NC Innovation | The largest economic development investment in N.C. History

The room fell quiet as the stalwart Senator Brent Jackson quietly stepped up to the podium to announce the North Carolina State Senate’s budget proposal late Monday afternoon. What he described in his remarks is a project, more than six years in the making called NCInnovation – a not-for-profit corporation most reporters in the room didn’t know existed.

Jackson’s announcement was carefully crafted for good reason. The budget allocates $1.425 billion to NCInnovation in what may be the largest one-time economic development expenditure in state history.

Today, we’ll tell you a little more about NCInnovation, and how it plans to operate. As you read with us this morning, think of a few key individuals that need to know what you are reading, then forward this to them. 

If you get to the end and have an inquiry, send it our way without second thought. 

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NCInnovation is led by some of the top minds in North Carolina business and academia.

Its Board of Directors, chaired by retired Truist Financial Corp. CEO Kelly King, boasts centuries of combined experience – it’s “an all-star lineup of state financial, university and research luminaries,” according to the Associated Press.

And late last year, they recruited UNC-Chapel Hill’s top innovation officer, Michelle Bolas, to head up the group’s university’s partnerships.

Equipped with an unrivaled cast of business and innovation minds, the organization has a bold vision: To make North Carolina “The Innovation State.”

An innovation arms race of sorts has broken out as the next phase of interstate competition. States like Massachusetts, Georgia, Tennessee, and Ohio have already devoted billions of public dollars to boost applied research and its commercial outputs. How does North Carolina compare right now?

We’re an absolute powerhouse on research and development funding. North Carolina’s $13 billion in annual R&D activity is about 38% higher than the national average as a proportion of gross state product.

But our innovation performance doesn’t measure up to the size of our research base. Despite top universities and human capital, we significantly lag our peers and national averages in commercializing our research.

North Carolina ranks just 20th in innovation nationally, has only half the venture capital dollars of the average state, and is not patenting or commercializing on par with our R&D base.

And to the extent North Carolina is winning, those wins are concentrated in just one part of the state. As Business NC reported this week, “Few partnerships exist across N.C. universities to solve marketplace problems, [and there is] little regional collaboration between academic, industrial and capital formation networks.”

To address these challenges, NCInnovation curated a model based in part on other states but adapted for North Carolina’s unique position.

NCInnovation centers its work on the UNC System, particularly in regions of the state that are not now considered innovation engines.

The organization will deploy a three-pronged strategy to accelerate and commercialize applied research for “homegrown innovation”:

• Develop regional innovation networks to connect industry, academia, and entrepreneurs;
• Leverage applied research to target market-based opportunities;
• Support research commercialization to accelerate innovation growth and scale.

NCInnovation has already established formal partnerships with N.C. A&T, Western Carolina University, ECU, and UNC Charlotte.

Kelly King describes the initiative this way:

“As some question whether American universities produce skills relevant to market demands, North Carolina is orienting itself, in part, toward applied research that addresses actual marketplace problems and opportunities.

“And as gaps between rural and urban America turn into chasms, North Carolina will focus its innovation work in regions beyond just the urban centers.

The initiative, then, will boost rural economic development by orienting regional research efforts toward actual industry needs that exist in those regions. By helping commercialize those research outputs, NCInnovation will grow “ecosystems,” anchored by UNC System schools, that help turn ideas into companies that stay in those regions.

Crucially, that intra-state economic development will position North Carolina for inter-state competition in the innovation arms race.

The organization initially submitted a recurring annual funding model for the General Assembly’s consideration. But legislators, cognizant of the complications posed by having to resubmit funding requests every two years, offered instead an endowment model.

With a $1.425 billion one-time appropriation, NCInnovation can use the returns on investment proceeds to fund its programmatic expenses, just like any other endowment. In that way, NCInnovation immediately becomes self-sustaining in perpetuity.

The group proposes a bold path forward to build on North Carolina’s history of innovation.

In the words of Kelly King: “North Carolina has grown in recent decades into a national and international competitor. But that can’t be the end, because to be satisfied is to fall behind.

“From our farms we built research universities, from our research universities we built Research Triangle Park, and from RTP we will strive to be the national leader in innovation.

“We’re looking now towards a future in which innovation expands beyond our urban centers – a future that defines North Carolina as The Innovation State.”

Our state is on the brink of formally realizing a “moonshot” idea – one that could alter the trajectory of our state for generations. We hope you’ll join us.