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30-year mortgage rates climb to 6.89%, highest since Feb

SUMMARY: 

  • 30-year hit 6.89% this week
  • Highest average rate since February
  • Home loan costs rise as Treasury yields climb

The average rate on a in the U.S. rose this week to its highest level since early February, further pushing up for .

The rate increased to 6.89% from 6.86% last week, mortgage buyer said Thursday. A year ago, the rate averaged 7.03%.

Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners refinancing their home loans, also rose. The average rate ticked up to 6.03% from 6.01% last week. It’s still down from 6.36% a year ago, Freddie Mac said.

Mortgage rates are influenced by several factors, from the Federal Reserve’s interest rate policy decisions to bond market investors’ expectations for the economy and inflation. The key barometer is the 10-year , which lenders use as a guide to pricing home loans.

Bond yields have been trending higher, reflecting bond market investors’ uncertainty over the ‘s ever-changing tariffs policy and worry over exploding federal government debt.

The 10-year Treasury yield was 4.43% in midday trading Thursday, down from 4.47% late Wednesday.

The average rate on a 30-year mortgage has remained relatively close to its high so far this year of just above 7%, set in mid-January. The average rate’s low point so far was six weeks ago, when it briefly dropped to 6.62%. After rising for three straight weeks, the average rate is now at its highest level since Feb. 6, when it averaged 6.89%.

High mortgage rates, which can add hundreds of dollars a month in costs for borrowers, have reduced purchasing power for many prospective homebuyers this year. That’s helped keep the U.S. in a sales slump that dates back to 2022, when mortgage rates began to climb from the rock-bottom lows they reached during the pandemic.

Last year, sales of previously occupied U.S. homes sank to their lowest level in nearly 30 years. Sales fell last month to the slowest pace for the month of April going back to 2009.

Rising mortgage rates have helped dampen sales during what’s traditionally the peak period of the year for . Mortgage applications fell 1.2% last week from a week earlier as home loan borrowing costs rose, according to the Mortgage Bankers Association. Applications for a loan to buy a home were up 18% from a year earlier.

New data suggest sales could slow further in coming months. An index of pending U.S. home sales fell 6.3% last month from March and declined 2.5% from April last year, the National Association of Realtors said Thursday.

There’s usually a month or two lag between a contract signing and when the sale is finalized, which makes pending home sales a bellwether for future completed home sales.

“At this critical stage of the housing market, it is all about mortgage rates,” said Lawrence Yun, NAR’s chief economist. “Despite an increase in housing inventory, we are not seeing higher home sales. Lower mortgage rates are essential to bring home buyers back into the housing market.”

Economists expect mortgage rates to remain volatile in coming months, with forecasts calling for the average rate on a 30-year mortgage to range between 6% and 7% this year.

States offer big incentives for data centers’ growth

SUMMARY:

  • States compete to attract with big incentives
  • Financial incentives and worth millions
  • Pushback from communities over data center expansions

HARRISBURG, Pa. (AP) — The explosive growth of the data centers needed to power America’s fast-rising demand for and platforms has spurred states to dangle incentives in hopes of landing an economic bonanza, but it’s also eliciting pushback from lawmakers and communities.

Activity in state legislatures — and competition for data centers — has been brisk in recent months, amid an intensifying buildout of the energy-hungry data centers and a search for new sites that was ignited by the late 2022 debut of OpenAI’s ChatGPT.

Many states are offering financial incentives worth tens of millions of dollars. In some cases, those incentives are winning approval, but only after a fight or efforts to require data centers to pay for their own electricity or meet standards.

Some state lawmakers have contested the incentives in places where a heavy influx of massive data centers has caused friction with neighboring communities. In large part, the fights revolve around the things that tech companies and data center developers seem to most want: large tracts of land, tax breaks and huge volumes of electricity and water.

And their needs are exploding in size: from dozens of megawatts to hundreds of megawatts and from dozens of acres up to hundreds of acres for large-scale data centers sometimes called a hyperscaler.

While critics say data centers employ relatively few people and pack little long-term job-creation punch, their advocates say they require a huge number of construction jobs to build, spend enormous sums on goods and local vendors and generate strong tax revenues for local governments.

In Pennsylvania, lawmakers are writing to fast-track permitting for data centers. The state is viewed as an up-and-coming data center destination, but there is also a sense that Pennsylvania is missing out on billions of dollars in investment that’s landing in other states.

“Pennsylvania has companies that are interested, we have a labor force that is capable and we have a lot of water and natural gas,” said state Rep. Eric Nelson. “That’s the winning combination. We just have a bureaucratic process that won’t open its doors.”

It’s been a big year for data centers

Kansas approved a new sales tax exemption on goods to build and equip data centers, while Kentucky and Arkansas expanded pre-existing exemptions so that more projects will qualify.

Michigan approved one that carries some protections, including requirements to use municipal utility water and clean energy, meet energy-efficiency measures and ensure that it pays for its own electricity.

Such tax exemptions are now so widespread — about three dozen states have some version of it — that it is viewed as a must-have for a state to compete.

“It’s often a nonstarter if you don’t have them, for at least the hyperscalers,” said Andy Cvengros, who helps lead the data center practice at commercial giant JLL. “It’s just such a massive impact on the overall spend of the data center.”

Zoning, energy fights often frustrate developers

In West Virginia, lawmakers approved a bill to create “microgrid” districts free from local zoning and electric rate regulations where data centers can procure power from standalone power plants.

Gov. Patrick Morrisey, a Republican, called the bill his “landmark policy proposal” for 2025 to put West Virginia “in a class of its own to attract new data centers and information technology companies.”

Utah and Oklahoma passed laws to make it easier for data center developers to procure their own power supply without going through the grid while Mississippi rolled out tens of millions of dollars in incentives last year to land a pair of Amazon data centers.

In South Carolina, Gov. Henry McMaster signed legislation earlier this month that eased regulations to speed up power plant construction to meet demand from data centers, including a massive Facebook facility.

The final bill was fought by some lawmakers who say they worried about data centers using disproportionate amounts of water, taking up large tracts of land and forcing regular ratepayers to finance the cost of new power plants.

“I do not like that we’re making customers pay for two power plants when they only need one,” Senate Majority Leader Shane Massey told colleagues during floor debate.

Still, state Sen. Russell Ott suggested that data centers should be viewed like any other electricity customer because they reflect a society that is “addicted” to electricity and are “filling that need and that desire of what we all want. And we’re all guilty of it. We’re all responsible for it.”

Some lawmakers are hesitant

In data center hotspots, some lawmakers are pushing back.

Lawmakers in Oregon are advancing legislation to order utility regulators to ensure data centers pay the cost of power plants and power lines necessary to serve them.

Georgia lawmakers are debating a similar bill.

In Virginia, the most heavily developed data center zone in the U.S., Gov. Glenn Youngkin vetoed a bill that would have forced more disclosures from data center developers about their site’s noise pollution and water use.

In December 2024, the Joint Legislative Audit and Review Commission (JLARC) released a study projecting that energy demand from data centers in Virginia could more than triple by 2040, and residents in Northern Virginia — the epicenter of the state’s data center industry — have fought against data center growth, and opposition is growing in other regions as well.

In , city councilors are set to vote this month on a 350,000-square-foot data center zoning request that the planning commission recommended denying, and in County, a developer withdrew its rezoning application for an $8.85 billion data center campus and natural gas power plant in April. Meanwhile, , known as “Data Center Alley,” has placed new restrictions on regulation of data center construction.

In Texas, which endured a deadly winter blackout in 2021, lawmakers are wrestling with how to protect the state’s electric grid from fast-growing data center demand.

Lawmakers still want to attract data centers, but a bill that would speed up direct hookups between data centers and power plants has provisions that are drawing protests from business groups.

