The pandemic has sparked a greater influx of entrepreneurship in North Carolina, RIoT’s Executive Director Tom Snyder said during his State of the Region address on Tuesday at Raleigh Founded’s Warehouse District location.
The state saw a record number of new businesses launched in 2021, according to the NC Secretary of State’s office. More than 178,000 new businesses were founded, an overall 40 percent increase from 2020 and more than double 2017’s rate. That’s a whopping 2.9 percent of all adults in North Carolina who started a new business last year.
The reasons for such a boost in entrepreneurship are varied. Snyder attributed it partly to the “Great Resignation” that has occurred across the country, emerging technologies and an overall period of hardship.
“Whenever there is hardship, people tend to turn more easily to entrepreneurship as a solution,” Snyder said. “And I think it’s in pursuit, not of just steady income, but participation in wealth through ownership of a business that can grow and scale.”
The region has also, like the rest of the country, weathered through high inflation and shortages of semiconductors and labor. Snyder said the supply-chain shortages are mainly caused by globalization, which has limited competition in nearly every industry.
For instance, 74 percent of all meat packing and distribution is controlled by just four companies. Likewise, 62 percent of cloud services have been provided by just two corporations, and Amazon alone represents around 1.5 percent of the U.S. gross domestic product (GDP).
With so little competition, Snyder said these mega companies can simply adjust production downward to compensate for labor shortages and raise prices for customers.
“It seems that there’s been a little bit of a loss of vision on ‘let’s satisfy the customer’ and a little bit more on ‘let’s continue to grow the wealth and consolidate the wealth,’” Snyder said.
But that opens the door for entrepreneurs to better meet customer needs and alter the way wealth has so far been consolidated.
Data economy poised for explosive growth
Snyder compared the current region’s emerging data economy to when the Internet first arrived on the scene 41 years ago. In the early years, the Internet was seen as a novel concept, but it soon sparked an uprising of entrepreneurship and experimentation that transformed every single industry.
That’s where Snyder sees the data economy going.
“I think we’re at this really interesting point in history where the same wave of economic benefit that the Internet created, this data economy is going to create,” Snyder said. “So the question is, is our region the one that’s going to capture this?”
It will come down to a few ingredients, Snyder said.
Entrepreneurial support resources and access to capital continues to grow in the region.
NC IDEA has made grants totaling $3.75 million this year alone, up from just $600,000 six years ago. And new funds supporting startups are constantly emerging, like the Triangle Tweener Fund led by Spiffy CEO Scot Wingo. Last week CED released its Innovators Report, which found that 222 N.C. startups raised $4.6 billion in capital last year, 600 percent more than 2016.
And RIoT’s own startup accelerator (RAP) has expanded across the state and into Virginia.
Progress made, but more to be done
But for the region to stay on top of the data economy opportunity could require local governments to make moves of their own. Snyder highlighted the town of Wake Forest, which deployed American Rescue Plan (ARP) funds for digital literacy upskilling of residents at the W.E.B DuBois School in an effort to move people from low-wage hourly jobs to high-wage tech positions and spark entrepreneurship.
Other cities in the region and state are following suit with their own projects, and it remains important for rural areas to gain gigabit broadband in order to fully participate in the data economy, Snyder said.
While many local governments focus on using ARP funds to catch up on maintenance projects like bridges and roads, Snyder compared it to bookstores that incorrectly decided to invest in refreshing their storefronts instead of the tech that eventually shuttered them and propelled Amazon—which began its corporate life as a bookseller—to worldwide domination.
“If [bookstores] had spent their money on investing in new technology and new delivery of books, Amazon may not have gotten to where they are today,” Snyder said.
During the State of the Region address, Snyder discussed what the metaverse could mean for the Triangle tech industry. The growing ability to simulate the world around us will likely give rise to increased analytics and changing social dynamics, he said.
“If you can really accurately simulate something, you can start to do analytics,” Snyder said. “You can say, what if we change this variable, or what if we do this, what if we do that, and you can start to predict what will happen and you can use that to inform your real-world decision-making.”
Altogether, Snyder believes North Carolina is well-positioned to excel in the new data economy. The university systems continue to bring in a pipeline of strong talent. In fact, NC State announced an increase of engineering and computer science enrollment of 4,000 graduates per year over the next five years. And people continue to relocate to the Triangle for the (relatively) lower cost of living, bringing talent alongside them.
The big challenge remains how the region will work to support its startups and entrepreneurs, Snyder said, and not just incentivize the Apples and Googles coming here.
“Will those big, entrenched players adapt as quickly as the entrepreneurs in this room?” Snyder posed as a question. “That remains to be seen, but we’re excited to be here. I think smart money is on the startups.”