NCInnovation’s progress continues

Thanks for joining us this Saturday morning. Today we’re checking in on NCInnovation.

The organization’s model focuses intensely on the university research and development process, which can be complex. That complexity has also allowed room for some to try to define NCInnovation’s work inaccurately.

Today, we’ll reexamine NCInnovation’s purpose and the progress it has made to date. We’ll also look into some of the inaccurate claims floating around out there so you can have timely, accurate information.

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Let’s start with a brief review of the organization and why it exists.

In October 2023, the General Assembly charged NCInnovation – a nonprofit public-private partnership – with funding university research that has commercial promise. To pay for it, the legislature authorized $500 million over two years to be transferred into an NCInnovation endowment. Just like any endowment or pension fund, the money will earn interest and investment income. NCInnovation will use that interest and investment income to deploy research grants and other support to fulfill its mission.

In doing so, NCInnovation will accelerate the pipeline of commercially viable discoveries coming out of North Carolina universities, leading to new companies, new jobs, new licensing deals, and more revenue for universities. (NCInnovation only funds North Carolina public university researchers through the institutions at which they work. The organization does not fund or otherwise support startups or private companies.)

The idea is both very old and very new. As WRAL TechWire reported, quoting an NCInnovation spokesperson: “This [general model] has underpinned American innovation for the last 80 years. Things are born on American campuses, and then they’re commercialized, improved, and built upon by the private sector. That’s the model that has existed since World War II.”

NCInnovation’s leaders adapted this tried-and-true model to North Carolina, which boasts a world-class university system that touches every corner of the state. Importantly, NCInnovation also prioritizes university research outside of the Triangle. There are incredible faculty undertaking groundbreaking research endeavors in other parts of the state; NCInnovation intends to support them, mature their discoveries, and grow innovation economies centered around UNC System institutions.

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NCInnovation doubles down on the American model for innovation. We have the best universities staffed by the best researchers in the world, and we have the most dynamic private sector ever known to man. Where the two intersect, great things happen. The Polio vaccine, resilient grain seeds, the pacemaker, GPS systems, the MRI scanner, seat belts: American campuses birthed them, and American companies commercialized them.

Policymakers have long recognized this. The Trump White House, for example, hammered this point repeatedly: Bringing together “the Federal Government, industry, and academia, position[s] us to leverage the full power and expertise of the United States innovation ecosystem.”

Contrast this with, say, the Chinese model for innovation. Earlier this month, The Economist reported on China’s innovation designs:

Blending techno-utopianism, central planning and an obsession with security, this sets out China’s ambition to dominate the industries of tomorrow. . . Investment in politically favored industries is soaring, but the underlying mechanism of capitalist risk-taking has been damaged. Many bosses complain of Mr Xi’s unpredictable rule-making and fear purges or even arrest. Relative stockmarket valuations are at a 25-year low; foreign firms are wary; there are signs of capital flight and tycoons emigrating. Unless entrepreneurs are unshackled, innovation will suffer and resources will be wasted.

Whereas America supports its university researchers until the private sector can take the baton and improve upon it, China has no such demarcation. NCInnovation supports under-developed university research, maturing the work underway on campus until the private sector is ready to engage.

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So where does NCInnovation stand now?

The state budget became law just six months ago, and in that time NCInnovation has already met most legislative requirements, staffed up, and built the infrastructure to deploy research grants. Six months. 

Earlier this month, NCInnovation finalized plans for initial pilot grants, intended to fine-tune its policies, procedures, and application process. The initial slate of 6-8 research grant recipients could be announced by mid-May. After that, NCInnovation will scale its research grant program to a full statewide call for applications.

Just this week, reports came that UNC-Charlotte is poised in 2025 to receive the prestigious R1 classification, boosting the school’s economic impact. Cited as reasoning for this, NCInnovation’s Charlotte hub, located on campus. This should come as no surprise, as not that long ago CNBC’s Scott Cohn profiled NCInnovation as the state was named best for business for the second year in a row – Cohn continuously boosts the organization in his talks across the country. 

The organization has also attracted some big names to its staff leadership team. Michelle Bolas, who led research commercialization at UNC-Chapel Hill for many years, leads NCInnovation’s grantmaking and operational work. Josh Howard, a former federal prosecutor and DOJ official who is well-known in North Carolina legal circles, is NCInnovation’s general counsel. Linda Hall, who was COO at the Research Triangle Foundation for 17 years, is NCInnovation’s chief financial officer.

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Finally, we briefly discuss criticism about NCInnovation, which has come almost exclusively from the John Locke Foundation and its media arm, the Carolina Journal.

For much of the past year, the Locke Foundation centered its opposition on the claim that NCInnovation funds private startup companies. But NCInnovation does no such thing.

In a memo distributed by NCInnovation earlier this month and obtained by TRC Nexus, an NCInnovation official wrote: “The Locke Foundation conceded to us that it based its past year of opposition on an old bill draft that never became law. When we asked for sources for the Locke Foundation’s inaccurate claim that NCInnovation funds private businesses, they responded: ‘[Here is] the budget bill that created NCI,’ and linked to an old draft that never passed the legislature.”

That exchange prompted the Locke Foundation to publish a correction (“Locke regrets any confusion or misunderstanding this may have caused”). In the same post, though, the Locke Foundation introduced a new rationale for its opposition: “NCInnovation gets to choose which applied research” gets grant funding.

In response to that claim, NCInnovation wrote in its memo, “If applied research funding is not to be distributed based on merit, then it is unclear to us how it should be distributed. NCInnovation’s legislative mandate is to fund university applied research that has commercial promise. We are executing on that mandate.”

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Much has happened since we last checked in on NCInnovation. We’ll keep you updated on the undertaking, which high-profile business leaders have billed as a potential model for other states to follow.