Editor’s note: On Feb. 7, Tom Snyder, Executive Director of RIoT, is set to host the annual “State of the Region” address at HQ Raleigh’s monthly happy hour. Once again embracing the State of the Union theme, Tom will discuss domestic and foreign affairs, looking first within our state’s borders, then beyond. He will also discussNorth Carolina’s progress, opportunities, threats, and defense—and offered a call to action. Any economy has all these ingredients. Economies that maximize potential are the ones that work with energy and in cooperation.
So where does NC stack up? Here it from Tom himself.
2019 was another positive year for Research Triangle and the state overall. If you recall last year, I simplified all of economic measurement down to a simple inspection of resources and customers. Every company needs resources like space, money and talent – and you need customers that pay for all that.
Space to Work
Place matters. Professional networks do not develop authentically across a screen and LinkedIn. It is important to meet people directly. Spaces that offer new and seasoned professionals to interact have continued to expand.
HQ Raleigh, our hosts this afternoon, opened two new locations in 2019 and now eclipse 100k square feet of co-working that hosts more than 330 startup companies. We saw the opening of Spaces and WeWork within a few blocks of here.
Launch Factory and Advent Coworking, both in Charlotte, each renovated their buildings to double in size. Hygge has opened additional locations. American Underground continues to expand. We are seeing more co-working and collaboration spaces open across NC.
Nearly every university and college in the region now provides access for their students to HQ and other locations.
Significantly, we are starting to see coworking and incubator spaces open in under-represented communities. Loading Dock opened a space in Southeast Raleigh to engage a community that has been underserved. Wilson is making huge investments into the GigEast Exchange to be a hub for entrepreneurship across all of Eastern NC.
Our urban centers are competitive with cities across the nation in providing a physical environment that supports entrepreneurial growth. The challenge for 2020 will be to expand more into smaller towns and rural communities, interconnecting them across the state to unlock the potential of all North Carolinians.
Access to Capital
Fundraising may always be the most talked about metric on ecosystem health. Certainly the topic is sexy. Much more frequently, RIoT is asked for help on connections to talent. Let’s touch on both.
Fundraising in the Triangle is up from $160M in 2018 to $436M according to the recently released Triangle Tweeners list that Scot Wingo publishes each year. Companies are raising larger rounds and more deals are getting done. Software companies continue to dominate this space with Pendo, Spreedly, Cloud Factory and Archive Social each raising more than $50M.
But the Triangle is not the only place where investment dollars are flowing. nCinco raised $80M in Wilmington, and Live Oak Bank opened a $545M fund for FinTech startups. This may be the largest fund in the south and adds to the already strong FinTech ecosystem in Charlotte.
Investment is not the only source of capital for startups. Grant money is driving innovation and commercialization. NSF awarded the Wireless Research Center and NC State $25M to launch an advanced wireless testbed for drone research. The City of Raleigh launched a new impact partner grant program, awarding multiple $25k grants to organizations fostering economic development in the city. Charlotte added more than $2M to the government’s economic development office budget to increase efforts on entrepreneurship. Winston Salem is rolling out an incredible initiative, reimbursing startups up to $5k per job for the first 5 jobs companies hire.
Entrepreneurial support capital is on the rise.
Talent and Jobs
Less reported, but even more critical than money as a resource is talent.
NC State continues to excel, and their partnership with HQ Raleigh brings closer connection between student talent and startup jobs – Saint Mary’s University, SKEMA, Meredith College, Campbell Law, Wake Tech Community College. Many local colleges and universities have opened HQ Raleigh offices to better connect students to opportunities.
In a recent announcement, Winston Salem has been selected as the pilot site for Builders and Backers, a Walmart-backed initiative to provide tutoring to at-risk high school students. When completed successfully, those students gain free tuition for college – pipelining more diversity into the workforce.
