North Carolina and our cities have been doing a great job adding infrastructure to help entrepreneurs. Most of our larger cities have entrepreneur councils and chamber of commerce programs to boost the chances of entrepreneurs to succeed. Most of our universities have started great programs for entrepreneurship.
As a recent report concludes, our fine state is losing ground in the important infrastructure piece of venture capital.
Sure this is a sign of the economic times, but there are things our state can do or can improve to boost these numbers to have a greater impact and may lead to better job creation with better wages.
Filling the Gaps Across the State
North Carolina needs to do a better job of increasing the amount of capital invested throughout the state. I am not talking about forced distribution of course, but 80-90% of the venture capital invested in our state is invested in the Raleigh/Durham/Chapel Hill area known as the Triangle. The Triangle has unique assets that are going to attract more capital with the three research universities, the RTP infrastructure, experienced entrepreneurial management talent and the workforce talent from the universities.
As the 10th largest state by population, real technology assets, the third largest cluster in life sciences, we have some work to do outside of the Triangle to achieve a top ten status for venture capital investing in the state rankings. Charlotte is taking some steps to raise its profile among investors with some new angel groups and has just announced the 2013 SEVC Conference will be hosted there next March.
Winston–Salem, Wake Forest University, Greensboro and the new Joint School of NanoScience and NanoEngineering have strong technology assets that need help getting more progress towards commercialization.
While Asheville (mountains) and Wilmington (beach) are seen traditionally as more tourism based economies, no one can deny the wealth based there that could serve as a magnet to attract more emerging growth businesses.
What can be done to educate these high net worth individuals about the Qualified Business Venture Tax Credit that reduces the risk of this kind of investing in our state?
Business and Personal Relationships Across Other States
While I read how excited North Carolina newspapers were about the new round-trip non–stop flights to San Francisco and Silicon Valley, I did not read a word about that new flight during the same time in the San Francisco papers.
Admittedly I snuck into the VC Fly In event for a few minutes during the lunch break and I was very impressed by the quality of the VCs and executives who attended that event.
I am so happy we kept our relationship with the brilliant Garheng Kong after he moved back to California to work with the California venture firm. CED and other organizations do a great job of bringing in VCs for the big conferences.
We need to take advantage of the relationships that our business executives have in bigger markets such as Boston, New York, Florida and Texas. Sure these states have their own quality deal flow, but that is why we have to lean on personal relationships to bring these investors to our state events. We all know of entrepreneurs who have moved out of North Carolina to avoid the capital gains taxes to places like Florida. These friends can still invest in North Carolina if we invite them back to invest in people they already know.
Increase the Quality of Submissions for SBIR and STTR Grants
John Ujvari is the SBTDC expert on SBIR Grants and he recently told me about the correlation between the SBIR and Venture Capital numbers. He told me at an event at RTI that North Carolina gets 2% of the total US SBIR Grant Awards and gets about 2% of the total amount of venture capital among the states. Let’s improve the number and quality of the grants that we submit for these big grant opportunities.
Investors love non-dilutive equity that comes from sources like SBIR grants. When a company gets an SBIR grant from a federal organization like the Department of Defense, this Phase I grant can be as much as $350,000, larger than an angel round of capital. The Phase II grant award from the National Cancer Institute can be a million dollars. The Department of Defense can also become a large client at the end of the SBIR Phase III process. This grant process and winning of grants can serve as a qualifier for the investors.
How to Get Started
The Joint School of NanoScience and NanoEngineering in Greensboro is hosting an event called “Attracting Investors Through Winning Grants” with several workshops on SBIR grants on October 25. This event is not industry specific and is free and open to all interested companies and academics. The event will include an invite only investor showcase for 8 North Carolina companies with a new investor group based in Tennessee.
Attendees can also attend and participate in a workshop to create a one page outline of their potential grant application. Another workshop will discuss the grant registration process and the resources available in North Carolina. Representatives from NC IDEA, NC Biotechnology Center will discuss their available grants with a representative from Southeast Tech Inventures.
Please register here: http://grantsandinvestors.eventbrite.com/#
Editor’s note: Jim Roberts is the Founder of RedSpire Connections, a consulting firm with experience in business development, lead generation, marketing and industry events. Jim was the founding Executive Director of entrepreneur councils in Charlotte and Asheville. Jim worked at the North Carolina Department of Commerce and was most recently the Director of Business Development for the Center of Innovation for NanoBiotechnology (COIN). Jim Roberts can be reached at firstname.lastname@example.org if you have questions about the October 25th event.
(C) Jim Roberts