreneurs. And those serial entrepreneur end up becoming angel investors, who invest at these very early stages.

As you know, VCs are investing less and less in early stage startups. And so, it’s really important that we have a vibrant angel investor network. So, that is to say I think Refraction has done a great job in the last five or six years of bringing together companies that can learn from each other, share best practices, but also tap a network of mentors who are, you know, either former entrepreneurs or investors, and others that have experience in growing technology companies. And so, we do that, we provide the mentor network, we provide events, and workshops. We bring in high profile speakers from elsewhere. And so, I think there’s more that we want to do, and I think we have pockets of innovation happening at places like George Mason, and in D.C., coworking spaces, other places. But I find that, in our region, we’re not as connected as we should be.

And so, what can we do as Refraction, as a nonprofit player, that’s not in it to make a quick buck, to bring the community together, to make us stronger than it is? As you know, D.C. is the fifth largest economic region by GDP in the country. There’s no reason why we should not be churning out more high growth startups than other regions. Northern Virginia has 220 of the INC 5000 fastest growing privately held companies. That’s a lot. That’s compared to only 57 for our other large tech hubs like us. But 44 percent of those companies are in government service. That’s that’s a lot higher than our peers.

And you look at our VC landscape. We have, on a per capita basis, Northern Virginia has a third lower VC funding since 2014 than other large tech hubs. And it’s growing much, much slower than our peer regions. So, I think there’s a lot of signs where we’re also not attracting kind of young talent. Well, in our region, 25 to 34 year old population, we’re actually declining, where other peer regions are rising. And we know, that sort of younger talent, highly skilled talent, helps fuel and power these these startups.

ABERMAN: So nevertheless, with all those stats, before I let you go really quickly, what is it that made you take this job? What are you optimistic about?

LEE: Well I think we have a lot of the right ingredients. Look, Capital One, one of the top 10 banks in the country, it is considered a technology company, was started right here. Cvent, I think one of the largest event software companies, based and started right here. AOL was based here, and Steve Case is still very actively promoting innovation, entrepreneurship, all across the country. And so, I think we have a lot of the ingredients. We need to put them together in a way that attracts top talent from all around the country, and grows jobs more quickly than we have been.

ABERMAN: Hear, hear!. Esther Lee of Refraction. Check out Refraction if you’re looking for a community to join to grow your business. I’m part of Refraction, and many of my friends are as well. Esther, thanks for joining us.

LEE: Thanks, Jonathan.

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