RALEIGH — RIoT Executive Director Tom Snyder hosted the sixth annual State of the Region event in Raleigh on Tuesday, with a talk that reviewed the state’s economic activity and innovation ranking.
During his remarks, Snyder questioned the efficacy of large tax incentive packages that North Carolina’s state and local governments offer to large employers or manufacturers, and he suggested that the funding be reallocated to entrepreneurs.
“Most of the economic health and vitality is in the small business sector,” said Snyder in his talk. “And yet, even at a municipal level, when you look at economic development strategy, it’s spending a lot of money on site development. It’s spending money to bring utilities to a spot and trying to attract a large employer or manufacturer. North Carolina is fantastic at doing this.”
Snyder mentioned VinFast, Boom Supersonic, and Bosch as examples of companies that recently received large incentive packages from North Carolina’s state and local governments. (For VinFast, the state and local incentives total nearly $1.25 billion; for Boom Supersonic, nearly $130 million; for Bosch, nearly $4 million.)
“These are some of the big wins that create ribbon-cutting moments for elected officials,” Snyder told the audience. “It’s much more difficult to say, ‘Hey, look at this startup company; they just went from three jobs to seven jobs.’ Right? That doesn’t get a lot of head nods.”
Snyder also referenced statistics from the Small Business Administration that point to the economic impact of startups and small businesses.
“The Small Business Administration has recognized for many, many, many years that, at the lowest point, about 64 percent of all jobs were created by small businesses,” said Snyder. “When you look at the actual budget in North Carolina at a state legislative level, there’s nearly zero for entrepreneurial-driven economic development.”
Investment in small business as an economic practice
Karen Lindquist, CEO of Green Stream, attended the event Tuesday and told TechWire afterward that she found Snyder’s comments “compelling.”
“His point about economic development programs resonated with my experience,” said Lindquist. “Communities tend to give millions in incentives to large companies, while programs for small businesses are often quite narrow in scope and poorly funded.”
Green Stream, a HUB-certified woman-owned business, is an environmental technology company that specializes in flood monitoring. Lindquist relocated her startup from Virginia to North Carolina so that she and her co-founder could participate in the RIoT Accelerator Program. The company now works out of the Wireless Research Center in Wake Forest.
As a startup founder, Lindquist shared that she would like to see more interest in “nurturing small tech and manufacturing businesses” to grow the state’s overall and local economy.
“It’s not unusual for large businesses to get the incentive, and then fail to provide all the promised jobs and other benefits back to the community,” said Lindquist. “Meanwhile, a vibrant and diverse small business community could benefit so much more for far less investment, and potentially provide so much more economic benefit back to the community if nurtured and allowed to grow.”
Thom Ruhe, president and CEO of the NC IDEA Foundation, also attended Tuesday’s event, telling TechWire he “looks forward to the event every year.”
Ruhe told TechWire that he agrees with Snyder’s remarks about economic development.
“When considering the robust pace of new firm formation, the collective employment impact on the state significantly exceeds the jobs promised in the generous, thirsty incentive packages offered to large corporations,” said Ruhe. “Yet, as Tom pointed out, very little support is offered to the incredible new jobs engine hiding in plain sight.”
Entrepreneurship helps to diversify the state’s economy
Ruhe told TechWire that the entrepreneurial activity in NC is an important part of that diversity, helping to give the state an edge.
“The robust entrepreneurial ecosystem of North Carolina has diversified our economy to the point of making our state a compelling choice for many different industries, unlike other states that are disproportionately focused on a select few,” said Ruhe.
Snyder also mentioned the state’s diversity as a core strength.
“We’re diverse across a lot of different measures of diversity,” said Snyder in his remarks, speaking about the diversity of industry and company stages across the state.
Snyder has delivered a State of the Region address annually since 2018, hosted by Raleigh Founded (except a virtual address in 2021).