Millions of dollars and innovative technology are being brought to Appalachia's impoverished region by Richard Branson and John Chambers through the Hyperloop project.

• Richard Branson's Virgin Hyperloop is planning to establish a certification center and testing track in West Virginia for its revolutionary transport technology.
• John Chambers, a native West Virginian and former Cisco CEO and JC2 Ventures founder, is among the tech titans investing in the distressed Appalachian region to transform its coal and chemicals economy into the future.

Richard Branson's Virgin Hyperloop has announced plans to establish a certification center and testing track in West Virginia for its revolutionary transport technology. The announcement was made in Charleston today by Branson, a strategic investor and partner in Virgin Hyperloop, and his influential friend, John Chambers, the former CEO of JC2 Ventures.

Sir Richard Branson, founder of the Virgin Group, stated in a release that today marks a significant milestone in Virgin Hyperloop's history. The Hyperloop Certification Center signifies the beginning of the hyperloop journey for West Virginia, the United States, and the world. This step brings us closer to realizing hyperloop travel for everyone.

To revitalize West Virginia, Chambers, a native of the state, is leading philanthropic and investment efforts with tech start-ups and venture capital, including through his VC firm. He believes that the state needs a renewed focus on innovation to drive job creation and economic growth and create a tech ecosystem that will foster startup growth.

West Virginia University's John Chambers College of Business and Economics is set to unveil a new $100 million business school building on the Monongahela riverfront in April 2022. This facility is an extension of the college, established with a Chambers donation in 2018, aimed at promoting entrepreneurship in Appalachia.

Another Silicon Valley tech icon, former CEO Brad Smith, has donated $25 million to fund a program that aims to recruit tech talent to the often overlooked Mountain State. The program will launch by early 2021 and will accept applications from out-of-staters looking to apply their tech talent, work remotely, and change their lifestyle. Smith, who is from the tiny town of Kenova, West Virginia, said, "We are dreaming big and some might be very surprised by the transformations we're making and the quality of life here with mountain biking, hiking, fishing, and white water rafting."

Smith, a Marshall University graduate, has previously donated $10 million for scholarships and $25 million to rename the college of business as the Brad D. Smith Center for Business and Innovation. His initiatives aim to cultivate an entrepreneurial culture in West Virginia, with plans to invite tech leaders like Sheryl Sandberg to speak to local students, though Covid-19 has delayed these plans. Additionally, he has organized startup pitches at the university. Smith believes that these investments and efforts will contribute to the state's goal of becoming a startup hub.

A state in transition

Another Silicon Valley tech icon, Ray Lane, is also contributing to the development of West Virginia by providing $5 million in 2000 to support its Department of Computer Science and Engineering. The efforts of these prominent tech executives and founders could potentially revitalize Greater Appalachia and test whether philanthropy can successfully rejuvenate former Rust Belt areas.

Over the past two to three decades, the Appalachian region has faced challenges such as job loss, drug addiction, and poverty due to factors like offshoring, increased imports, and new energy sources. Specifically, West Virginia lost over 32,700 jobs from 1994 to 2018, and the manufacturing industry, which made up 13.1% of jobs in 1990, accounted for only 6.1% by 2017. Additionally, mining and logging jobs fell from 5.4% to 2.7% of state employment during the same time period.

While 10.9% of Americans live in poverty, West Virginia has a higher poverty rate of 16%, according to the U.S. Census Bureau. Additionally, West Virginia has the lowest percentage of residents with a bachelor's degree, with only 20% holding one, according to the same source. During the pandemic, West Virginia's unemployment rate reached 15.9% in April 2020, above the national average of 14.7%, but improved to 8.9% in August as businesses started reopening as early as May, according to the Bureau of Labor Statistics.

The certification center established by Virgin Hyperloop will not only advance regulatory and commercial objectives but also create thousands of new jobs in various sectors, including construction, manufacturing, operations, and high-tech.