Those provisions would give utility regulators new authority to approve those agreements and order big electric users such as data centers to switch to backup generators in a power emergency.

Walt Baum, the CEO of Powering Texans, which represents competitive power plant owners, warned lawmakers that those provisions might be making data center developers hesitant to do business in Texas.

“You’ve seen a lot of new announcements in other states and over the last several months and not as much here in Texas,” Baum told House members during a May 7 committee hearing. “I think everybody right now is in a waiting pattern and I worry that we could be losing to other states while that waiting pattern is happening.”

Virginia Business Deputy Editor Kate Andrews contributed to this story.

More sellers than buyers in housing market slowdown

SUMMARY:

  • April sees 34% more home sellers than buyers
  • Fewest buyers in since 2013
  • Little relief for those priced out of the market

Homeowners eager to sell may have to wait a while before a buyer comes along.

As of April, the U.S. housing market had nearly 34% more sellers than buyers shopping for a home, according to an analysis by Redfin.

Aside from April 2020, when the pandemic brought the economy and activity to a standstill, there haven’t been this few buyers in the market for a home before, based on records that date back to 2013.

The trend is good news for home shoppers — if they can afford to buy at current and prices, which are still rising nationally, albeit more slowly.

Fewer buyers means less competition for home listings and more pressure on sellers to dial back their asking price and make other concessions to help get a deal done. That’s a stark reversal from just a few years ago, when it wasn’t uncommon for homeowners to receive offers well above their asking price from multiple home shoppers.

“The balance of power in the U.S. housing market has shifted toward buyers, but a lot of sellers have yet to see or accept the writing on the wall,” said Asad Khan, a senior economist at Redfin.

The lopsided balance between buyers and sellers is reflected in home sales, which remain in a slump going back to 2022, when mortgage rates began to climb from the rock-bottom lows they reached during the pandemic. Last year, sales of previously occupied U.S. homes sank to their lowest level in nearly 30 years. Sales fell last month to the slowest pace for the month of April going back to 2009.

Sellers began outnumbering buyers in November 2023, when the average rate on a climbed to a 23-year high of nearly 8%, according to mortgage buyer . The average rate reached 6.89% this week, its highest level since early February.

All told, there were 1.9 million sellers and 1.5 million prospective in April, or 490,041 fewer people in the market for a home relative to sellers. A year ago, there were 6.5% more sellers than buyers. Two years ago, buyers outnumbered sellers by 5.3%.

Redfin based its estimate of the number of sellers in April on active listings, or the number of homes for sale at any point during the month. It estimated the pool of people in the market for a home by creating a model that takes several other data into account, including the typical time it takes for a someone to buy after taking a tour of a home.

Faced with a market with fewer potential buyers, some sellers have opted to lower prices or offer sales incentives, such as agreeing to pay for a buyer’s closing costs or other expenses. Nearly 1 in 5 home listings had their price reduced last month, according to Realtor.com.

The growing imbalance between buyers and sellers should pull U.S. home prices 1% lower by the end of this year, according to Redfin.

Prices have already begun to decline in select metro areas. In the four weeks ended April 20, home prices fell in 11 of the top 50 most populous U.S. metro areas, including Dallas, Oakland, California, and Jacksonville, Florida, according to Redfin.

The market with the biggest gap between buyers and sellers is Miami, where sellers outnumber buyers by about 3 to 1, according to Redfin. The strongest seller’s market is Newark, New Jersey, with 47.1% fewer sellers than buyers.

Despite tipping more in favor of buyers, the housing market is likely to remain unaffordable for many Americans. The median U.S. home sales price has jumped 53% over the past six years, far outpacing wage growth.

And while the inventory of previously occupied U.S. homes climbed last month to the highest level since September 2020, it’s still well below pre-pandemic era levels and short on properties that most Americans can afford.

Before the pandemic, households earning $75,000 a year could afford to buy nearly half of all homes on the market nationally. As of March, only 21.2% of home listings were affordable, according to a recent analysis by the National Association of Realtors. A home is considered affordable if monthly payments don’t exceed 30% of household monthly income.

“Without a significant boost in housing inventory at price points below $260,000, the path to homeownership will remain blocked for millions of Americans who are otherwise financially ready to buy,” according to the NAR report.

CACI wins $638M in intelligence contracts

Reston-based announced last week that it was awarded nearly $638 million in contracts to support .

“As a leader in managing complex, specialized requirements for classified customers, we possess unparalleled mission knowledge valuable to the intelligence community,” CACI President and CEO John Mengucci said in a statement. “These new contract awards expand upon our decades of experience and understanding of their unique objectives, which accelerates effective outcomes, drives positive results and allows personnel to stay focused on achieving ongoing success in an ever-evolving threat landscape.”

CACI, which closed its $1.27 billion acquisition of Fairfax-based Azure Summit Technology in October 2024, returned to the Fortune 500 list this year, rising 41 slots from No. 525 in 2024 to No. 484.

Founded in 1962, CACI serves intelligence and defense agencies, utilizing its technology and expertise to boost national security. It has more than 25,000 employees and reported $7.66 billion in fiscal 2024 revenue.

41 Virginia companies made the 2025 Fortune 1000

SUMMARY:

  • Virginia has 25 companies listed on the annual Fortune magazine list and a total 41 businesses on the Fortune 1000
  • is Virginia’s top-ranked business, as it has been for multiple years, and and traded places in the state’s rankings, with RTX in second place and Boeing in third
  • Newport News-based Enterprises debuted on the Fortune 500 list this year

There were some ups and downs for Virginia companies on this year’s Fortune 500, but overall, the state’s representation held steady with slight improvement.

Forty-one companies headquartered in Virginia made the grade in Fortune magazine’s 71st annual Fortune 1000 list, and 25 Virginia companies are on this year’s elite Fortune 500. Last year, 39 Virginia companies made the Fortune 1000 list, with 24 on the Fortune 500.

As it has for several years, Freddie Mac, the federally sponsored mortgage business, continues to be the top-ranked Virginia-based company at No. 38, down two spots from last year. It posted $122 billion in revenue in 2024, up $14 million from 2023, but has had a leadership shakeup recently. In March, Freddie Mac CEO Diana Reid was fired by Federal Housing Finance Agency Director Bill Pulte, and former Freddie Mac President Michael Hutchins was appointed interim CEO. Reid became CEO in September 2024.

Boeing slid from No. 52 in the 2024 ranking to No. 63, a reflection of the aerospace and defense contracting giant’s decline in sales after the January 2024 midair blowout of a 4-foot wall panel in a Boeing 737 Max 9 jet cabin. Last year, Arlington County-based Boeing lost $11.8 billion in profits, a 14.5% decrease from 2023, to $66.5 billion. It also saw former President and CEO Dave Calhoun step down in September 2024 to make way for Kelly Ortberg, who is based in Seattle to keep a closer eye on airplane manufacturing in the state of Washington. Things appear to be looking up for Boeing in 2025, as it has made sales in recent months and reached a settlement with the Justice Department to avoid criminal trial.

By virtue of Boeing’s slide, RTX is now Virginia’s second highest ranked company on the 2025 Fortune 500, at No. 54, up one spot from last year. The Arlington-based aerospace and defense contractor formerly known as Raytheon Technologies, has seen its fortunes fluctuate this year, winning a $1.5 billion Air Force contract in February but also undergoing a three-week strike by machinists at subsidiary Pratt & Whitney this month.

Notably this year, Ferguson Enterprises, the Newport News-based plumbing and heating products distributor, debuted on the Fortune 500, ranking No. 146. Following a corporate reorganization last year, Ferguson’s British holding company merged with its U.S. subsidiary based in Newport News. The company, which has about 35,000 employees, reported $29.6 billion in revenue for 2024.