NC IDEA has raised perhaps the most significant initiative on the talent front, continuing to expand the Ice House program statewide. They are well on their way to teach 100,000 people how to build an entrepreneurial mindset. RIoT launched a main street program to support companies that do not think of themselves as tech companies to leverage internet and data technologies, helping to educate talent in place.
Foreign Competition & Defense
Overall, we score high marks on domestic affairs. But what about our foreign competition? In this case, we’ll interpret that as other US states.
The NC Department of Commerce just released their 2019 Innovation Index report. This assesses economic data across numerous measures, with specific focus on innovation, R&D activity, startup growth and technology. In a nutshell, NC is moving in a positive direction, but lags national averages in almost all categories and is moving forward at a slower rate of progress than common comparison states.
As a state, we excel at funding academic research and university education, but fall woefully behind other states in per capita K-12 funding. There is a significant shortage in R&D commercialization activity as well as resources and programs to bridge the gap from research to practical application.
The good news, NC’s economy is the 12th largest in the US and 22nd largest in the entire world. But we are imbalanced with 7% of the state accounting for 53% of economic output. To create a truly lasting and healthy region, we must put more emphasis on providing resources to support underrepresented minorities, women and rural demographics. Economists have shown that the healthiest local economies in the US, as measured by GDP, rank exactly as the most diverse places. Being more inclusive is not just the right thing to do, but also smart business.
Pay it Forward
One of the most significant observations in 2019 is how authentically companies founded in North Carolina are giving back to the next generation of business. In 2017 I talked about how the region had achieved “Startup 2.0”, with founders giving time to mentor and support new startups, and often exiting one company to then launch another.
We are now seeing even more significant involvement by locally grown companies to create greater impact. I think, for example, of Red Hat. Delisa Alexander, Chief People Officer, still has her day job, driving talent and culture across Red Hat, but also takes time to chair the Raleigh Chamber, supporting economic health across the region. Jason Hibbets, a senior architect at Red Hat, is perhaps the strongest voice organizing volunteers across the region to support civic projects.
There may not be a better example of companies supporting greater community good than Untappd in Wilmington. Chairman, George Taylor has gone on to launch TruColors, a brewery run by rival gangs who have come together in partnership, building economic opportunities for gang members and reducing gang violence by over 90% across the city.
Fidelity Investments did a study in 2018 that concluded that entrepreneurs donate 50% more money to charities and nonprofits than non-entrepreneurs. Additionally, two thirds of entrepreneurs volunteer 3 or more hours per month, which is more time than the non-entrepreneur average.
Headquarters take care of their homes. They want the place they grew up to remain vibrant and healthy. In the same way that renters may not care for the building they live in as much as a homeowner will, companies that grow in place tend to be far more invested in their community than companies that relocate for a short-term tax incentive.
It is critically important that North Carolina continue to invest in resources to help grow great companies in place.
Last year, I spoke about the importance of collaboration across the state. We are stronger as a unified region than as separate communities.
Progress is accelerating in this area. Governor Cooper formed the Governor’s Entrepreneurship Council to advise the state on creating stronger impact. From this, NC IDEA held the first statewide Entrepreneurship Summit in the US last November. Thom Ruhe, NC IDEA’s CEO challenged the audience to do a better job of “ecosysteming” — essentially working together to build a support framework for new business.
We see efforts like the GigEast Exchange bringing resources to the underserved eastern counties of our state. I am more regularly convening with energetic organizations like Mountain Bizworks in Boone and the Manufacturing Solutions Center in Conover. Pockets of entrepreneurial support are beginning to share best practices and collaborate.
Municipalities are striving to provide greater resources to their citizens as all communities become “smart and connected”. RIoT has had the good fortune to help lead state-wide data sharing initiatives that support more efficient government, improved emergency response and easier work between neighbors.
Call to Action
I’d like to close with a simple call to action. We are all part of a community and an ecosystem that is much broader than just our close neighbors. Get to know someone you have not yet met. Figure out some small way that you can help them. Pay that forward. Work together. Be inviting. Together, we will continue to create opportunities and be successful together.