An ambitious, technology-driven economic development initiative would gain up to $1.425 billion in endowment funding from the Republican-sponsored Senate version of the 2023-24 state budget.
The nonprofit NCInnovation has as its primary goal the commercialization of research developed and funded within the UNC System, utilizing regional hubs with a rural North Carolina emphasis.
Both Democratic Gov. Roy Cooper's state budget recommendation and the Republican House state budget proposal support NCInnovation, but with a much lower $50 million dedication.
“North Carolina is a national leader in research and development funding, but data shows we lag competing states in commercializing that research and turning it into jobs,” said Bennet Waters, president and chief executive of NCInnovation.
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NCInnovation has several high-profile members on its board of directors and management team.
Chairman is Kelly King, the former BB&T Corp. and retired Truist Financial chairman and chief executive. Board members also include Stan Kelly, retired president of Piedmont Triad Partnership, UNC System President Peter Hans and N.C. A&T Chancellor Harold Martin.
“I’m grateful to North Carolina’s legislators for their many months of work,” King said in a statement.
“NCInnovation’s model will be a gamechanger for North Carolina, especially our rural areas that have the human talent, but need support to press forward on commercializing research outputs.”
Waters said the nonprofit was created by “some of the state's top business minds to enable a public-private partnership."
“Our objective is simple: provide local support for talent and research to create jobs and economic opportunities for all North Carolinians.”
NCInnovation plans a data-center approach with the applied research "toward actual market needs,"said Sen. Brent Jackson, R-Sampson, during the May 15 unveiling of the GOP Senate state budget.
"It will help generate homegrown industries and companies to stay in North Carolina and hire North Carolinians for decades to come."
Senate leader Phil Berger, R-Rockingham, said during the presentation that the initial funding request for NCInnovation was $250 million a year for 10 years.
"Our thinking was that it was better to go ahead and endow (NCInnovation) as opposed to an annual appropriation," Berger said.
Senate budget writers hedged their funding pledges by placing limitations on how much can be used annually, along with stringent investment and compliance requirements.
There have been similar healthcare commercialization initiatives in North Carolina, in particular involving academic medical centers and medical schools, such as Atrium Health Wake Forest Baptist and Wake Forest University School of Medicine.
NCInnovation has signed memorandums of understanding with four UNC System members: East Carolina University; North Carolina A&T State University; UNC Charlotte and Western Carolina University.
According to the GOP Senate budget bill, NCInnovation would be charged with "developing a network of regional innovation hubs, to incentivize applied research opportunities, and to support the commercial growth and scale of emerging technologies.”
The nonprofit would enable North Carolina to better compete with other states for the ability to commercialize innovations resulting from in-State, world-class educational and research entities, according to the language.
"North Carolina will benefit from similar efforts to accelerate commercialization of theoretical and applied science and inventions stemming from the efforts and activities of its educational facilities and other resident research entities,” according to the budget bill.
According to a 2022 National Commission on Innovation report, North Carolina “is a well-recognized leader in research and development.”
“But the outputs of that R&D base don’t measure up to its size. Companies that may have been born in North Carolina move to other states to grow in more sophisticated innovation ecosystems.
“Failure to nurture an innovation ecosystem withholds benefits from a state or transfers them to other states,” according to the report.
“The same multiplier effect applies: one missed opportunity withholds the follow-on jobs and economic benefits that might be created in the future.”
Jackson said the reasoning for such a major funding push for NCInnovation is the increasing challenge of creating and retaining jobs in rural North Carolina.
"We need to extend economic vitality to every corner of this state," Jackson said. "To do so, we must take a visionary approach."
"Simply put, we are leveraging our state surplus to help develop homegrown innovations. It's a bid to improve North Carolina's competitive position relative to peer states."
Jackson said NCInnovation represents the offspring of a recent review of North Carolina's innovation ecosystem by a national economic research firm.
"The data revealed good news and bad news," Jackson said.
"The good news is that our population centers are landing major economic-development projects. North Carolina is an absolute powerhouse on research and development funding" at $13 billion annually.
"However, the outputs of that R&D funding doesn't measure up to the size of our research base," Jackson said.
NCInnovation already has several high-profile economic and educational supporters.
Jamie Dimon, chief executive of JPMorgan Chase & Co., said in a statement that “with business all over the world, we understand that innovation and scale begins locally, which is why we thought it especially important to support North Carolina’s entrepreneurial development through NCInnovation.”
JPMorgan, the nation’s largest bank by asset size, has been on a major Chase branch and operational push into the Charlotte and Triangle region in recent years. So far, it’s only committed to one Triad branch in Greensboro.
“This model holds great promise to expand North Carolina’s technology commercialization and serve as a blueprint to expand American innovation,” Dimon said.
Ward Nye, chairman, president and chief executive of Martin Marietta, said that with “a global race under way for applied research products with commercial applications, NCInnovation’s model seeks to give North Carolina a competitive edge.”
“That may well determine our future growth trajectory.”
Can it work?
NC Innovations can play a notable role in helping rural areas of North Carolina become more relevant locations for advanced technology operations and advancements, said Michael Walden, an economics professor at N.C. State University.
“There is no question that rural areas in North Carolina— indeed, in most states — have lagged behind urban areas in economic growth, particularly growth in emerging sectors like technology,” Walden said.
“The question is how to change this. The legislation is based on the notion that public programs can guide economic investments to rural areas.
“Certainly if the new program is able to help develop the training for local labor to attract these firms, then that is a step forward,” Walden said.
However, Walden cautioned that as rural residents gain expertise in advanced technologies, "what would prevent the trained labor from moving to other areas— particularly metro areas?”
“There is more than labor availability needed to attract firms, such as those in the tech industry. High speed internet is at the top of the list. Also, tech firms often like to locate near similar firms for the valuable interactions that can occur.”
"Hopefully, the new program will take a comprehensive approach to economic development in rural areas,” Walden said,
“There certainly are numerous positive features of rural regions to promote— such as much lower cost housing, access to open space, less traffic, and a quieter lifestyle compared to the big cities.”
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