Also notable among Virginia companies this year, moved back on to the Fortune 500, ranked No. 484, and Henrico County insurer dropped off the Fortune 500, slipping to No. 507.

CACI, which closed its $1.27 billion acquisition of Fairfax-based Azure Summit Technology in October 2024, rose 41 places from No. 525 in 2024 to No. 484.

Other companies saw significant rises and falls on the list, with Richmond-based utility Dominion Energy falling 34 spots to No. 264 this year, following a 10% dip in revenue to $16 billion in 2024, and Henrico County convenience store chain Arko’s decline of 35 places to No. 488, with its revenue dropping 8.1% to $7.57 billion. Global electric utility AES, based in Arlington, dropped 24 places to No. 343, and IT company DXC Technology fell 21 spaces to No. 315.

On the positive side of the ledger, Booz Allen Hamilton rose 24 places to No. 398, marking a 15.2% rise in revenue in 2024, and Leidos rose 16 places to No. 250.

Released Monday, the Fortune 1000 list ranks the 1,000 largest United States corporations by total revenue, including public companies and private companies for which revenue information is available.

This year’s Fortune 500 list also features a record number of companies run by women — 55 companies, or 11% of the top 500. In Virginia, three companies — General Dynamics, Northrop Grumman and Science Applications International Corp. — have female CEOs, making up 7.3% of Virginia’s Fortune 500 leadership.

This year, 11 Virginia Fortune 500 companies are based in Fairfax County, retaining its status as the Virginia locality with the most Fortune 500 companies. The metro Richmond area, including Hanover, Henrico and Goochland counties, has the second most companies on the Fortune 500, with seven companies. Arlington County and the Hampton Roads region each have three companies on the Fortune 500.

These are the Virginia-based companies that made the 2024 Fortune 1000 list, in order of ranking:

38) Federal Home Loan Mortgage (“Freddie Mac”), McLean

54) RTX, Arlington County

63) Boeing, Arlington County

80) Performance Food Group, Goochland County

82) Capital One Financial, McLean

96) General Dynamics, Reston

110) Northrop Grumman, Falls Church

139) Dollar Tree,

146) Ferguson Enterprises, Newport News

151) CarMax, Goochland County

209) Altria Group, Henrico County

250) Leidos, Reston

251) Markel Group, Glen Allen

264) Dominion Energy, Richmond

315) DXC Technology, Ashburn

343) AES, Arlington County

368) Huntington Ingalls Industries, Newport News

380) Hilton, McLean

395) Owens & Minor, Mechanicsville

396) NVR, Reston

398) Booz Allen Hamilton, McLean

421) QXO Building Products (formerly Beacon Roofing Supply), Herndon

484) CACI International, Reston

488) Arko, Henrico County

496) Science Applications International Corp. (SAIC), Reston

507) Genworth Financial, Henrico County

531) Parsons, Centreville

645) Maximus, Reston

662) Brink’s, Henrico County

670) Venture Global, Arlington County

689) Graham Holdings, Arlington County

723) Navient, Herndon

737) V2X, McLean

766) ASGN, Glen Allen

900) Tegna, Tysons

933) AvalonBay Communities, Arlington County

963) NewMarket, Richmond

972) Universal Corp., Richmond

979) CoStar Group, Arlington County

986) BWX Technologies, Lynchburg

992) Fluence Energy, Arlington County

This is a breaking news story and will be updated.

As federal cuts loom, Virginia universities redouble fundraising

SUMMARY:

  • William & Mary has had record-breaking private gifts over the past year, including $100 million for coastal and marine sciences program
  • Universities face , so they are focusing even more on private
  • , Shenandoah University and -Wise also reported record-breaking donations over the past year

This is an era when individual philanthropists are needed, says Dr. , the retired liver surgeon who has donated more than $150 million to Virginia Commonwealth University and William & Mary over the past three years.

He and many others who make major donations or solicit them on behalf of universities and nonprofit organizations are fully aware of the current national situation. Colleges are facing cuts in federal funding — totaling hundreds of millions or even billions of dollars in some cases — and that creates more pressure to seek funds from private donors, who already carry considerable weight at higher education institutions.

“I don’t know how long this push to minimize the contribution of scientific research and the way human beings are going to interact with Earth and everything that lives on Earth” will continue, Stravitz says. “The people who are degrading this and our NIH-funded researchers, for instance, I understand where they’re coming from. They’re trying to shrink big government and things like that, but this isn’t the way to do it, in my opinion. And so, I think that VIMS and VCU are probably going to rely more on foundation giving.”

In February, Stravitz and his family’s philanthropic organization, the Brunckhorst Foundation, made a $50 million donation to W&M’s Virginia Institute for Marine Science (VIMS) and the Batten School of Coastal & Marine Sciences, creating a full-tuition scholarship fund for students in those programs. Stravitz says he was inspired by Hampton Roads philanthropist ‘s record-breaking gift to W&M and knew the university was seeking more funding to sustain its work in climate change research and coastal resilience.

In 2022, Stravitz made headlines for his $104 million donation to support liver research at VCU, establishing the Stravitz-Sanyal Institute for Liver Disease and Metabolic Health. A 1982 W&M alumnus who was medical director of VCU Health’s Hume-Lee Transplant Center, he is an heir to the Boar’s Head Provisions Co. fortune through his mother, the late Barbara Brunckhorst. The Brunckhorst Foundation, Stravitz says, has long supported programs focused on , one of his mother’s primary interests.

In July 2024, Batten gave $100 million to establish the Batten School and expand VIMS, including creating the state’s first undergraduate degree program in coastal and marine sciences.

In an April email answering questions about her donation, Batten wrote that the school named after her family “promises to unleash an army of young environmentalists to lead the battle in their communities, their professions, in the world at large to save our planet from the lethal effects of a changing climate.”

Batten and her family, who have made eight- and nine-figure gifts to other Virginia universities, derived their fortune from the late Frank Batten Sr., who co-founded The Weather Channel and sold it to NBC Universal and two private equity firms in 2008 for nearly $3.5 billion, and served on the William & Mary Board of Visitors. The family owned TeleCable, Landmark Communications and The Virginian-Pilot and Daily Press newspapers, among other media properties.

Batten says that her family is “committed to the support of environmental education,” and that the university’s “location at the center of a geographical region of the United States at high risk made it an obvious choice for an investment in an undergraduate degree in marine science, the first in Virginia.”

Record-breaking year

While he recognizes the challenges facing his office and its counterparts at universities across the nation with federal funding in jeopardy, William & Mary’s senior vice president of university advancement, Matthew Lambert, is also proud of the series of blockbuster donation announcements William & Mary has made over the past year.

In addition to Batten’s $100 million gift, which marks the university’s largest ever philanthropic gift, and Stravitz’s $50 million donation, which is the largest scholarship- specific fund in William & Mary history, William & Mary also received a $30 million anonymous donation from an alumna in March 2024 to renovate and rename a building in honor of former U.S. Secretary of Defense Robert M. Gates, the university’s chancellor. This April, alums Rob and Jean Berger Estes made a $15 million donation to launch the Estes Center for Excellence in Accounting.

Rob Estes, chairman and CEO of Richmond trucking giant Estes Express Lines, happens to live near Stravitz on Richmond’s Monument Avenue, though the two didn’t discuss their donations ahead of time, Stravitz says. Typically, major donors work closely with a small group of university advancement and administrative staff, keeping their cards close to the vest until announcement time. It can take multiple years to hash out plans for a major gift.

Stravitz began discussing his donation to VIMS with President Katherine Rowe, and Derek Aday, VIMS’ dean and director, not too long after Aday joined the university in 2021.

“The first time I went to VIMS several years ago, Derek was pretty much new on the job,” Stravitz says, “but you could tell that this guy totally had his act together and had a plan. We started talking, and I guess it took about three years or so to assemble what we’ve ended up with.”

