Stoking our entrepreneurial economy
Today, we find ourselves at an entrepreneurial crossroads. The Research Triangle region is home to thousands of technology-based firms in fields as diverse as bioscience, information technology, gaming and technical textiles. Supporting these technology start-ups is an equally dynamic entrepreneurial ecosystem, which includes dozens of innovative for-profit and nonprofit incubators, a growing network of angel investors and venture capitalists, and diverse events and programs to support new firm formation.
In light of this activity and buzz, some might say the region’s entrepreneurial ecosystem no longer needs a robust, proactive state – that we have reached a critical mass of private and nonprofit organizations that are ready to step up and lead the entrepreneurial charge.
We strongly disagree.
This entrepreneurial ecosystem is not simply the result of private sector bootstrapping or a grassroots initiative. Closer inspection reveals the essential role of the entrepreneurial state: a concerted effort by the state of North Carolina to invest in and build foundational support for technology development and new firm formation. Private firms alone cannot adequately address the challenges of global competition and preparing the workforce for rapid technological change.
This is not a new role for North Carolina. It is centuries old when factoring in the founding of our nations’ first public university to build capacity for North Carolina’s development. And it reflects a deep understanding by public officials and policymakers of the need for long-term investment – the willingness to invest in risky technologies, emerging industrial sectors and necessary institutional supports well in advance of quantifiable economic returns.
As an example, the Biotech Center – the nation’s first state-funded development agency in biosciences – was created in 1981 at a time with only a handful of biotech firms nationwide and only one firm in North Carolina. Concurrently launched with the Microelectronics Center of North Carolina and North Carolina School of Science and Math, all three were proposed in a report by the North Carolina’s Board of Science and Technology.
As a result of continued state funding and support that transcended changes in political administration, the Biotech Center has positioned North Carolina as a national leader for bioscience employment and establishment growth. It has also established international expertise in biopharmaceutical manufacturing, in turn generating good paying job for workers who might not otherwise secure employment in high-tech fields.
RTP is another bright spot in the North Carolina economy as a result of forward-looking state investment. While RTP was initially established as a science park for large-sized R&D operations, it has become a pioneer in entrepreneurial development. North Carolina state government, in partnership with business and university leaders, invested heavily in RTP – using political capital to initially attract large R&D employers to the Park. And those anchors in turn have seeded several waves of entrepreneurship that are contributing to the regional economy.
In some cases, this entrepreneurial pathway was initially shaky, especially when rounds of corporate layoffs forced talented individuals to turn to entrepreneurship out of economic necessity. But the park is also home to a number of entrepreneurial champions. One example is GSK and its predecessors, Glaxo and Glaxo-Wellcome, which have actively supported entrepreneurial development over decades through severance packages, technology licensing deals and alumni mentoring and also by acting as a first client. Entrepreneurial success depends on these complementary actions.
State-funded institutions have repositioned themselves in an effort to stay ahead of technology development and with an eye toward entrepreneurial potential. The Biomanufacturing Training and Education Center at N.C. State University, initially created for educational purposes, is now a place where firms, new and old, can experiment with new and innovative manufacturing techniques. The Biotech Center, for its part, is continuously improving strategies for financing and risk-assessment, most recently creating a new tool to help communities retain entrepreneurial firms on the cusp of take-off and when they are most attractive to other states.
Government must continue to play an active role in seeding and crowding-in private investment, promoting synergies between established and newly formed firms, helping balance the desire for private gain with a shared commitment to the larger public good, extending funding for public and higher education, in turn helping to foster new rounds of innovation and the next generation of entrepreneurs. We need state leadership with a long-term perspective to ensure North Carolina’s economic future.
The focus on innovation at the Emerging Issues Forum in Raleigh next week is an opportunity for us to reflect on and also rejoice in the entrepreneurial contribution of our state, both to this region and others. But, equally, it is a time to ponder what is at stake if we lose government support for essential parts of that ecosystem.
Nichola Lowe is associate professor of City and Regional Planning and Maryann Feldman is Heninger Distinguished Professor in Public Policy, both at the University of North Carolina at Chapel Hill.
This story was originally published February 7, 2015 at 10:34 PM with the headline "Stoking our entrepreneurial economy."