If the 50+ entities that applied for NC IDEA’s new Ecosystem Partner grants got their way, $10 million would be invested in boosting the state’s startup ecosystem in coming years.
June 13, 2016
With $10M in Ecosystem Grant Requests, NC IDEA Delays Awards, Plans to Fundraise
NC IDEA's expanded mission and budget means finding funding partners, deploying more capital in North Carolina.
Unfortunately, NC IDEA has just $1 million a year to fund proposed partner projects. That means it’ll be making some tough choices this summer. According to the foundation’s new CEO and president Thom Ruhe, about $2.5 million of the proposals should get funded and another $5 million is debatable (The final $2.5 million should not be funded, he says).
To help fill the gap, Ruhe and the NC IDEA board will delay award announcements by a month in hopes of consolidating some proposed projects and raising additional money to fund others. Expect answers in August.
He admits they’ll be taking a different strategy than other foundations or grant-making organizations. Most react to what was submitted and say yes or no, but NC IDEA will be more proactive, Ruhe says, thanking entities for their submissions and suggesting ways to rethink the plans or to integrate them with other complimentary proposals.
“We are using this vantage point we have from seeing everything else to suggest different things,” he says. Ruhe will begin talking to partners this week with the hope of narrowing down the project list.
He’ll also begin his own fundraising process to fund more requests. Though it might be difficult to secure funds from out-of-state organizations due to House Bill 2, he says he’ll target statewide and regional foundations, philanthropists and 501c3 organizations about partnering to fund proposals that align with their missions or goals.
“Invest in something legacy—plant orchards here,” he says. “Consider funding what we’re doing here because you may be investing in a job that gets created for your grandchildren.”
Ruhe has made some changes to the legacy NC IDEA grant program during his first 100 days too. During the spring 2016 cycle—Ruhe’s first chance to read proposals, hear pitches and make judgement calls on the most promising startups in the state—Ruhe encouraged his fellow judges to think about impact and scale in a broader sense so as to diversify the portfolio and make some longer-term bets.
Whereas NC IDEA traditionally looked for $1 billion market opportunities, where a company could feasibly earn a fraction of a percent of market share and build a sustainable business, some of the grants will go to companies in smaller markets but where they could capture a larger share.
That’s why an oyster company, advanced materials startup and niche consumer product made the cut alongside a pair of more traditional technology plays in much larger markets in manufacturing and senior care. Sandbar Oyster, in particular, could be a multi-million dollar company if it reaches five percent market share in the global industry, something judges thought was feasible considering the intellectual property it has developed to increase oyster yield and its plans to license the technology to competitors.
“This was my way to signal to the community that we will start evolving and changing the lens by which we judge companies,” Ruhe says. “We’ve been heavy Triangle tech centric, but we want community development and economic portfolio density to have more impact.”
Ruhe stresses that portfolio diversity isn’t necessarily “a pillar criteria” in judging, but that it will be taken into consideration when all other criteria are equal.
About Sandbar Oyster, he says “I had to challenge everyone to think outside the box and imagine something that still has a lot of economic upside and in this case, is a unique North Carolina export or has the potential to be.”
Ruhe will round out his first four months in June with the annual NC IDEA board meeting, where he’ll make budget and staff requests for the year and set priorities and plans for two additional grant programs, both with the goal of deploying more capital to support economic development through entrepreneurship statewide.
More details to come.