North Carolina’s entrepreneurial community is looking to combine the area’s extensive resources to become a national hub of innovation
By Katie Reilly
Those who know it best talk about entrepreneurship in North Carolina as they would a recipe.
They describe the right ingredients — the resources and tools required to make the Triangle a hub for innovation and development — and then they describe the strategic combination of it all: the recipe, which is still a work in progress.
“We have all the ingredients,” said Jay Bigelow, director of entrepreneurship for the North Carolina Council for Entrepreneurial Development (CED). “We could certainly improve our recipe.”
Those ingredients, Bigelow said, boil down to access to capital, talent and customers. He said North Carolina has all three, but they could be utilized more effectively.
In 2014, the CED tracked 226 in-state entrepreneurial companies in the technology, cleantech, life science and advanced manufacturing industries — finding that they collectively raised $622 million in funding during the year.
That access to capital represents an increase of almost 35 percent from the $461 million raised by 223 companies in 2013.
Ted Zoller, director of the Center for Entrepreneurial Studies at UNC’s Kenan-Flagler Business School, said the concentration of sponsored research at the major research universities in the Triangle is positioning the area to be a national hotspot for innovation.
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Spending on research totaled $3.25 billion during the 2012-13 fiscal year at five of the universities in the area — Duke University, N.C. Central University, N.C. State University, RTI International and UNC.
“We’ll have to integrate all of the resources that we have in place,” Zoller said. “We have all the tools, but they’re not integrated into an ecosystem. I would like to see the three metropolitan areas converge — and that’s what’s happening.”
Zoller describes what he predicts will soon be a nationally and internationally distinct ecosystem of innovation in Chapel Hill, Durham and Raleigh.
“For a region to get national-level recognition, it needs to have a flywheel — a continuous cycle of starting or scaling or recycling the resources or capital of a startup,” Bigelow said. “It’s recycling the entrepreneurs, it’s recycling the skillset of the people who have successful entrepreneurial companies, and it’s recycling the capital.”
That’s what the region is working toward. Bigelow said the Triangle hasn’t reached Boston’s or Silicon Valley’s level of entrepreneurial renown. Rather, he benchmarks the Triangle against Austin, Texas; Seattle; Denver and Chicago.
“We’re really trying to see what each one uses and leverage what we have here,” Bigelow said. “The ingredients to make the cake are fairly well known, but what differs for every region is the recipe.”
Brooks Raiford, president and CEO of the North Carolina Technology Association (NCTA), credits the changing face of Research Triangle Park with encouraging entrepreneurial development.
“They want people to live out there, they want small companies to be able to come out there and start up and fail and try again,” he said. “They will still have very large players out there, but they’re going to be much more open to the full spectrum of innovation.”
Raiford said 70 percent of NCTA members have fewer than 50 employees, and about two-thirds of its members are headquartered in North Carolina.
The association regularly lobbies the N.C. General Assembly about policies affecting the technology sector. And Raiford recently spent a morning at the legislature, presenting information about technology companies.
He wants to see legislators extend a law — set to expire this year — that grants a tax credit to companies that do research and development in North Carolina. He also wants to loosen restrictions on investing in startups in the state.
According to data compiled in the NCTA’s 2015 State of the Technology Industry report, North Carolina is one of the top states in public research university funding and net business openings — an achievement coming out of an economic recession.
“In a kind of perverse way, the downturn kind of sparks innovation across the country, but especially in an area like this one where there’s a high concentration of highly skilled people and resources,” Raiford said.
Zoller and Lewis Sheats, director of the N.C. State Entrepreneurship Clinic, work to ensure those skilled people are graduating in the region. More than 32,000 students graduate from one of the 21 colleges and universities in the Triangle each year.
“The most important ingredient to an entrepreneurial ecosystem is brainpower and innovation, and our most important product at a university the quality of the University of North Carolina is the ability to create great students,” Zoller said.
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With programs dedicated to entrepreneurship at Duke, N.C. State and UNC, it’s an area of study that’s quickly becoming a priority.
“You need outstanding universities that are challenging people to think differently and have innovative solutions,” Bigelow said. “And you need an entrepreneurial ecosystem for them to plug into.”
Brandon Magsamen was in graduate school at Duke when he and a couple of friends developed their idea for CrowdTunes, an app that turns the disc jockey reins over to customers at bars and restaurants.
Since it launched in 2013, the company has been based in Durham, where Magsamen says he’s found a supportive community of startups.
“There’s a good community. People are very friendly. So there’s the southern kind of, you know, the southern feel comes out,” said Magsamen, who previously lived in Austin, Texas and Chicago.
“It’s not the bay area, it’s not Austin, Texas; or New York, right? To run a team like this we would have had to have raised three times as much as we raised, so it’s affordable, it’s a super high quality of living.”
The company partners with venues, which crowdsource their playlists by giving patrons the chance to select songs using the app.
“What’s interesting about the Triangle as a region is there’s a large diversity here,” Magsamen said. “We’re a music company, and we need different types of bars and people.”
He said he’s found that mix of people and partners throughout Durham, Raleigh and Chapel Hill. Goodfellows, located on Franklin Street in Chapel Hill, is one of them.
“I love that kind of business,” said Steve Woodham, owner of Goodfellows. “I’ve had three bars on Franklin Street. This is kind of what I do. I love small business. I love ideas and things, so that’s why I’m excited for them. I hope it goes really well.”
The concentration of bars and restaurants on Franklin Street was a draw for Magsamen.
“Chapel Hill is just kind of a fantastic college town,” he said. “UNC drives a lot of that, and Franklin Street is a fantastic avenue for us to learn and test things. So as a startup, we’re able to test a lot of hypotheses by having access to those kind of three petri dishes we wouldn’t have necessarily in any other city. And so it’s been a kind of unintended consequence of living here, and it has been great.”
Zoller said he’s witnessed boomerang entrepreneurs — those who start their companies in North Carolina, leave and then return to continue their businesses — but he’s also known people to work elsewhere and then decide to move to the state.
“What has built (Research Triangle Park) has been organic growth, companies that have started home-grown from here, but in order for them to be successful, we’re going to have to recruit entrepreneurial talent from across the country,” Zoller said.
“My sense is that we already have all the missing pieces, and we’re so far ahead of many regions in making that argument.”
Feature photo courtesy of http://springleafstrategies.com/