Even though William & Mary is easy to work with and is an institution with deep ties to the nation’s history and an impressive slate of alums, it hasn’t always succeeded in past years at landing big donations.

“For reasons I don’t understand, they hadn’t received a lot of large gifts,” Stravitz says. “William & Mary’s received a lot of really big gifts in the last year, which is just wonderful. I think Jane Batten has a lot to do with that, and she certainly made me realize that this was a good investment.”

Despite his family foundation’s major gifts to VCU and William & Mary, Stravitz points out that the Brunckhorst Foundation has a wide-ranging scope, contributing to more than 60 organizations nationwide. He took a leadership role in the foundation in about 2016, he says, as his mother was aging and his career in medicine was winding down.

“It has been a tremendous joy,” Stravitz says. “I get a lot out of it. I somehow have gotten thrust into a position where I have to be creative about giving the money away and make people happy. I think taking a young person and promoting interest in research, whether it’s environmental or medical research, and making it easier for them to achieve their goals … is a very good strategy.”

Private vs. public sector

Lambert says that Rowe, who became William & Mary’s president in 2018, has created a “vision where William & Mary is uniquely positioned to be a force not just for good in our local Hampton Roads area or in the commonwealth, but for the country and the world.”

That appeals to major donors who “generally want to add to the margin of excellence [and] enable transformation and change,” he says. “We very rarely are going to donors and asking them to help us solve a crisis, although we do on occasion.”

Although many universities are taking steps to comply with the Trump White House’s executive orders — particularly in dissolving , equity and inclusion () offices — to protect federal funding, most expect to lose grants now or in the future as the administration cuts budgets for public health, environmental protection and international aid. Many other nonprofit institutions that receive federal grants are feeling the same pinch.

Designated an R1 research university by the Carnegie Classification of Institutions of Higher Education, William & Mary processed more than $81 million in research spending in fiscal 2023 that was sponsored by grants. According to the university’s updated federal guidelines webpage, “a significant portion of this amount” could be impacted by changes in federal policy, and it is creating plans for scenarios in which it loses up to $70 million in annual revenue.

Stravitz anticipates people in the future looking back at this period in U.S. history — “where the federal government is trying to dismantle itself” and institute deep cuts — will “realize that we made a lot of mistakes, and that was not the way to make government smaller.”

The Batten School and VIMS have approximately $100 million in active research grants from federal agencies, creating about half of its operating budget, William & Mary says. In addition to working with Virginia’s congressional delegation “to ensure that decision makers understand the value of our nonpartisan science,” the university has “developed a gap fund to provide grants and loans to principal investigators who otherwise would need to pause or terminate ongoing work.”

Right now, with some of the ‘s proposed funding cuts going through the court system, universities don’t have solid answers about how their budgets will be impacted, although most public research universities expect significant federal funding cuts.

In response, some of the nation’s largest philanthropic foundations — among them the Marguerite Casey Foundation, Bloomberg Philanthropies and the MacArthur Foundation — have committed hundreds of millions to make up some of the government funding gaps, but nowhere near the billions that some large universities receive annually.

In an April 28 NPR interview, New York University finance professor Sabrina Howell noted, “No private company would take on [research] on their own because it’s really expensive… only government can fund that kind of work.”

On the higher education side of the ledger, philanthropic funding is typically tied to specific projects, meaning that institutions can’t simply shift money to a program that is suddenly unfunded. Still, donors and advancement offices at universities are doing what they can to keep projects running and address new areas of research. So, the trend of seeking out ever-bigger individual donations continues.

Over the past year, William & Mary was not the only big winner in philanthropic announcements among Virginia colleges and universities.

In May 2024, Hampden-Sydney College and Shenandoah University each received $20 million donations, among the largest ever made to their institutions. Richmond’s Endeavour Legacy Foundation pledged its gift toward renovating Hampden-Sydney’s science center to an academic center housing two departments, and Wilbur and Clare Dove’s donation will help SU build a performing and visual arts center on its Winchester campus.

The University of Virginia’s College at Wise also received its largest ever donation last year, $11.2 million, from The Bill Gatton Foundation, creating six endowed funds for scholarships and capital construction.

Lambert says that getting the message out that William & Mary is a good investment to major donors — as well as to smaller donors who can combine forces to make a significant impact — is vital for the university’s future.

And that’s true across the board for higher education, he notes: “We’ve always as a country prioritized education, and when you look at the colleges and universities in the United States, that’s still the case today, but we clearly as a sector need to do a better job of [teaching] those that are in positions of leadership in the country, as well as our fellow citizens, about the impact that our colleges and universities have on the economy, the impact they have on our workforce [and] the impact they have on our democracy.”

This story has been corrected since publication.

Is DEI done at the University of Virginia?

SUMMARY:

  • board voted to dissolve DEI office after Trump executive order
  • However, conservative critics say university hasn’t gone far enough
  • Department of Justice issued a May 30 deadline for U.Va. to prove progress in stripping out all DEI functions at university
  • Some students, faculty and staff are concerned about impact on campus life

When she went through orientation at the start of the ‘s 2024-25 academic year, first-year student Katherine Rattray felt welcomed.

The university founded by Thomas Jefferson in 1817 as an “academical village” constructed in part by enslaved people seemed to acknowledge, “Yes, this institution was built on slavery, but at the same time we’re trying to do better,” says Rattray, who is Black.

But after U.Va.’s board of visitors voted in March to dissolve the university’s Office of Diversity, , and Community Partnerships in response to an executive order from President Donald Trump, Rattray’s feelings have changed.

“It’s already a big deterrent for students to see that there’s not a lot of diversity on campus,” Rattray says of the university’s 55% white student body. “Rescinding this, it just becomes more words than actions.”

Associate professor Jeri Seidman, chair-elect of the U.Va. Faculty Senate, says that U.Va.’s DEI office was largely focused on compliance with Title IX and Title XI anti-discrimination laws. Photo by Jay Paul

U.Va. is far from the only public university that has dissolved its DEI office in recent months. George Mason University, James Madison University, Virginia Tech, Virginia Commonwealth University and other universities across the nation have done the same, with university administrators and board members saying they didn’t have much choice in the matter, as their institutions stood to lose significant federal funding if they fought the White House on the issue.

For some observers, the Trump administration’s war on DEI represents a backlash against racial progress made following the 2020 police murder of George Floyd in Minneapolis, which sparked widespread protests and pledges for societal change. Many businesses and universities subsequently hired DEI professionals to help diversify their staffs, among other measures.

Although U.Va.’s DEI office was founded in the 1990s, when its primary focus was to raise graduation rates of Black students, the university’s board of visitors voted in 2020 in favor of an initiative to double the number of racially diverse faculty members and to pursue a more diverse student body.

After the board’s vote to dissolve the office this March, Gov. Glenn Youngkin said in a statement, “The Board of Visitors voted for common sense, saying ‘no’ to illegal discrimination and ‘yes’ to merit-based opportunity. DEI is done at the University of Virginia.”

In April, board members followed up by rescinding the 2020 diversity resolution.

Despite these actions, conservative critics say U.Va.’s administration hasn’t gone far enough.

President Jim Ryan “is not going to do anything if the board doesn’t hold his feet to the fire. He’s going to do nothing,” says former U.Va. board member Bert Ellis, a Youngkin appointee who was the board’s most vocal opponent of DEI. Ellis was so vocal, in fact, that Youngkin ousted him from the board in April partly over his outspokenness.

Meanwhile, the U.S. Department of Justice has gotten involved, alleging that U.Va. is not doing enough to dismantle its DEI apparatus and issuing its president a compliance deadline.

