A healthy environment for startups begins with a targeted investment in the systems nurturing founders and budding entrepreneurs.
That’s been the driving philosophy for Durham-based NC Idea Foundation, which since 2006 has invested millions to support maturing startup cultures in cities and towns across North Carolina. The privately-funded foundation has supported more than 250 North Carolina-based companies through non-equity based investment, mentorship, and access to funding.
“Our ultimate goal and highest purpose is to help North Carolinians achieve their full entrepreneurial potential,” says CEO Thom Ruhe. “The idea to support local organizations was about increasing capacity of these organizations to help entrepreneurs by scaling and optimizing their work in a way that can be done more efficiently.”
The foundation’s ECOSYSTEM grant program, in its second year, awards funding to institutions and organizations that “execute creative programs to support entrepreneurs and strengthen North Carolina as a national exemplar for entrepreneurship.”
Ruhe served as the vice president of entrepreneurship at the Kauffman Foundation for 7 years before joining NC Idea in 2016. He was chief marketing officer at Ohio-based JumpStart Inc. prior to that post. Both nonprofits focus on growing a diverse range of businesses and supporting diverse entrepreneurs by providing low-barrier access to capital to help grow companies, jobs, and opportunities within communities.
“There is no prescriptive model to how to best scale startups in respective cities,” says Ruhe. “The goal is to de-risk certain experiments for entrepreneurs. If there’s an organization that provides that space for entrepreneurs, maybe we just support their mission.”
North Carolina hasn’t had a problem attracting corporate entities. The state has welcomed large brands like Apple, Red Hat, and AvidXChange into the business environment in the last few years. The Research Triangle in central North Carolina remains a strong contender for the Amazon HQ2 project.
Ruhe has been vocal about creating a friendly environment in North Carolina where entrepreneurs can “build the next Amazon, not buy them.” Such expensive tax credits, says Ruhe, could instead be invested in building home-grown companies.
Such investment is growing. The state’s Council for Entrepreneurial Development reported that entrepreneurs in North Carolina picked up over $1 billion dollars in investment in 2017, an increase of more than 36% from the previous year. Tech startups being built in the state boosted funding back to the levels of 2015, when the majority of investments were made in the life sciences.
The grant program, says Ruhe, represents an experiment to ensure more communities of color have more entrepreneurial and economic opportunity. NC Idea Foundation has awarded $3 million in grants to two dozen organizations, in cities ranging from notable startup tech hubs like the Raleigh-Durham region to smaller, nascent startup communities in Pembroke, Wilmington, and Winston-Salem. The two-year grants of up to $100,000 are provided over the course of two years to build entrepreneurial ecosystems.
Devin Collins, the associate director of Ventureprise at the University of North Carolina Charlotte, says the goal of the program is to create greater capacity for early-stage ventures to test their business models with the support and runway needed to validate their ideas.
With a $75,000 grant, for example, the Ventureprise program helped 30 local business teams per year in the Charlotte area through an 8-week “customer discovery program” in which they conduct customer interviews and attend trade shows and industry conferences as they navigate the commercialization of their products and services.
“I went through the program in early February when I just had an idea and was really early-stage, hadn’t raised money, and hadn’t put any money into the business myself,” says Raven Solomon, president of the Center for Next Generation Leadership and Professional Development which helps companies attract and develop millennials and centennials.
“It forced me to talk to customers from all different angles,” Solomon says. Had I not have had the guidance and experience to sit down with customers and pivot my platform based on some of the assumptions I had that proved wrong, I would have wasted a lot of time and money. ”