During my 20 years helping build five startup ecosystem organizations in North Carolina, I have heard that the true sign of maturity and success of a startup ecosystem is to have significant exits of local companies through acquisitions and IPOs.
In the last seven years, Wilmington has made significant progress in the 30-year challenge of diversifying the local tourism and service economy since the 1989 expansion of I-40, the Interstate and Coastal Corridor tying the economies of the coast in Wilmington to Raleigh and all the way to Silicon Valley in California. [Editor’s Note: That would be a long drive.] I am sure that sounds funny, but I have recently met people in Wilmington from California who are relocating venture capitalists, technology recruiters and experienced mentors looking for a less expensive place to live.
When you ask the true leaders of the Charleston, S.C. ecosystem, they will tell you that the turning point for their startup economy was when they had multiple exits of local startups that created the FOMO to wake up the local high-net-worth people who were not yet convinced to dip their toes into angel investing. These stories come from Charleston leaders such as Stanfield Gray of DigSouth and John Osbourne of Charleston Angel Partners. Charleston is the model for Wilmington as a conservative, coastal city with limited research assets and a city that people associate more with tourism than innovation. Their hard work has paid off in a great improvement in local tech wages.
Right before the 2020 pandemic, Wilmington was on a real and positive roll with momentum earned by very hard work. A small startup called PlayerSpace was acquired by a big software company called Daxko. PlayerSpace was a software company run by a hard-driving entrepreneur who had created a back-office solution for YMCA-type organizations that needed to register kids for sports leagues. Most of these organizations were using notebook paper to keep track. PlayerSpace had made significant market penetration with YMCAs in big cities like Houston. Founder Todd John is wearing a huge permasmile these days, so it must have been a very profitable exit.
The more familiar story was with the true poster child of my work for the last seven years—Next Glass, which evolved into Untappd when Next Glass acquired Untappd in January, 2016. When I first met Kurt Taylor in early Spring in 2013, the UNCW Center for Innovation and Entrepreneurship had not even opened yet, as the old real estate building was being renovated. George Taylor and son Kurt worked very hard to build Next Glass, but pivoted towards the craft beer trend with the acquisition of Untappd.
We worked hard to get Untappd on the stages with CED, the North Carolina Technology Association and in local, regional and national media. Untappd grew from the original two founders to 125 employees with a renovated building turned into a HQ that is owned by the Goodnight family of SAS fame (Jim Goodnight is a Wilmington native). In April 2020, Boston-based Providence Strategic Growth Private Equity made a significant investment into Untappd and all of the angel investors exited. The Taylor family moved out of daily operations of Untappd and into their next venture of TRU Colors Brewing. You can hear the whole Next Glass/Untappd story on the Steve Vafier Carolina Stories podcast.
And then we get to nCino. nCino was a spinout of the granddaddy of the Wilmington economy, Live Oak Bank. nCino is a cloud-based software solution to speed up and assist the decisions that bank executives make about potential loans. A true fintech success story based at the beach. nCino now has achieved unicorn valuation status of $1B+, has over 1,000 employees and is still hiring 40 people during this pandemic. According to a Barron’s magazine story in January of 2020, nCino was heading towards an IPO.
And That’s Just The Beginning
What if I told you that the future of fintech is at the beach in Wilmington and not in the banking center of the state? Did you stop laughing yet?
In January of 2020, those smart banking executives at Live Oak Bank finally announced a well-known “secret.” Chip Mahan and Neil Underwood announced the formation of Canapi Ventures, a $545 million venture fund for fintech. Some say the fund has now reached $600 million, which makes it the largest tech/fintech-related fund in the Southeast. According to its website, Canapi has already made two investments.
Live Oak Bank already had a small venture fund that had invested in a joint venture called Apiture, which already has more than 100 employees in Wilmington. Other investments include Atlanta-based PayRailz and a local Wilmington company called Kwipped.
Signs of Validation and Density in the Ecosytem
I have been working very hard for seven years to build validation points in the Wilmington startup ecosystem. The first three months of this pandemic has given me a chance to exhale and reflect.
Sure, one of the first small signs of validation for Wilmington startups that I remember was when Next Glass won the Emerging Company of the Year award at the North Carolina Tech Association Awards dinner in November of 2013. I remember when NCTA described the value proposition of Next Glass as “building a taste profile among wine drinkers.” I remember watching 800 tech executives opening their smartphones to download the app. Next Glass won many pitch contests, awards and national recognition and I did not look so crazy to the locals when I said I was building a tech- and innovation-based ecosystem at the beach.
But now Wilmington startups are also winning NC IDEA grants. Before 2013, no WIlmington company had ever won a NC IDEA grant and frankly Wilmington had dropped off the statewide tour. Recent grant winners in Wilmington include Electronic Lab Logs, who I met through the new Wilmington Chapter of 1 Million Cups, which had 80 attendees at the first meeting before the pandemic started. Investors love NC IDEA grants—$50K non-dilutive awards decided by a room full of mentors and investors.
Most recently, VR hardware company Brilliant Sole was chosen for the RIoT Accelerator Program, which was a first for a Wilmington startup. In full disclosure, my WALE Angel Network is an investor in Brilliant Sole. Brilliant Sole has developed a wearable sensor product that works with your feet, which has potential in the healthcare, military and gaming industries. They recently made a great impression at the huge CES show in Las Vegas.
The North Carolina Biotech Center recently created a new program called the BIONEER Challenge, which used Wilmington as a test market. This is a new $20K non-dilutive grant after an accelerator-type program to choose the winner from the finalists. This will soon be a statewide program in other cities where the NC Biotech Center has offices.
We are also working on more validation with workshops on the elusive SBIR grants through a partnership with RTP-based First Flight Venture Center. Local and regional startups like OpiAid, Period Pal and EcoTrek Prosthetics are receiving guidance from a new program to help them get federal funding of their research and product development.
Well as you can imagine, running an ecosystem in a pandemic where meetings are not allowed is a true challenge that requires creativity. Good thing I am a “creative” as an advertising grad from the University of Florida.
Since we can’t have events, we have created two new assets for the members and sponsors of the Network for Entrepreneurs in Wilmington. The most effective has been our new short form video podcast called 3 Sips of Advice. VIP Guests have included former NC serial entrepreneur Aaron Houghton in Colorado; my friend Larry Long Jr., who is the sales leader at Durham’s Teamworks; Wilmington resident Jamie Mottram of Breaking T T-shirts and sports merchandise; and next is former Liquidia and RTI executive Ginger Rothrock, who is now a venture capitalist in Indianapolis with HG Ventures with a connection to Techstars.
The second new addition is a tougher task. Much like GrepBeat, we have created a hyperlocal startup news website for the beach: 91omg.biz, named after the 910 (91-OH) area code at the beach. It has been a challenge to grow an audience, but the local mainstream news and business outlets have not adequately covered the positive news of the startup businesses. The mainstream newspaper of record did not even announce the huge venture fund by publicly traded Live Oak Bank.
In addition, there are two new spaces in the works for entrepreneurs in downtown Wilmington. Girard and Tracey Newkirk are opening a large space called Genesis Block right down by the river. If Girard sounds familiar, his startup KWH Coin was involved in the Google for Entrepreneurs Black Founders program in Durham. And a Texas based coworking company called Common Desk is renovating a very old building downtown that has not been occupied for more than 40 years. Stay tuned for more!