Word on the Grounds

“In hindsight, I’m not sure that the DEI office was the right title for it because it felt like a lot of what it did was either legal compliance or really just trying to build community within the faculty, within the students, within the community,” says Jeri K. Seidman, associate professor of commerce and chair-elect of U.Va.’s faculty senate. “Not necessarily anything that was singling any particular group out, but rather just trying to create welcoming relationships amongst all of the stakeholders.”

As at other public universities that receive federal funding, U.Va.’s DEI office also served as an umbrella for departments responsible for compliance with federal laws, including Title XI, which aims to prevent racial discrimination at colleges, and Title IX, which opposes gender discrimination in everything from college athletics to campus rape investigations.

U.Va.’s DEI office also housed the Starr Hill Pathways program, a college and career pipeline initiative for and students in grades seven through 12.

Also, notes engineering professor Keith Williams, since the Supreme Court’s 2023 ruling overturning affirmative action in college admissions, U.Va. has already pivoted its focus on helping students based on merit and financial need, rather than race or ethnicity.

“We already knew that our challenge was to reach out to the students, particularly in Southwest Virginia and Richmond. That’s been our challenge as long as I’ve been there,” says Williams, former director of U.Va.’s Clark Scholars program, which aims to recruit more underrepresented students into STEM fields.

The loss of the DEI office’s support in that mission, he says, “certainly makes it harder. I do think that it’s our job now, it’s our task to step up and to communicate better with students and make them feel welcome here, regardless of where they come from.”

Despite the U.Va. DEI office’s three-decade history, the focus on diversity, equity and inclusion at Mr. Jefferson’s University reached an apex following national racial justice protests in summer 2020, when U.Va.’s board of visitors endorsed several recommendations by a university racial equity task force, including an effort to double the number of faculty members from underrepresented racial, ethnic and gender groups by 2030 and to aim for a student population “that better reflects” the diversity of the state and nation.

The 2023 Supreme Court ruling and the current board’s April rescission sounded a death knell for these initiatives. Meanwhile, in March 2024, Youngkin signed a bill to ban all Virginia public universities from giving preferential treatment to legacy students.

Just as it’s not yet clear how these changes may impact demographics at U.Va., it’s also uncertain as to how successful the now-canceled DEI initiatives would have been at diversifying the university.

In 2016, 51% of all first-year applicants offered admission to U.Va. were white, a number that fell to 41.4% in 2022, while the numbers of Asian and Black students offered admission rose over that period. But in 2024, the number of Black students offered first-year admission fell from 924 students in 2023 to 633, while white, Hispanic and Asian admissions numbers increased slightly over the previous year.

Speaking from his own experience, Adrian Villanueva, a first-year engineering student, says being part of the Clark Scholars program helped him choose U.Va.

“If I wasn’t offered Clark, I don’t know that I’d be at U.Va., to be honest,” Villanueva says. “Diversity is what makes U.Va., specifically engineering, the place that it is. Different backgrounds provide different insight into different perspectives on a certain issue or topic and might even expose parts of that issue that people from a certain background might not have even considered.”

Second-year student Mara Williams, a computer engineering major, adds that student groups like the Korean Student Association, the Chinese Student Association, Black Engineers and others will now have more to do to help students feel welcome.

“There’s going to be a bigger role and importance for them to step up,” Williams says. “I worry what this message is sending to people who are not being supported anymore.”

DEI opposition

Critics of the DEI office and other university diversity initiatives say they led to unnecessary spending and prevented the hiring of people with moderate or conservative views at U.Va., among other impacts.

Broadly, the presence of the DEI office also led to members of the school community being afraid to voice any countering viewpoints, says Joel Gardner, executive director of The Jefferson Council, a conservative alumni group co-founded by Ellis.

DEI, argues Gardner, “became an overwhelming philosophy that snuck into every nook and cranny of life on the grounds,” and civil debate “became corrupted by the fact that this university became an echo chamber where most administrators and most faculty all believed the same thing.”

However, in a 2023 piece about “cancel culture” and the argument that conservative-leaning students and faculty members are self-censoring, Ryan and then-provost Ian Baucom wrote, “We should be concerned about self-imposed censorship, to be sure. But we should be a lot more concerned about censorship at the hands of the government — or university leaders, for that matter. … That means protecting the rights of our faculty, students and staff to speak about ideas on which society is divided, no matter how uncomfortable it might make us.”

Stating that Ryan’s administration has “been very committed to free speech,” Seidman says that people “should not feel deterred” to continue to speak out on political topics.

And “regardless of where the [Title XI and Title IX] offices are housed, the presence of those offices and their ability to investigate and to enforce those laws is going to stay the same,” Seidman says.

In April, Ryan was one of more than 560 signers of the American Association of Colleges and Universities’ “A Call for Constructive Engagement,” a public letter condemning what it calls the second Trump White House’s “unprecedented government overreach and political interference.” The letter called for the freedom of faculty, students and university staffers to “exchange ideas and opinions across a full range of viewpoints without fear of retribution, censorship or deportation.”

Ellis says he doesn’t see any concern about Trump exerting influence on what universities may or may not teach. The president, he says, has a philosophy of, “You don’t need our money, you don’t need any of our rules, but if you need and want our money, we have some standards and some conditions that we’re gonna impose.” And Ellis adds, “I think that’s totally fair.”

Gardner, although stopping short of calling for Ryan’s resignation, expresses doubt that Ryan’s administration will do away with all diversity and equity initiatives. “In order to actually root out DEI from this university, it’s going to take a massive, massive effort and a timely effort. Unless you have an administration that takes that seriously, just not going to happen.”

In late April, a day before the special meeting of the board of visitors, the U.S. Department of Justice sent a letter to Ryan, U.Va.’s general counsel and Rector Robert Hardie stating that the university had until May 2 to produce evidence that every division of the university and its health system had dismantled DEI departments and initiatives.

Signed by U.Va. Law alumna Harmeet K. Dhillon, now head of the ‘s civil rights division, the DOJ letter alleges that Dhillon’s office received complaints that an internal report on U.Va.’s 30-day progress in ending DEI operations at the university after the March 7 vote had not been made public, and that U.Va.’s administration “may have failed to implement these directives.”

The same day as the DOJ letter, the Jefferson Council posted a tweet complaining that several of its researchers and allies had not been able to get a copy of the report, despite multiple FOIA requests.

Meanwhile, the university received a brief reprieve from the , which granted U.Va. an extension until May 30 to respond regarding the university’s efforts to eliminate DEI.

University of Virginia at a glance

Founded
Sometimes called Mr. Jefferson’s University or just The University, U.Va. was founded by Thomas Jefferson in 1819. Its first board of visitors included Jefferson and fellow U.S. Presidents James Madison and James Monroe.

Campus
With roughly 1,240 contiguous acres around its UNESCO World Heritage Site campus or “Grounds,” U.Va. is known for its distinctive Jefferson-designed Rotunda building located on the Lawn, the school’s 4.5-acre grass quad where graduations are held. U.Va.’s other major holding is the University of Virginia’s College at Wise, a four-year liberal arts college in Southwest Virginia.

2024-25 enrollment
17,901 undergraduate students
8,569 graduate students
5% international undergraduates
19% international graduate students
30% minority enrollment
67% in-state undergraduate students

Employees
Approximately 3,300 full-time faculty, 7,800 full-time staff and 12,800 Health staff

Academic programs
Notable for its medicine, law and business schools, U.Va. offers more than 200 majors across 12 schools.

Tuition, fees, housing and dining
Includes average room and board, education and general fees, plus books, travel and personal expenses for general undergraduates.
In-state residents: $39,494
Out-of-state residents: $79,574

Sources: State Council of for Virginia; University of Virginia

Charlottesville nurtures biotech startups

SUMMARY:

When Neal Piper’s son, Noah, rang the bell at Children’s Hospital in December 2020, it signaled the end of grueling chemotherapy treatments connected to beeping monitors and intravenous tubes.

