Editor’s note: Steve S. Rao is a Council Member At Large and Former Mayor Pro Tem for the Town of Morrisville and an Opinion Writer for WRAL Tech Wire. He served on the Board of the New American Economy, now the American Immigration Council, and on the NC League of Municipalities Race and Equity Task Force.
Note to readers: WRAL TechWire would like to hear from you about views expressed by our contributors. Please send email to: info@wraltechwire.com.
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A TALE OF TWO CITIES.. ..
Bull City Ventures Partner, Michael Lee, kicked off the recent Founders First event at the Carolina Theater in Durham with the famous words from the Charles Dickens. novel, Tale of Two Cities:
It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of light, it was the season of darkness, it was the spring of hope, it was the winter of despair.
Dickens was comparing the booming economy of London compared to France during the years of the French revolution.
THE WORST OF TIMES AND WINTER OF DESPAIR?
Lee went on to remind the audience that start ups and founders have continued to face their own winter of despair during the past two years as capital markets continue tighten with higher interest rates and a contracting economy.
Steve Rao
Many founders are still feeling the long term effects of a post COVID economy and had to navigate through some tough times. Even now, the markets reflect a tougher time for start ups to raise funding and grow their companies than even a few years ago. Michael emphasized that in 2023, Venture funding levels were down 80% and 17 percent of dollars raised are down rounds.
And speaking on the issue of diversity, Michael reminded us there are not enough minority firms in our start up ecosystem. Data reveals that only 13% of NC small businesses are minority owned. ( https://carolinademography.cpc.unc.edu/)
We just have to do better when it comes to growing more minority businesses. I will say that it was very motivating to finally see an Asian Investor (Michael Lee) as a partner at a Venture Firm. I hope we see more of this trend in the near future.
IT IS STILL THE BEST OF TIMES, THE SEASON OF HOPE..
Despite living through the Winter of Despair, these are also the best of times for our start up community.
The energy and excitement of our start up community was at an all time high at the Founders First Summit. Over 700 top investors, entrepreneurs and others in the startup and tech ecosystem gathered at the historic Carolina Theatre downtown Durham, North Carolina.
Bull City Ventures started hosting this event in 2009 with the intent of connecting national investors to entrepreneurs throughout our region. Since their first event, attendance has grown from 75 to over 700 attendees, ranging from nationally-recognized investors, entrepreneurs and others in our startup ecosystem.
Lee inspired the audience by reminding us that even during these challenging times, the wisdom of our start ups have enabled them to survive and thrive by running their companies with the old fashioned focus on profits and customer acquisition. I certainly felt the hope and excitement from many entrepreneurs, who packed the Theater, eager to hear insights from investors and also share their successes with each other.
Bryan Shield from the Boston Red Sox inspired us with how transformational Chat GPT and AI is today in terms of disrupting innovation and creating many new opportunities for start ups. It is as big as when the Internet was open to the public with the World Wide Web and the pace of change and innovation in AI is picking up every day.
Bryan’s remarks made me remember my virtual coffee with John Chambers a few weeks ago, who reminded me that AI innovation is moving much faster than many of us thought as it continues to cross the chasm and go main stream. The startup and companies who can successfully develop a disruptive AI Strategy will succeed in creating successful, vibrant companies, and differentiate themselves from the competition!
During the event, I met Chip Kennedy, CEO of Civic AI, who shared with me his excitement about his company, which is leveraging Artificial Intelligence to help cities and towns deliver immediate benefits to the residents they serve by standing up AI powered 311 Call Centers. Chip is looking for early stage capital and feels good about his prospects as he looks to bring on new customers to their platform. I certainly hope that Triangle AI start ups, like Civic AI can receive their fair share of the $79 billion of Venture money going towards AI.
Another AI start up to watch is Wilmington based OPIaid, founded by David Reeser. OPIaid’s AI and Data platform is helping address the opioud abuse epidemic and saving lives. They have been named as one of the top ten start ups to watch by the NC Tech Association and continue to bring on new customers.
