Editor’s Note: This column was authored by Jim R. Roberts, the founder of the Network for Entrepreneurs in Wilmington (NEW) and the WALE Angel Network. In addition, Roberts is a core reviewer for NC IDEA and the recipient of multiple NC IDEA ECOSYSTEM grants. Roberts is the founding executive director of the UNCW CIE incubator, and previously worked at the Durham-based Center of Innovation for NanoBiotech (COIN), funded by the NC Biotechnology Center. He is a former employee of the state of North Carolina, having served in the International Trade Division of the North Carolina Department of Commerce.
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WINSTON-SALEM – There were some very clear messages and takeaways at the fourth annual NC IDEA Ecosystem Summit, which was held this week in Winston-Salem.
First, paying incentives to recruit jobs from large companies to North Carolina is very expensive. Next, NC IDEA is putting money behind their words in helping black entrepreneurs compete on a level playing field. Lastly, people don’t walk when the money is talking as NC IDEA kept attendees at the end of the event by announcing winners of the MICRO, SEED and Ecosystem grants, which together meant that the nonprofit foundation has deployed a total of $2.3 million dollars into North Carolina’s economy.
NC IDEA chose the conference theme “Esse quam videri,” meaning “To be rather than to seem,” which is also the official motto of the State of North Carolina but RTI executive (and sponsor) Sara Lawrence added the “y’all” for some southern flavor at the start of the two day event.
Here’s more on some of the key takeaways from the event.
DATA, DATA, AND MORE DATA
For anyone who has been listening, NC IDEA leader Thom Ruhe has been very vocal about his thoughts on economic development incentives to recruit jobs to North Carolina.
A big focus for the 2022 Ecosystem Summit was to emphasize that if North Carolina leaders would just spend the equivalent of one megadeal for incentives on improving the funding of local and regional startup ecosystems, there would be a much bigger economic impact statewide.
For these purposes, a “mega deal” was defined as any deal where there was at least $50 million offered in performance-based incentives. While equity investments are a private sector decision, the public sector can play a large role in preparing the entrepreneurs with programming to increase their chances of success.
The huge amount of money would be better spent on ecosystem-led programs for homegrown startups, Ruhe has advocated.
And during a keynote address, John Lettieri of the Economic Innovation Group spoke about the aspirational goal of economic dynamism, or the combination of new business formation, the ability to switch jobs and geographic mobility of the workforce as healthy signs of an economic region.
Where the current media may be reporting more on the growth of startups, the numbers in the data showed a decline in small business formation since the Great Recession.
That is until the COVID-19 pandemic. Suddenly, there were a record number of small businesses registered with the state of North Carolina Secretary of State Elaine Marshall.
Even before the COVID-19 pandemic issues, all net new jobs in 2019 were created by small businesses and startups, not by recruiting efforts. North Carolina is now growing faster than the national average but there is still work to be done.
IF AMERICA HAD NOT TORN DOWN BLACK WALL STREET LOCATIONS …
NC IDEA has made real progress in funding programs for underrepresented people and no program is more visible than the new Black Entrepreneur Council. This organization has an impressive board, funding assigned and enough momentum to have real impact.
The quote that I will remember from this panel was “ You know if they had never torn down the Black Wall Streets across the nation to begin with we would be a lot closer to the equity and inclusion that we are fighting for now.”
Carl Webb had an interesting point about his acquisition of the NC Mutual building in downtown Durham that he has transformed into a hub of activity that includes the coworking space Provident 1898 and is also the home of the NC IDEA offices.
The NC Mutual business was being formed in the same year as the destructive 1898 coup d’etat in Wilmington that the city has never recovered from. (If you don’t know about 1898, author David Zucchino won a Pulitzer prize last year for the book Wilmington’s Lie.)
During the Summit, NC IDEA also announced a new $600,000 grant to help the Black Entrepreneur Council have a deeper partnership with the Historically Black Colleges and Universities (HBCUs) in North Carolina.
ENTREPRENEUR DEVELOPMENT IS ECONOMIC DEVELOPMENT
It is hard to imagine a more cooperative organization than RIOT, founded by the Wireless Research Center in Wake Forest, NC as a way to grow Internet of Things startups. WIth more than 80 corporate sponsors to support the tech startups, RIOT leaders Tom Snyder and Rachel Newberry have expanded their impact across the state and have also expanded to Virginia and to Colorado. One of the new SEED grant winners, Phase Dock, is very active in the RIOT accelerator programs in NC and Virginia.
A panel that focused on economic development was led by Krista Covey of First Flight Venture Center. Covey and First Flight are also very busy working across the state to help early stage life sciences companies get help moving through the red tape of federal grants.
On the panel, Heather McWhorter made it clear she is looking for partners to make Wilmington a national leader in the Blue Economy. While the University of North Carolina at Wilmington has a research focus on marine biotechnology, the region is looking for more partners to commercialize this research to build new companies. An example of marine biotechnology is Seatox, led by Dr. Jenn McCall, which is a testing product for the algae problems in freshwater lakes that are killing fish and caused by global warming.
DID I MENTION THERE WAS DATA LIKE $2 MILLION IN INCENTIVES PER JOB?
Dr. John Hardin of NC Department of Commerce has reports on Innovation factors in the North Carolina economy. If you want to know where your innovation ecosystem stands versus where the booster organizations think your city is, these reports are invaluable to setting realistic expectations. This improvement in the innovation infrastructure in North Carolina started with the creation of Research Triangle Park in the 1950s when the state was the 2nd poorest state in the U.S. on a per capita basis.
The next speaker Greg LeRoy of Good Jobs First had data about the cost of recruiting jobs to North Carolina over the last 20 years that would make any politician hide their head in their hands in shame.
Some recent mega deals with recruiting incentives cost the state $658,000 per job!
Further, the analysis showed that the data center jobs announced were created at a rate of $2 million dollars per job.
While North Carolina was recently ranked the #1 state for business by CNBC, the state is also ranked at the bottom of national rankings in spending per student in the K-12 educational system. The data shows that human capital is the most important factor in business success not recruiting incentives.
THE BIG (CASH) FINALE
While NC IDEA had already publicly announced the 15 winners of the Micro $10,000 grants, the SEED $50,000 and the even larger ECOSYSTEM grants had not yet been announced.
At the final session of the Summit, NC IDEA announced $2.3 million dollars between these three grant categories.
SEED startup grants are very competitive with over 150 applications from across the state with just seven winners. These grants serve as a valuable validation point when the startups are trying to attract additional investors.
The ECOSYSTEM grants are equally as valuable because NC IDEA truly makes an effort to help organizations across the state. The winning organizations also help underserved entrepreneurs including in rural regions who don’t typically have funding for resources and programming for small business owners.