Five years later, Noah is a healthy third grader who will turn 9 in July, and the business his dad launched, Luminoah, is also thriving.

Piper, who lives in Charlottesville with his family, expects the new feeding tube system produced by Luminoah to be approved by the Food and Drug Administration by the first quarter of 2026, which would clear it to go to market.

Like other companies in Charlottesville’s rapidly growing biotechnology sector, Luminoah has a mission to “change the standard of care” through innovation, Piper says. Whether it’s through new therapeutic drugs or medical devices, dozens of startups and established companies have adopted the same refrain.

Meanwhile, the University of Virginia’s $350 million Manning Institute of Biotechnology is helping drive further growth in medical innovations, with a 350,000-square-foot building under construction and expected to be occupied in late 2026.

In 2019, Noah Piper was diagnosed with a brain tumor, and doctors told Neal Piper and his wife, Valeria, that Noah would need to get his nutrition through a feeding tube.

Neal Piper recalls seeing a rocket ship on the wall they saw each time they visited their son at the children’s hospital. Looking back on it now, Piper sees the rocket as a metaphor for his family’s journey since Noah’s cancer went into remission. Inspired to help other families and individuals facing similar challenges, Piper started Luminoah, named for his son, after conceiving of a portable tube-feeding device that’s compatible with smartphones and able to track nutritional intake.

As of May, Piper says Luminoah has raised $10 million in capital and employs 10 full-time workers. If the feeding device receives FDA approval as expected in early 2026, it would allow the company to begin scaling up extensively. But that wouldn’t be possible without locally available support, says Piper, who spent 15 years in commercial health care, including at pharmaceutical giant Pfizer.

“If we weren’t in the commonwealth, and particularly in Charlottesville in this ecosystem, I think I could have just been another dad with a passing idea to make a difference,” Piper says. “I wouldn’t have had a network and support to see it through. As a result … that ripple effect can impact the lives of millions of people.”

Accelerating innovation

In April, the nonprofit CvilleBioHub opened the Commonwealth Bio Accelerator, a 6,500-square-foot lab and office space in ‘s North Fork business park in designed to help new biotech companies get started. Since 2016, CvilleBioHub has supported more than 100 early-stage startups, and its executive director, Nikki Hastings, says the accelerator has room to accommodate six companies.

Tenants will have equipment and mentoring opportunities available, and once the Manning Institute opens, there will be more biotech support available just down U.S. 29 in the Fontaine Research Park.

The institute is expected to foster research on cellular therapy, gene therapy and nanotechnology while expanding U.Va.’s capacity for clinical trials.

In 2023, Albemarle philanthropists Paul and Diane Manning launched the institute with a $100 million gift to U.Va., with $150 million committed by U.Va. and $50 million by the state. In December 2023, the university broke ground on the institute’s home building, but in the meantime, it has begun hiring more scientists to conduct medical research to discover treatments for cancer, diabetes and other diseases.

Paul Manning, who started a biotech-focused private firm that invests in life sciences and pharmaceutical startups, has said that he hopes the institute will “transform the future of medicine.”

Meanwhile, the state’s GO Virginia economic development initiative has supported CvilleBioHub annually since 2020. The state pitched in $4.3 million for the Commonwealth Bio Accelerator, while the Mannings’ foundation, private donors and Albemarle and Charlottesville covered the rest of the $7.5 million project.

Although the new facility has limited space, Hastings says the companies primed to launch there are seeking to develop medications for lung fibrosis and genetic epilepsy, as well as a novel liquid biopsy blood sample analysis method for improved cancer detection.

“We’re trying to fill a lot of the gaps that exist in our entrepreneurial ecosystem,” Hastings says. “As companies are spinning out great research coming out of the University of Virginia, we’re asking how do we help them to make good decisions on the things that they need to do to commercialize their product and bring their ideas to market.”

Hastings and other leaders started CvilleBioHub in 2016 with several networking events. They learned quickly that there were brilliant people with innovative ideas in the community, but many of them found it difficult to connect with investors and other entrepreneurs who could help them succeed.

CvilleBioHub has helped ease that challenge for startup founders and has also encouraged more investment from the state and private sector. And the new accelerator will offer entrepreneurs another avenue for success, Hastings says.

“We’re also giving them the facilities and infrastructure that have been severely lacking in our region, to get them up and going and continuing to do their research.”

One of the more than 70 companies under the CvilleBioHub umbrella is Rivus Pharmaceuticals. Still in the clinical research stage, Rivus was established in 2019 with the goal of developing weight-loss medication that’s designed to reduce excess fat, maintain muscle mass and combat cardiometabolic diseases.

Allen Cunningham, Rivus’ co-founder and chief operating officer, has been working in Charlottesville’s biotech ecosystem for more than 20 years. He says it’s grown tremendously in the last decade as leaders like Hastings have advocated for stronger partnerships and connections, which in turn have drawn the attention of institutional investors from across the country.

“These investors are critical to fund the capital-intensive clinical development necessary to bring new therapies to patients,” Cunningham says. “With [U.Va.] and the increasing number of biotech companies in Charlottesville, there is an excellent pool of R&D resources to draw from to support the growth of companies like Rivus and others in our community.”

Big biotech

While pharmaceuticals and medical devices compose large parts of the biotech sector, the industry broadly spans the realm of life sciences. Through research on animal and plant cells, biotech has the potential to unlock breakthrough discoveries for disease-resistant crops, renewable energy sources and cancer treatments.

A recent example of biotech at work was the rapid development of mRNA vaccines for COVID-19, which helped immunize millions of people against the pandemic virus after it emerged in 2020.

In Virginia, around 3,400 biosciences companies employ a total of more than 30,000 people, according to Virginia Bio, a nonprofit state trade association based in Richmond.

As the number of biotech companies in Virginia leaped by 50% between 2019 and 2023, the industry’s average annual wage has increased to $107,000, making it one of the state’s highest-paying industries. Overall, biotech contributes $8.4 billion to the state economy, according to industry studies.

While Boston and North Carolina’s Research Triangle are famous for their biotech prowess, biotech trade publication GeneOnline ranked the Maryland-Virginia-Washington, D.C., region as the nation’s third best region for the industry in 2024, with Charlottesville and the Manning Institute specifically touted.

Virginia Bio CEO John Newby concurs, saying that Virginia biotech entrepreneurs benefit from proximity to the state’s wealth of research universities and hospitals, defense contractors, military bases and the federal government.

“It’s just a rich environment to find opportunities in life science and biotech,” Newby says. “Looking at this through the lens of a young professional looking to start her career or as she progresses, she doesn’t have to stay in just one silo. She doesn’t have to stay in the private sector. She can go to the government sector or a regulatory agency. She can go to Capitol Hill if she wants to do policy. You can do all that in this region.”

Industry leaders in Charlottesville have been at the forefront of advocating for stronger business relationships and mentoring by formalizing the “biohealth [hub] concept,” and stand out as leaders for the rest of the state, Newby says. “They were the first ones to do it, and they’ve done quite a good job.”

‘Collaborative community’

Often, biotech innovators are driven by experience and needs. Two of the Mannings’ children required specialty medical care and Luminoah founder Neal Piper started Luminoah after his son’s cancer diagnosis.

“He would spend most of the day at U.Va.’s Children’s Hospital getting chemo, and he would come home and all he wanted to do is play with his twin sister, but instead, he was tethered to an IV pole,” Piper recalls. “That meant he had to sit on the couch getting fed for up to six hours, and then he was also attached overnight, doing overnight feeds. And so, his quality of life was completely turned around as a result of needing this therapy.”

Piper knew he could do something about it and saw an opportunity to leverage his professional background and connections. That’s how Luminoah began.

“I’ve found that each chapter of a journey in life enables you to get confidence and really build on muscle memory,” he says. “You can have knowledge based on experience, but you really need a strong reason to drive innovation forward. And those two came together for us.”