The early stage capital panel was enlightening and all of the panelists shared that there is not enough money to go around so founders are having to work harder than ever, to get their companies to the point they can exit.
Panelist Ryan Moore from Accomplice Venture fund revealed that 1% interest rates accelerated innovation and made it easier for companies to raise money and grow companies. Today, interest rates hovering at 5% make it very challenging for start ups to raise money but reminded us that great ideas and passion are what lead to great companies and that money is only an accelerator of these ideas.
I enjoyed attending a number of events this year which continue to put a big spotlight on the Triangle as one of the best places in the country to start a company. Global entreprenuership month in November, gave our start up community a chance to reflect and celebrate our success in transforming the Triangle into one of the top places in the nation to be a founder.
The power and energy of our start up community has never been stronger. When it comes to the future of our start up community in the Triangle, it is still the Season of Hope.
NC IDEA ECOSYSTEM SUMMIT
November kicked off with the NC Idea Ecosystem summit where much of the focus was on how we grow more minority entrepreneurs and level the playing field.
Investor Victor Huang reminded all of us that we are all born to be starters, makers, and doers, and entrepreneurial opportunity should be a fundamental right for everyone, everywhere. Huang shared how his nonprofit and nonpartisan organization, Right to Start is driving civic change to remove the barriers for entrepreneurs, so everyone can realize their basic right to start.
All communities across our state must level the playing field and expand entrepreneurial opportunity for everyone.
North Carolina has a world-class university system, ranks near the top of peer states in research and development funding, and is a top destination for talent. Despite those advantages, we rank 20th in innovation. We learned from NCInnovation President and CEO Bennet Waters how the state’s $500 million investment will enable this vision.
Following his remarks, a panel of leaders in innovation explored strategies to advance innovation, entrepreneurship, and technology commercialization in our state.
FIRST IN FLIGHT HIGH FLYER AWARDS
I was able to attend the High Flyer Awards, where we celebrated former Governors Jim Hunt and Jim Martin, receive the Champions of Innovation Awards and congratulated Advanced Animal Diagnostics for winning the High Flyer of the Year award. During the event, I was able to meet with a number of start ups, and enjoyed catching up with Ed Burghard from Dignify Therapeutics, a growing life science company which came out of our Morrisville Innovation program and evenually graduated to First Flyer Venture Center.
The First Flight Venture Center story is inspiring. Since 1991, their companies have accumulated a market capitalization of $12 billion. First Flight companies filed over 28 patents, and raised over $4,454,000 million in grants. https://www.ffvcnc.org/)
The High Impact, High Science model seems to be working well in our region.
SUSTAINABLE ENTREPRENEURS!
Last week, I wrote about the growth of innovation in our Clean Tech Cluster, which we celebrated at the RTP Cleantech Cluster Awards. Startups are certainly doing their part. A perfect example is Ndustrial, the 2023 Clean Tech Entrepreneurial Company of the Year. NDustrial is focused on clean energy. Founder John Crawford is reshaping the way industrial companies think about energy management. Ndustrial has developed an innovative energy platform that integrates more than 60 different systems into a single normalized view that processes more than 100 million data points to enable smarter energy decisions in real time. Ndustrial was recently named as one of the Top 100 energy transition startups in the world.
SMART CITY INNOVATION
Finally, I could not end this blog without talking about the leadership of Tom Snyder and RIOT in strengthening our entrepreneurial ecosystem. This organization has been instrumental in driving the creation of new companies focused on game changing innovation in IOT and sensors.
Raleigh just hosted their rebranded annual summit, recently Connected Triangle+ Summit, where government, business leaders and entrepreneurs discussed how we could accelerate smart city innovation in the region. I enjoyed moderating a panel on Regional Collaboration. In conjunction, this year Raleigh is hosting a reverse pitch competition organized by RIoT, asking entrepreneurs and startups to propose “smart” solutions that address challenges in transportation, environment and climate change and equity/affordability. (https://wraltechwire.com/2023/07/31/triangle-becoming-a-smart-region-built-upon-smart-cities-heres-how/)
In Morrisville, for example, companies like Varidx and Sam Anayltics have worked with our Town to establish a smart city dashboard which provide our residents real time views of facility usage and receive notifications when our parks are flooded. Green Stream Technologies is also another successful start up that offers sensors, data visualization, and IOT services to help build and maintain climate resilient communites.
