Just over five years ago, I held the first official (as in not a test run) ExitEvent
Startup Social. A year after that, I started writing content three times a week under the ExitEvent
byline. A year after that, I was negotiating my own exit from ExitEvent
, assured that ExitEvent’s
future would be bright.
Today, nearly three years after that exit, I'm pretty thrilled with how far the Triangle startup scene has come. Four years ago I was asking how Raleigh was going to play with Durham. Three years ago I was asking if Chapel Hill was ever going to wander off campus and if Charlotte could get out from the shadow of big banking. Two years ago, Wilmington and Asheville were still far off outposts, may as well have been Tatooine.
Not all of those questions have answers, and not all of the answers are answers that I'm 100% in love with. But there's no question that where we are today, five years from that first official meetup, is a far, far better place than where we were in 2011, when I was still going to entrepreneur events and asking the only other entrepreneur there where the hell everyone else was.
So in 2016, it’s safe to say that the Triangle is on year five of a startup renaissance that began at roughly the same time ExitEvent kicked off (coincidentally, I have a knack for being in the right place at the right time).
Over those five years, you can look at all sorts of numbers and statistics on the Triangle and draw any number of conclusions about the health and strength of the startup ecosystem. Almost all of the numbers are trending up, so almost all of the conclusions are positive.
But if you know me, you know I’m an 80/20 guy—Let the numbers do 80% of the work and then flesh out the remaining 20% with good old human intuition and common sense. So I went and did what I do a lot, I talked to a bunch of people.
Here’s what I can tell you:
The Triangle is gelling but we're still letting I-40 hold us back.
In 2011, Durham startup was all about Durham, more closely tied to the revitalization of downtown than Durham’s position in the Triangle and the state. There were a ton of organizations, both inside and outside the startup scene, with Durham in the name. At that same time. Raleigh’s own fledgling startup community was scattered and unformed, but there were plans on the table.
If there’s one hurdle left to jump, it’s that the two cities are still somewhat insular, and I think this is mainly due to how difficult it still is to get from Point A to Point B. This phenomenon rears its ugly head in everything from talent—we hire people from all over the Triangle and while we haven’t lost a hire due to commute, it’s starting to become a bigger and bigger issue—to something as mundane as events in one city starting at 5:00 or 5:30 or even 6:00 p.m.
There are two fixes here and one is much easier than the other.
The first is simple time and work/life management. For example, at Automated Insights, we’re pretty lax about when the workday starts and ends. We’re in the heart of downtown Durham, and we’d rather have you productive at 10:00 a.m. than sitting in traffic for 90 minutes at 7:30 a.m. Further, if I were to start ExitEvent today, I’d hold the Socials at 7:00 or maybe even 8:00 p.m.
The second fix is much more fraught with controversy, and that’s mass transit. I’m against light rail, because I haven’t seen the math make sense, but I’m totally intrigued by Bus Rapid Transit. I know these things don’t come together quickly and easily, but there’s a solution in there somewhere and this is the first big infrastructure challenge outside of building enormous skyscrapers that needs to be hit head-on in the next five years.
North Carolina is becoming a network, but we still need to shake the trees in the outposts.
Earlier this year I went out to Wilmington to speak to a bunch of local entrepreneurs and I found that Wilmington today looks like Durham a couple years ago, everything from the craft brewery boom to the trend of local money going early into local startups.
Creating a startup hub at the beach is harder than it sounds, the environment actually works against you. Who wants to spend 16-hour days building widgets when you can practically hear the waves from your backyard? But I was introduced to at least a dozen solid people trying hard to make it happen, and they’re starting to see results.
I haven’t been out to Asheville or Charlotte in a while, but I’m hearing the same thing coming out of there—This is it, this is the time, the startup thing is happening.
I believe this. I do. The problem is it’s a call we’ve heard before, every couple of years or so. I’ve fallen for it myself, but I still believe. However, I know it won’t happen unless the entrepreneurs stand up and take charge in those communities. It’s a tough, thankless, expensive job, believe me, I know firsthand.
Area investors are getting involved at the seed stage and we're making more of them, but not enough, and we still need VC at the Series B level.
Five years ago, Triangle startups chasing after institutional capital were starting to see an uptick in seed funding, but most were stalling out at the $1 million mark. The good news is the ceiling is rising, and we’ve seen good number of startups able to raise at and above that mark, successfully navigating the so-called “Series A Crunch” of the early 2010s.
The bad news is that there’s now a so-called “Series B Crunch.”
Whether tied to the unicorn phenomenon or just a moving target, the ceiling is now firmly set at that second institutional round, roughly the $5-10 million range. Again, this is better than it was, but an influx of startups getting those early rounds and thus competing for that Series B money is only going to make the funnel tighter.
The only solution is to attract more investors who play at that level. We’re starting to do that, and we need to continue to focus on that.
Exits are (relatively) plentiful, and we’re starting to see the fruits of those exits.
Local entrepreneurs are starting to see the value of acquisition as an exit strategy and thus are making smarter decisions earlier about acquisition. I’m biased here, of course, but the exits we’ve seen over the last five years via acquisition have generally been lauded and, at least early on, have turned out to be good moves.
We’re also finally starting to see a new wave of entrepreneur-turned-investor, myself included, that, at least in terms of the advancement of the local ecosystem, is the most important step in our evolution.
Corporate relations are also getting stronger, as we see big companies like Red Hat, Citrix and others get more involved in the entrepreneurial efforts in the region.
In terms of the 20-year plan that entrepreneurial communities need to become fully formed, the Triangle is moving from the first to the second quarter. While we’ve made great strides over the last five years, we still need more entrepreneurs leading the startup community.
In fact, we need to stop saying startup community. I’ve always hated that term. Somebody coin the new phrase and own it.
This can happen a number of ways. It doesn’t always have to be a group or an org thing like ExitEvent, and it doesn’t have to be strategic, but if the last five years have been a challenge, the next five are going to be make-or-break, and not just for the Triangle, but for the entire state.
But you know my advice. It’s the same thing I was saying in 2011: The more we work together, the better off we’re going to be.