Innovation is a key to success for virtually every organization, and the same is true for a state seeking to outperform. While North Carolina power brokers have known that forever, the stars have aligned this summer for lawmakers to approve an eye-popping $1.4 billion to support a not-for-profit startup, NC Innovation. Its mission is to turn university research into thriving businesses in areas beyond Raleigh, Durham and Chapel Hill.
Funding for NC Innovation wasn’t final at press time, but the effort has received bipartisan support. A key factor is that the major driver is retired Truist CEO Kelly King, who helped transform BB&T into a top-10 U.S. bank. He also gathered backing from many key N.C. business leaders. Nine lobbyists were hired to promote the project.
King is a private-enterprise champion who is promoting a major public-sector investment, which a Locke Foundation official terms “crony capitalism.” Maybe it is, but competition from other states investing billions to promote promising startups has changed the minds of some free-market conservatives. It’s one thing to lose a film in Wilmington when a producer grabs cash from Georgia; it’s another to miss out on a major software, logistics or biotech company.
Rather than emerging through the UNC System, NC Innovation is an independent group. While King’s team raised $23 million privately for startup costs, state lawmakers are the financiers and would retain the ability to withdraw funding. They will also pick most of the group’s 13-member board, which excludes UNC System employees in the Senate bill. (It also exempts the group from open meetings and public records laws, which is a mistake.)
The thesis is that North Carolina’s public universities, aside from UNC Chapel Hill and N.C. State University, are largely ineffective in turning their researchers’ ideas into commercial successes that create jobs and prosperity.
Nearly 94% of academic research funding in the state runs through those two campuses, plus Duke and Wake Forest universities, NC Innovation says. The other 14 UNC schools lag far behind.
To fix that, NC Innovation CEO Bennet Waters is hiring directors for regional hubs at Western Carolina University in Cullowhee, East Carolina University in Greenville,
N.C. State A&T in Greensboro, and UNC Charlotte. They will identify promising campus projects, then determine how to help deliver offices, plants and jobs in counties not named Durham, Mecklenburg, Orange and Wake.
Waters has 20 years experience in Fortune 500 and privately held companies and is a former part-time professor at UNC Chapel Hill, so he has academic and business credibility. He contends there’s a big gap between federal funding for research and the additional money, mentoring and execution needed to bring a product to market.
The CEO notes that the Senate plan calls for shifting $1.4 billion between state reserve accounts; no one is writing a single, massive check. Investment managers expect annual growth of about $106 million annually, providing funds for commerce-minded professors. Fifteen years from now, Waters says, the endowment value should still top $1.5 billion, even after sourcing a lot of North Carolina innovation. ■