And lets not forget the wonderful work being done by the RIOT accelerator program which is connecting IOT companies, the resources and mentors to take their products to market, which at the end of the day, creates more jobs and grows local economies.
MORE INSIGHTS
It certainly is the best of times, and the age of wisdom for our start up community.
In fact, I think it is fair to say that is the Epoch of Belief.
If there is anything we have learned about our start up ecosystem over the years, nothing can stop an idea, whose time has come. Cree (Wolfspeed), SAS, Red Hat, were all ideas that came out of NC State years ago. The founders of these companies believed in their big ideas and put the teams in place to execute on their vision. Look at where they are today as they employ thousands in the Triangle and around the world!
And, we can draw hope from the success of Scot Wingo’s Tweener Fund, which is filling a void in early stage capital. Brian Hamilton and his Foundation continue to mentor and support entrepreneurs, and even give inmates a chance to get a second chance in life by starting companies. (Inmates to Entrepreneurs) The tagline for the Hamilton Foundation is Entrepreneurship for All. (https://brianhamilton.org/)
Finally, just this week, the Biden administration announced A $10 billion investment, including $79 million in Wisconsin, to help small minority businesses access the capital they need. And the Small Business Community Navigators Pilot Program provided $100 million in funding to 51 organizations, including U.S. Black Chambers of Commerce and the National Urban League, that worked with local groups to connect entrepreneurs to resources to help their small businesses recover and thrive. Kudos to President Biden for taking the lead on growing more minority owned firms but more work needs to be done at the federal and state level.
It is the big, game changing idea that will prevail at the end of the day. Founder success does not happen overnight. It takes hard work, grit, determination, passion, energy, and an unwavering commitment for their company for them to grow and continue to create jobs in our region. Entrepreneurs and start ups with the right culture, talent and ideas, can not only survive but thrive even in a tougher economic climate. A culture of continuous innovation can help founders recruit and retain the best and brightest talent, which will help sustain their long term growth. Former Chief People Officer at Red Hat shared some invaluable insights on how we develop this type of culture in our organizations.
And Jobs. Jobs. Jobs. Start ups Create Jobs . For every small business which is successful in North Carolina, we create about 5 new jobs. More new company filings is can keep Secretary of State Elaine Mashall’s office very busy.
Apple, Vinfast, and the big whales we recruit are important in growing our economy but a vibrant start up ecosystem will be critically important in creating many new jobs, at a time when larger companies are displacing many jobs to invest in productivity. Many of these new start up jobs will be focused on AI, data, cyber security and other emerging technology applications. I cannot think of a better time than now for us to create these new jobs of the new economy.
Make no mistake.
The competition for these jobs will be fierce and other nations like India are emerging as start up nations. Chambers reminded me that India now has 87 billion dollar unicorns, and over 100,000 start ups in their economy.
A special thanks to NC Idea, First Flight, Bull City Ventures, and all of the community leaders who continue to believe in the importance of Entrepereneurship for all! While our ecosystem has achieved remarkable progress in uplifting entrepreneurs throughout our region and state, our work is far from over.
I end this blog like the Mission Impossible movies.
Will you accept the NC Idea Mission to empower our hometown heroes to achieve their full entrepreneurial potential across every corner of North Carolina?
The good news is that this mission will never self destruct because of the light, hope, wisdom of our founders and start ups. Call me an optimist but I say it still remains the season of light and hope for our innovation ecosystem.
I accept this mission. I hope you will do the same.
Keep up the great work and lets continue to make the Triangle the Start up Region and North Carolina, the Start Up State.
