One of the questions we get most often is: how many companies applied to our latest seed grant cycle? Over the years, the number of applicants per cycle (Fall and Spring) has varied, but is generally trending up. And an upward trend is usually considered a good thing. But we are rethinking the process, including the criteria for making awards and how we should ultimately measure efficacy of the program.
For one thing, we are refining evaluation criteria, which is admittedly subjective. Assisted by a group of accomplished professionals, successful entrepreneurs, mentors, and investors themselves, we evaluate applications based upon the strength of the idea, the growth potential of the company, the quality of the written application, the strength and commitment of the founder and/or team, and finally the impact that our grant can have on the trajectory of the company.
The impact criterion has been the subject of much discussion lately. Specifically, we consider how our grant can directly accelerate the progress of a company. This invariably leads to discussion around companies that are either too early for our process or too late; namely they have raised considerable amounts of capital, are profitable, or have already been in business for 5+ years.
These factors tend to manifest more frequently in certain industries like life sciences, medical devices, and other capital intensive applications. It can be challenging to demonstrate that $50,000 can help these types of companies, especially when considering such an applicant in the context of hundreds of others that won’t require millions in venture capital, FDA approvals, and other regulatory compliance. Whereas we don’t want to preempt applicants based upon industry or stage, the impact question follows the law of diminishing returns and these types of applications don’t usually prevail. Notwithstanding our process however, they may ultimately go on to become great and successful companies, which we certainly celebrate.
Obsessing over impact is an important part of our process. It goes to the heart of our charitable purpose of supporting North Carolina’s economic development by helping young, innovative companies grow, create jobs and become major contributors to the state’s business community. This is a different lens than an investment group that is simply focused on return on investment. We are trying to find companies at a specific moment in time when our funds and support can help them accelerate and achieve significant milestones in their development.
Since our efforts are exempt from a profit motive, we have the privilege (I would even go so far as to say obligation) to make educated bets on folks working very hard to realize their entrepreneurial dreams. For us, it is about tapping into our nation’s greatest natural resource – our entrepreneurs. And in so doing, we are working with others to make North Carolina entrepreneurially diverse and economically strong. We also welcome feedback and input from the community, so if you have thoughts, please feel free to share them with me: firstname.lastname@example.org.
October 19, 2016
Written by NC IDEA President & CEO, Thom Ruhe