Great startup communities are built with many bricks -- a network of resources that enable startups to flourish and grow. When the Rise of the Rest tour stops in the Research Triangle of North Carolina -- they'll find that we tick the usual boxes:
- Research Universities that can provide entrepreneurial talent? Check. UNC, Duke, NCSU.
- Co-working spaces with density? Check. American Underground, HQ Raleigh, Launch Chapel Hill, The Frontier.
- Accelerator? Check. The Startup Factory.
- Entrepreneurial support organization? Check. CED.
- Angel investors and seed stage funds? Check. Check.
And a central part of that helpful ecosystem is NC IDEA, a private, not-for-profit whose mission since 2006 has been economic development in the state of North Carolina by creating winning startups, not just participating startups. Because NC is in the name, most people assume it's either a state agency or state funded -- but it is private -- you can think of it is an endowment that uses it's proceeds to grow startups.
(Full disclosure -- I am the director of Groundwork Labs, a program funded by NC IDEA so I am an unabashed fan of the work we do.)
NC IDEA grows startups in two ways: Groundwork Labs -- an accelerator-like program to help founders who have not much more than a raw idea, and NC IDEA Grants -- a source of non-dilutive funds to fill the gap between a solid idea and equity funding.
The NC IDEA grant program awards approximately 10 grants of up to $50,000 each year. But building winners takes more than money. We have developed a robust mechanism for evaluating startups and preparing them for the challenges they face. WIth a rigorous written application, broad review process, thoughtful and actionable feedback, and mentoring, we are able to produce stronger entrepreneurs.
We measure our success by the revenue and employment achieved by the startups we fund, and other funding milestones along the way. Since 2006, NC IDEA has provided over $3.7 million dollars to 93 startups in North Carolina. To date, our grant companies have secured over $20 million dollars in non-equity funding, and raised over $70 million dollars in equity funding and 75 percent of grant recipients still remain in business today since the program's inception.
By 2012, applications had grown to over 300 annually yet only 10 were receiving grants each year. We saw a lot of really interesting technologies and capable founders, but not quite ready for a grant - usually because they had not figured out how to turn that technology into a business. We started Groundwork Labs to help those companies. Programmatically, Groundwork is just like an accelerator program -- mentor driven, selective, and 3 months of space -- but executed in our not-for-profit model -- we offer the program to selected companies for free without taking an equity stake.
In the three years since starting the Groundwork Labs program, 80 companies have participated in Groundwork. 40 of those are still active, and 20 have raised approximately $4 million in equity and been awarded $2 million in grants. 8 Groundwork companies have gone on to win NC IDEA grants and 12 have been accepted into accelerator programs including The Startup Factory, 500 Startups, TechStars, Healthbox and Blueprint Health.
So how did NC IDEA create an endowment that can afford to give away $500,000 each year and support a free accelerator program? It's an interesting story -- dating back to some state funding of a technology initiative back in 1981 -- but too long for this blog -- you can read the details here.
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