Will Mauldin, CEO and co-founder of Rivanna Medical, started his medical imaging company in 2010 as he was completing a doctorate in biomedical engineering from U.Va.

Originally from North Carolina, Mauldin came to Charlottesville with the idea of starting his own business. Rivanna Medical has since created advanced ultrasound equipment and imaging software for administering epidural anesthesia.

“I found that U.Va. was a place where I was most likely to be successful,” Mauldin says, explaining why he chose to study there. “As far as innovation and entrepreneurship, the setup at U.Va. was really strong for me.”

With a product already in the marketplace, Rivanna Medical continues to grow as the federal Department of Health and Human Services awarded it a $30.5 million grant in 2023 to develop a new ultrasound-based device to detect bone fractures in wrists and ankles.

Mauldin says the advancement would help emergency personnel manage triage in a mass casualty blast, but it could also have an application in urgent care clinics, as technicians could check for broken bones with the equipment.

As one of the more established biotech startups in the Charlottesville area, Mauldin has seen how CvilleBioHub has strengthened an already robust entrepreneurial ecosystem. He’s also been able to share some of his wisdom and experience with new startup founders, counseling them on how to strategize timelines and account for extended clinical trials or regulatory processes.

“We went through all those first initial steps, and I would definitely do it differently if I did it again. So, I’m very happy to share that,” Mauldin says. “We have a very collaborative community. I think we all see the benefit of that.”

Charlottesville at a glance

Widely known as home to Thomas Jefferson’s Monticello estate and the University of Virginia, the Charlottesville region is located about 65 miles west of Virginia’s state capital. The city was founded in 1762, with the Jefferson-designed U.Va. campus founded 57 years later. The region is popular for vineyards, breweries and distilleries, as well as for access to the Blue Ridge Mountains. The area’s largest industries include higher education, health care, defense, hospitality and tourism.

Regional population*
Charlottesville: 51,743
Albemarle County: 117,790
Buckingham County: 16,736
Fluvanna County: 28,382
Greene County: 21,717
Nelson County: 14,788
Orange County: 38,778

Major employers
University of Virginia/UVA Health
Albemarle County
Sentara Health
City of Charlottesville
U.S. Department of Defense
Northrop Grumman
Crutchfield Corp.
CFA Institute

Major attractions
Monticello, the home of America’s third president and author of the Declaration of Independence, is a UNESCO World Heritage Site that draws visitors from around the globe. You can see the distinctive Jefferson-designed Rotunda at U.Va. Another must-see for history-minded visitors is Highland, the Albemarle estate of President James Monroe. Charlottesville’s Downtown Mall is a good place to visit for eating, shopping and socializing. Take in the natural beauty of the surrounding Blue Ridge Mountains along Skyline Drive and the Blue Ridge Parkway and at Shenandoah National Park. Hikers will savor Instagram-worthy views from Spy Rock and Humpback Rocks. Take a break from picking apples and peaches at Carter Mountain Orchard with live music and apple cider doughnuts. Or take a tasting tour through area wineries like Jefferson Vineyards, Trump Winery, Blenheim Vineyards and Pippin Hill Farm & Vineyards.

Major convention hotels
Boar’s Head Resort
22,000 square feet of meeting/event space;
168 guest rooms and suites
Kimpton The Forum Hotel
22,000 square feet of meeting/event space;
208 guest rooms and suites
Omni Charlottesville Hotel
12,441 square feet of meeting/event space; 205 guest rooms and suites

Boutique/luxury hotels
Albemarle Estate at Trump Winery
The Draftsman
Graduate Charlottesville
Keswick Hall
Oakhurst Inn

Notable restaurants
C&O
French, candorestaurant.com
Ivy Inn
American fine dining, ivyinnrestaurant.com
Oakhart Social
Seasonal American, oakhartsocial.com
The Spot
Gus Burgers and fries, thespotuva.com
The Ridley
Southern, ridleyva.com

*July 2024 population estimates from University of Virginia Weldon Cooper Center for Public Service based on 2020 U.S. Census Bureau data

AI startup boom ‘here to stay’ in Virginia

SUMMARY:

  • The number of -related in Virginia has spiked in recent years.
  • Virginia’s concentrations of tech talent and data centers bolster AI startups. 
  • Founders of AI startups need to differentiate their companies to impress funders.

 

Virginia’s talent makes it a natural fit for AI-related startups, says founder and CEO Blake Hall. Photo courtesy ID.me

The introduction of OpenAI — and disruption of DeepSeek — have fundamentally changed how existing businesses operate. Indeed, nearly half of chief information officers, chief technology officers and other tech leaders report was fully integrated into their companies’ core business strategies — and a third said AI was fully integrated into products and services, according to a 2024 report by PricewaterhouseCoopers.

But at the forefront of AI-fueled innovation are companies that are paving the way so other businesses can operate more efficiently.

Between April and June 2024 alone, investors poured more than $27 billion into AI startups in the U.S., according to startup tracker PitchBook.

“The AI train is leaving the station, [and] you need to be on it,” Tom Loverro, general partner with firm IVP, wrote in a post on X in June 2024.

Zooming into Virginia, it’s “no surprise” there has been a “pretty big spike” in the number of AI-related startups during the past couple of years, says Jason Chen, CEO and executive director of Tysons cyber-focused startup accelerator .

There is no one industry that’s been left out of the AI startup boom in Virginia, Chen says.

“It’s everything from to cybersecurity to data governance, you name it,” Chen says. “I couldn’t tell you that there was one specific subsector that seems to be jumping out in particular to us, at least within Virginia.” And in terms of investment, Chen says most of the Virginia-based AI startups his firm tracks have landed seven or eight figures in funding during the past couple of years.

Among Southern states, Virginia also ranks third in terms of deal flow for AI-related startup companies, according to a 2024 report by venture capital firm Valor Ventures. Virginia ranks among Texas and Florida, which boast data centers and military installations.

“Virginia’s entrance into the top three lends credence to the national trend of enterprise SaaS being the largest AI-augmented sector so far as cities such as Alexandria and Herndon are home to enterprise SaaS-focused startups,” according to the report.

Some of the most popular AI startup sectors in the South include enterprise SaaS, digital health, cybersecurity, retail, supply chain and logistics, the report shows. Enterprise SaaS and cybersecurity are the biggest AI startup sectors in Virginia, according to Valor.

The AI boom is here to stay for now, says Beth Burgin Waller with law firm Woods Rogers Vandeventer Black.

Virginia’s cyber web

Blake Hall, founder and CEO of McLean-based verification service company ID.me, says Virginia is a natural fit for founding AI-related startups due to the state’s deep bench of cybersecurity talent.

In contrast to all of AI’s positive traits, bad actors can use these tools to create deepfake videos and other tricks that allow hackers to gain access to sensitive information or just confuse the public. Experts can ward off such misdeeds.

“There’s a lot of cybersecurity talent in this particular area that makes D.C. and Virginia really well-suited to be on the bleeding edge of protecting against some of the ways that unethical people will use AI tools to try to hurt folks,” Hall says. “It very much is a cat-and-mouse game on the AI side right now.”

Founded in 2010, ID.me serves as an example of a successful former startup that’s scaled in the era of AI innovation. Over the past decade and a half, ID.me has grown to become an AI-powered verification network for several federal government agencies, including the IRS, Veterans Affairs, the Social Security Administration, the U.S. Treasury and the FBI. As of late 2024, ID.me was valued at $1.8 billion.

Hall predicts the AI startup space in Virginia will continue to grow, particularly as enemy nation-states continue to build up their own AI.

“There are other nation-states that don’t share American values that are trying to really beat us in this race,” Hall warns. “I think it’s kind of like a new ‘Manhattan Project’ for America that actually should spur investment into the space. It’s really important that America wins and that you have AI that is infused with American values based on freedom and human rights.”

