Spoiler alert: The Triangle is not going to rival Silicon Valley – at least not any time soon.
But that’s not necessarily bad news, according to Tom Miller, senior vice provost for academic outreach and entrepreneurship at N.C. State University.
“While the level of innovation and entrepreneurship in the Triangle is growing at a rapid pace, most measures of entrepreneurial activity put us an order of magnitude behind Silicon Valley,” said Miller, who also is executive director of the university’s Entrepreneurship Initiative.
According to second-quarter data from the National Venture Capital Association, California ranked No. 1 in the nation for venture deals with 280 transactions, while North Carolina ranked No. 10 with 43 deals. If one were to consider patent activity in making this comparison, the Tar Heel State also falls short, Miller noted.
The U.S. Patent Trademark Office reported 24,350 patents granted in the Bay Area in 2015, versus 2,142 in the Triangle.
“We’re not catching up either,” Miller said about patent activity. “If you look at the rate of growth in patents over the period from 2000 to 2015, the Bay Area is growing at a faster rate, 64 percent versus 47 percent. Even when you factor in the population differences, the patents per capita in the Bay Areas are about three times that of the Triangle.
“While this sounds somewhat discouraging, it’s really not,” Miller said. “I recently visited with a group of N.C. State alumni working at Google in Mountain View, California. While it’s very exciting to be working at Google, one young alumna pointed out that while the pay for a young engineer in the Valley is not different from the Triangle, the cost of housing is not even comparable, nor is the rush-hour traffic.”
‘Think and Do’ at Centennial Campus
Some of the Triangle’s most successful startups launched out of N.C. State’s Centennial Campus, home to the college’s renowned engineering programs, the NCSU-UNC Joint Biomedical Engineering Program and, currently, 31 companies. This “Think and Do” mantra at N.C. State is evident in the companies that graduate, and has been decades in the making.
“Innovation has always been core to N.C. State’s DNA,” Miller said. “A number of us at N.C. State have worked over the past 20 to 30 years to foster a culture of entrepreneurship as a means to translate that innovation into products and services that benefit the world, and build North Carolina’s economy. When Randy Woodson came to N.C. State as chancellor seven years ago, he had a goal of doubling the number of startups launching from N.C. State annually.”
In the last four years, the number startups launched from university research tripled from four in 2012 to 12 in 2016, and that doesn’t account for student-led startups, Miller said.
“In 2010, we opened the Garage, a ‘learn by doing’ entrepreneurial space for all N.C. State students. There are currently 31 companies that started in the Garage currently in business in North Carolina,” Miller said. “I’m aware of four that have launched within the past three years that are venture-backed with a combined valuation of $75 million.”
Innovation and startup spirit at N.C. State isn’t restricted just to its Centennial Campus. There’s the Albright Entrepreneurs Village, which is a residence hall for entrepreneurial students from across the university. The Poole College of Management has an Entrepreneurship Clinic with HQ Raleigh, modeled after a teaching hospital, which allows students to work with HQ entrepreneurs. The university also recently launched an accelerator program specifically for student-led startups.
“To help with the lack of early-stage funding, we recently launched the Wolfpack Investor Network (WIN), an angel network focused on early-stage companies founded by N.C. State faculty, students, staff and alumni,” Miller said. “Since forming in late 2016, WIN has already looked at more than 70 companies and participated in seven funding deals. To top it all off, we’ve worked with the Alumni Association to establish the Alumni Entrepreneurs Network to keep all of our entrepreneurial alumni connected. These initiatives – and some I haven’t even gotten to – have contributed to building a strong entrepreneurial culture at N.C. State.”
Red Hat's startup success
While the Triangle may not be on the cusp of being the next Silicon Valley, there are plenty of home-grown success stories within the boundaries of the beltline. Take, for example, Red Hat. Founded in 1993, Red Hat grew its humble headquarters from Durham, to N.C. State’s Centennial Campus, and now owns the skyline of downtown Raleigh.
What was once one of the Triangle’s most promising tech startups, the multinational, open source software giant now has more than $2.4 billion in revenue.
“Red Hat is a longtime member of the Triangle business community, and we believe this growing, dynamic region is becoming a top-five hot spot for innovation and entrepreneurship,” said DeLisa Alexander, executive vice president and chief people officer at Red Hat. “We started out as a little company with a wild idea, so we understand many of the challenges that startups face. Now that Red Hat is a large, successful company, we’ve taken on a bigger role as a corporate citizen in the innovation community. We strive to be a catalyst in this ecosystem and help other businesses become the next Red Hats.”
Entrepreneurship, as a trend, is up in North Carolina, thanks to not only those who take risks on their business ideas but also because of incubator spaces, business-friendly local government entities and nonprofits dedicated to bolstering startups, Alexander said.
“Innovators and entrepreneurs are a key part of a robust business ecosystem, because they generate new ideas, challenge the status quo, and help us solve the big problems that our world is facing. In recent years, we’ve seen tremendous support in the local community – from universities to businesses to government to nonprofit organizations – for cultivating entrepreneurism.”
One area where the Triangle might begin to rival the firms of Silicon Valley is in talent.
Alexander said people want to work and live in Raleigh, which helps with talent recruitment and retention. Raleigh-Durham firms also have their choice of graduates from some of the country’s best universities right in their own backyards.
“As Red Hat grows, we increasingly appreciate having our corporate headquarters in a place where our people can have an exciting career along with the quality of life this area offers,” Alexander said. “Raleigh is also home to some incredible talent. As an open source company, Red Hat's culture not only fosters innovation and collaboration – it demands it. We’re always looking for people who will thrive here, so being part of a startup-friendly region is a tremendous advantage to us for recruiting talented people.”
HQ’s veterans initiative
In addition to quality of life, cost of living and a talent pipeline direct from top universities, North Carolina is also unique in that it is home to several major military installations and some 120,000 military members.
HQ Community and Carolina Small Business Development Fund (CSBDF) recently announced a partnership to offer veteran-owned small businesses free co-working space and innovative services to grow their businesses at HQ Raleigh, Charlotte and Greensboro.
“Our goal with this partnership is to help military veteran entrepreneurs reach their business aspirations by offering them an ecosystem where they will thrive and find the necessary resources they need to succeed,” said Lenwood V. Long, president and CEO of CSBDF. “We are excited about our unique partnership with HQ Community and the opportunity to create economic opportunities for the veteran community to succeed.”