Although President Trump relaxed environmental regulations for the coal industry, the US Energy Information Administration reported a decline in coal production to its lowest level in 41 years in 2019, as the country shifted towards cheaper and renewable sources of energy such as natural gas. In 2019, there were 52,805 coal miners nationwide, with 13,998 in West Virginia.

To regain from its losses, the Mountain State requires entrepreneurial energy, high-tech talent, and venture capital spending. Although there are indications of a rebound and some sandboxes are emerging in life sciences, data centers, and cybersecurity, there is still a considerable distance to cover.

In 2019, only one West Virginia start-up received venture funding of $200,000, while California had 3,870 venture deals worth $65.6 billion.

Venture capital moving from Silicon Valley

Steve Case, the founder of AOL and current head of Revolution Ventures, has been actively investing in start-ups in Middle America through his two Rise of the Rest funds since 2017. These funds have backed a total of 130 early-stage companies, with a focus on supporting overlooked hubs.

Venture investors are sourcing deals outside their usual locations in Silicon Valley, Boston, and New York due to the pandemic, according to him. He has led busloads of coastal venture investors on eight tours of the heartland since 2014, though the tours have not yet reached West Virginia.

Since the outbreak of Covid-19, a survey of 3,300 Bay Area tech workers by Blind revealed that 15% have relocated and most do not plan to return. The trend towards remote working and dissatisfaction with high living costs and congestion are contributing to Silicon Valley losing its appeal and talent redistribution.

According to Case, the trend of venture capital concentrated in Silicon Valley will reverse, as indicated by anecdotal evidence, rising costs, a Silicon Valley backlash, and multi-billion-dollar IPOs and acquisitions in rising cities.

Mountain State Capital, a leading investor in central Appalachia, recently raised a $20 million fund to support tech start-ups in the region. Co-founder and managing director Mike Green, who previously worked for Silicon Valley start-ups and hails from New York, found the lifestyle and culture in West Virginia appealing. "The lakes, mountains, good quality air, and enjoyable lifestyle were all here," he said. "What was lacking was capital." Green's mission was to establish a start-up culture in the region, and he has made five investments in West Virginia out of a total of 13. He chairs a West Virginia Investment Fund that pools accredited investors and has become a member of an angel investor alliance that compares deal flow weekly.

Dr. Tom McClellan, a plastic and reconstructive surgeon, invented Serucell, a rejuvenating skin serum, which is one of his recent venture investments at Mountain State Capital. He has a lab in Morgantown and holds 35 patents. "I wanted to have a big impact in a small place," said McClellan.

The West Virginia State Broadband blueprint aims to increase the state's broadband internet penetration rate, which is currently at 85% and ranks "in the bottom tier or dead last" compared to the national figure of 93.5%. The blueprint seeks to provide fast, reliable, and affordable wireless connections throughout the state.

West Virginia Forward, a collaboration between West Virginia University, Marshall University, and the state's Department of Commerce, aims to strengthen and diversify the region. One of their projects involves hiring consulting company McKinsey & Co. to identify the state's inherent strengths, such as auto parts assembly, aerospace maintenance, and new sectors including life sciences, cybersecurity, and cloud services. Another initiative is to attract Virgin Hyperloop to establish a presence in West Virginia, which is a step towards becoming a start-up state.

Since 2017, Virgin Hyperloop has conducted initial research and development at a test site in Nevada. West Virginia is the first Hyperloop certification facility in the U.S. Several urban areas and regional corridors are considering the technology for future transportation projects, including North Carolina's Research Triangle, Chicago, Columbus, Ohio, Pittsburgh, Missouri, and Texas.

In July 2020, the US Department of Transportation and the Non-Traditional and Emerging Transportation Technology Council issued guidance on a regulatory framework for hyperloop in the United States. Virgin Hyperloop aims to achieve safety certification by 2025 and begin commercial operations in 2030.

—By Rebecca Fannin, special to bizfocushub.com

Sheryl Sandberg was invited by former Intuit CEO Brad Smith to speak to students in West Virginia, but the engagement was delayed due to Covid-19.