Despite the buzz brought on by DeepSeek’s debut in early 2025, it’s unlikely to be a platform or service Virginia startups use. DeepSeek, a China-based AI research lab that develops its own open-source AI models, is beginning to get banned over concerns, says Beth Burgin Waller, a principal attorney at Roanoke-based Woods Rogers law firm who specializes in cybersecurity and data privacy.

Gov. Glenn Youngkin issued an executive order Feb. 11 banning DeepSeek on state government devices and networks, Waller says, and “given these concerns — that are beginning to be echoed at the federal level and beyond in the private sector — I think the likelihood of any Virginia startups successfully integrating DeepSeek into their platforms or operations would be incredibly difficult.”

An AI startup founder should be able to say what is different about the company’s approach to solving a certain problem, says Jason Chen with Mach37. Courtesy photo

Still, the “AI boom is here to stay — at least in the short term,” Waller adds. Since Virginia is a leader in the technology industry, the state is “poised to play a central role” in the movement, she says.

Virginia is rich in data centers, with Northern Virginia considered the data center capital of the world, having the highest concentration of data centers globally. This makes it easier for AI startups to tap into resources other states are “racing” to build, Waller says. Plus, Northern Virginia has the second-highest tech employment rate of any U.S. metro area and has 2.5 times more computer science graduates than other tech hubs like New York City, San Francisco and Seattle, according to a November 2024 study by the Northern Virginia Technology Council.

“Between venture capital firms and large corporations like Amazon, Google and Microsoft operating themselves like VCs in this space, significant investment is being made across all areas of AI infrastructure,” Waller says. “From the energy sector and the push for expansion of data centers to the rush to innovate around processing chips — such as the quantum computing chip Microsoft announced this year — the world is in a race to create sustainable AI infrastructure.”

Systemwide development

While cybersecurity-related AI startups have a clear and impending impact, incubators across the state have seen an array of industries using AI.

“What I’m seeing is just how many different industries are leveraging AI,” says Morgan Evans, marketing and program manager of Startup Virginia, a Richmond-based nonprofit business incubator and entrepreneurial hub focused on high-growth businesses.

Some examples she provided were Richmond-based AI startup Rising Tide, which offers an automated platform for last-mile logistics, and Richmond-based Kinis.ai, a company that builds smart insoles that use AI to enhance athletic performance and improve wellness.

And despite Northern Virginia’s strong connection to the tech community, Evans says she’s witnessed AI startups form across the state, particularly in Central and Eastern Virginia because of the amount of entrepreneurial support in both regions.

“There’s a hope that we’re driving more and more tech-related companies — AI or not — to Richmond,” Evans says. “That’s grown a lot in the past few years. There’s a lot of people around here that want to help boost startups and connect them with the right people and the right ways to get their startups off the ground.”

The Roanoke and New River valleys and Southwest Virginia have also seen an increase in AI-related startups, says John Hagy, director of Roanoke-based startup accelerator Regional Accelerator and Mentoring Program (RAMP), which also has education offerings for startup companies.

“AI has been the biggest trend that we’ve seen,” Hagy says. “Like every company is incorporating AI in some capacity, whether that’s in the main product or in their operations. That has really been most present in some of the core competency industries of Southwest Virginia,” which include the agriculture, biomedical and national security industries.

For example, AI implementation by startups in the region has helped agriculture-focused companies produce a higher yield of crops, biomedical-focused companies identify surgical instruments and track vital signs, and security-focused companies in the region identify deepfakes and disinformation, Hagy says.

“AI has become more accessible to people, and they see the value of it against day-to-day business problems,” Hagy adds. “The reason that the startups are so secure and growing so much here in those three industries is because of the level of research. And we have the benefit locally of [agriculture] and biomed, which are large employers” in the region.

Being connected to the Virginia Tech community and its Northern Virginia hub have also helped AI-focused startups blossom in the region. Hagy says that while RAMP’s teachings are primarily focused on business fundamentals, entrepreneurial strategy and growth, the accelerator has also made a point to discuss the implications of AI with its cohorts. RAMP typically works with a partner or expert to explain to cohorts the importance and implications of AI implementation in their AI startups.

While there is interest from VC firms in providing capital to AI-related startups, Startup Virginia’s Evans also says it’s still a challenge to find capital for early-stage companies.

“That’s always just a struggle in general,” she says.

Proceed with caution

The promise of AI is exciting — but expensive. While large, well-funded companies have the manpower and resources to more quickly implement AI, smaller companies and startups have a steeper hill to climb.

Still, “there’s no reason to believe yet that the AI race will be winner-take-all,” according to an October 2024 article in Harvard Business Review about whether startups can survive in the age of AI. “There is still room for scrappy startups to eat away at market share.”

And while many companies have started to tout implementing AI into their products, services and operations, there are varying degrees to which the technology is being used. To stand out as an AI startup, it’s important to really be able to articulate the problem the company is solving and what is different or proprietary about the way the company is approaching a certain problem, Hall says.

“If you have good answers to those questions, then generally, investors and VCs are going to be predisposed to want to invest in your company,” Hall says.

While not trying to cast doubt, Chen with Mach37 says nearly all of the companies his firm tracks are trying to or claiming to incorporate some degree of AI into their solution.

“It is certainly a trend where I think the early-stage companies — and even growth-stage companies — have recognized the influence and impact that AI is now having across all of business, all industries,” Chen says. “If we were making investments, we’d be doing some pretty deep due diligence to see how strong the AI is, whether or not the AI is open source, or do they have an actual AI subject matter expert [or] an engineer on their team or not.

“You would just want to really dig deep to understand how much they really are pushing the needle.”

Knostic raises $16m to secure generative AI data

A Herndon creating fine-grained to prevent data leaks secured approximately
$16 million this spring. , founded in 2023, provides need-to-know tools for companies using generative large language models like Microsoft 365 Copilot.

“We have a lot of organizations rolling out AI systems to help knowledge workers be more productive,” says Knostic co-founder and Chief Technology Officer Sounil Yu. “But these AI systems can’t keep a secret.”

In March, less than a year after the start of a pre-seed round, Knostic, which has about 30 employees, announced it had raised $11 million in funding. Bright Pixel Capital, a Portugal-based firm that focuses on cybersecurity software, led the funding round. Silicon Valley CISO Investments and California’s DNX Ventures joined.

In April, the company won a $5 million simple agreement for future investment as a Top 10 finalist in the , a competition that awards “cyber-security’s boldest new innovators.” The investment brings Knostic’s total funding now to $19 million.

In the next five years, Knostic plans to use the funding to continue developing access controls to get ahead of the explosive AI market.

“It’s been a wild ride because of the pace of both the adoption of the technologies that we’re riding on top of, as well as the introduction of new opportunities with the usage of AI,” Yu says.

Naren Ramakrishnan, engineering professor and director of Virginia Tech’s Sanghani Center for Artificial Intelligence and Data Analytics, says security controls are important with the rapid growth of .

“You can’t just walk into an office and take any file from any shelf that you want,” Ramakrishnan explains. “You need to have a key.” With AI systems, access controls provide that security.

Generative AI systems are eager to provide answers. Access controls, like Knostic’s, prevent the dissemination of confidential information like salaries and sales revenue, Ramakrishnan says.

Knostic’s software applies rules for what an employee should or should not see when they log on based on their role, Yu says.
“When businesses adopt these AI systems, they end up shooting themselves in the foot by exposing company secrets,” Yu says. “What we’re doing helps ensure that LLMs can exercise discretion.”

The rapid adoption of AI provides Knostic a space to persist through an ever-changing field, Yu says: “It’s pretty fundamental to help drive the next evolution of technologies.”