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Friday, February 14, 2025

Green shoots: A $50 million program aims to propel N.C. businesses

A new program from the North Carolina Rural Center will put as much as $50 million in the hands of investors, who will in turn invest the capital into the state’s small businesses.

In July, the state-supported Rural Center expects to announce which venture capital funds, limited partners and investors will be part of the program. Those companies must agree to match those funds on a 2-to-1 basis. 

Bill Spruill

“This program will actually bring $150 million into the North Carolina economy,” says Rodney Sampson, who oversees the federally funded N.C. Venture Capital Program for the center.

The program’s goal involves placing 53% of the money in the hands of entrepreneurs identified as “socially and economically disadvantaged” by the Department of Treasury.
The federal government will allocate $32 million at first, then add $28 million to the fund if the selected investors hit that mark of reaching people who have found it difficult to raise capital.

“Over the past 50 years or so, socially and economically disadvantaged individuals who start venture-backable companies have struggled to raise less than 1% of all private venture capital,” Sampson says. Potential participants include military veterans, racial minorities, those who identify as part of the LGBTQ community, and those who live in rural areas, among others, according to program guidelines.

The commitment to direct a large portion of the money to members of those groups “is a game-changing model” to create generational wealth among people who experience inequitable obstacles, he says.

The social aspect of the funds excites Liam King, a director with 2ndF, a Raleigh-based venture capital firm whose mission includes investing in underrepresented minorities.

“You can’t determine how successful someone is going to be based on where they come from or what they look like,” says King. 2ndF hopes to participate in the program. 

Goldsboro native Bill Spruill started 2ndF last year after selling Global Data Consortium to London Stock Exchange Group for $300 million. The company, which offered an identity-verification software platform and was formed by Spruill and Charles Gaddy,  only received outside investment after the business had operated for 10 years.

“We saw a lot of founders in our space raising a lot more money, a lot quicker, with a lot less friction,” Spruill said during a videotaped discussion with the Rural Center’s Sampson.

Spruill, who is black and in his mid-50s, noted he doesn’t look like most tech entrepreneurs. He says that hurt his efforts despite a resume that included a $30 million sale of an earlier company.

“All along the way, investors said, ‘No, we’re not interested,’” says Spruill. “There were a lot of, I’ll call them excuses, along the way.”

Spruill says he started 2ndF to create opportunities for high-achieving minorities, particularly in the tech sector. 2ndF stands for Second Foundation, a reference to a book series by science fiction writer Isaac Asimov. In the book, a group called the Second Foundation is tasked with ensuring successful outcomes.

For Spruill, success would be closing racial wealth gaps.

The N.C. Venture Capital Program is part of the $200 million of federal stimulus money that state lawmakers have directed to the Rural Center for aiding the state’s small businesses.

Companies across the U.S. raised about $235 billion in venture capital in 2022, with about half of that money going to companies in Boston, New York and California. In North Carolina, 246 companies raised $4.2 billion last year, according to the Council for Entrepreneurial Development. Nearly half of that went to Cary-based Epic Games, creator of the hit video game Fortnite.

The hope is that investors involved in the new program will spot other opportunities in the state.

“There are thousands of would-be entrepreneurs with ideas,” says Sampson. “This is a big catalytic opportunity.”

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