Durham-based NCInnovation, a nonprofit directing millions in state funds toward university research with commercial potential, has launched a pilot round targeting six to eight grants.
Pat Ryan, NCInnovation’s spokesperson, tells TechWire that grants will generally be in the six-figure range, but specific allocations depend on researchers’ individual needs. Funding will be awarded in tranches based on set milestones.
Backed by $500 million from the state legislature and nearly $25 million in private funds, NCInnovation targets the so-called “valley of death” between proving a concept in a laboratory and maturing it to attract investors and licensing deals. The program takes an industry-agnostic approach, meaning innovations in life sciences, biotech or other sectors may be eligible, but the potential market application matters most.
“This has underpinned American innovation for the last 80 years. Things are born on American campuses, and then they’re commercialized, improved, and built upon by the private sector,” Ryan says. “That’s the model that has existed since World War II. This is a continuation of that general model, but we’ve adapted it to focus on North Carolina’s public universities.”
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For this pilot launch, the organization wants to keep the grant pool small to ensure all tracking software works properly ahead of the statewide request for proposals (RFP) later this year. University administrators presented several dozen applications across NCInnovation’s four regional anchors: NC Agricultural and Technical State University in Greensboro, East Carolina University in Greenville, Western Carolina University in Cullowhee and UNC Charlotte. The organization tapped four directors to lead its efforts in each university’s region.
Eyeing a statewide innovation economy, the organization aims to support institutions outside of the Triangle’s three pillar universities. A TEConomy Partners analysis ranked North Carolina second among peer states in R&D funding, but 87% of all in-state R&D expenditures were centralized in UNC Chapel Hill, Duke, and NC State.
University research and development expenditures. Source: NCInnovation
Upcoming Pilot Round
Over the last few months, NC Innovation’s regional directors have worked with university leadership and research faculty to identify advanced projects in their portfolios with commercial promise. Applications will now be reviewed by an external panel of industry veterans with experience in research and small business commercialization. Then, RTP-based research institute RTI International will lead a second level of analysis for market validation. The board of directors expects to make the final decision at their next meeting, scheduled for May 15.
In addition to providing direct non-dilutive funding, NCInnovation will connect grant recipients to mentors, business development resources, and entrepreneurs-in-residence. The state budget directs NCInnovation to assist with technology development, licensing and intellectual property protections. It will also furnish additional services after recipients prove commercial viability and are ready to seek venture capital funding.
“NCInnovation has support services mapped by region, and they’ll be working with the research leads [grant recipients] to identify best fits by project,” Ryan says. “Statewide organizations such as the NC Biotechnology Center, NC IDEA and the Council for Entrepreneurial Development may be appropriate, as well as regional and local business support organizations and university entrepreneurship support centers.”
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Endowment Funding Model
NCInnovation’s funding model works similarly to a university endowment or pension fund: State funds go into an endowment, which earns interest and investment income to feed the organization’s grantmaking. Ryan says there’s currently an RFP open for an independent investment manager to oversee the endowment, as mandated in the state budget.
The grants are part of a state reserve fund allotting two rounds of $250 million through 2025, as approved by the General Assembly in last year’s budget appropriations. The NCInnovation Reserve is one of about a dozen state reservations totaling $11.3 billion through 2025, including emergency response and disaster relief, housing, and the State Capital and Infrastructure Fund, among other activities.
Aside from state support, NCInnovation has raised nearly $25 million to cover overhead and administrative costs. It’s close to surpassing that threshold, which is required to qualify for the second $250 million share. Donors include Duke Energy, JP Morgan, Bank of America, Blue Cross and Blue Shield, and Capitol Broadcasting (WRAL TechWire’s parent company). This week, the organization announced a new $500,000 pledge from the Huntington Foundation, a unit of Ohio-based Huntington National Bank, which recently announced it’s expanding in the Carolinas.
Chaired by retired Truist Financial CEO Kelly King, NCInnovation’s 13-person board features prominent business leaders like Piedmont Triad Partnership CEO Stan Kelly, Variety Wholesalers CEO Art Pope and retired Waste Industries CEO Ven Poole.
