Although existing entrepreneurial companies in Charlotte are seeing substantial revenue and job growth, an in-depth study of the state of entrepreneurship in Charlotte finds the area dramatically lags benchmark cities in inventions, venture capital and research dollars.
The study, the Charlotte Entrepreneurial Growth Report (CEGR), was commissioned by the Charlotte Regional Fund for Entrepreneurship and conducted by Ventureprise, the Business Innovation & Growth Council and the UNC Charlotte Urban Institute.
Among the report’s findings:
- Charlotte ranked 25th out of the 40 largest U.S. markets in startup activity.
- The $40 million in academic research and development funding in Charlotte for fiscal year 2013 was far below other benchmark cities: $17 per capita. Kansas City had $137 per capita, Tampa $163 per capita. The Research Triangle Park had $1,174 per capita.
- Like the ranking for academic research and development, the venture capital new firms receive in Charlotte is 1 percent of Austin results and less than 3 percent of Research Triangle investments.
- Charlotte averaged $3 of venture capital investment per capita, which accounted for just 0.02 percent of venture capital funds invested nationwide from 2011 to 2014—a number the report called “shockingly low.” Charlotte’s venture capital investments were far below the second-lowest benchmark city, Tampa, which received $18 per capita, and Research Triangle Park, which received $119 per capita of venture capital funding.
One reason for the lack of academic research and development funding in Charlotte is the absence of a medical school, the report said. Austin’s Dell School of Medicine opens to students in 2016, and soon Charlotte will be the only one of seven national benchmark metros without a medical school. Medical schools are magnets for federal grants, which provide major funding for research and development.
The report includes survey responses from nearly 250 entrepreneurial companies in the Charlotte metro region. Together the companies employ 2,350 full-time workers and anticipate $1.3 billion in 2015 revenue—comparable to the revenues of publicly traded Piedmont Natural Gas or Coca Cola Bottling Consolidated. The surveyed companies saw 23 percent growth in revenue in 2014 and by mid-2015, when the survey was conducted, they reported that they expected to see a similar increase in employment for 2015, which could have resulted in more than 600 new jobs. These jobs are well-paying, with salaries (average of $61,300) well above the metro average ($48,300).
A separate survey in the study, also in 2015, gauged public awareness of and attitudes about Charlotte’s entrepreneurial climate. The survey found that Charlotte-Mecklenburg residents (81.8 percent) recognize the importance of start-up companies to Charlotte’s economy and many (63 percent) said they would recommend to a young person to pursue a career as a small business owner or entrepreneur.
The report also looked at how Charlotte compares to other cities on a number of metrics related to innovation, research and development, and venture capital investment. The Milken Institute’s Best Performing Cities report measures nine outcomes, including employment growth, wage growth and participation in the technology sector. In 2014 Charlotte ranked 23rd out of 200 metros, ahead of Atlanta (50), Kansas City (77) and Tampa (86). (For 2015 the Charlotte region moved up to 13.) But in 2014 Charlotte ranked far behind (99) on the high-tech location quotient, confirming that the region’s economy is not driven by the technology sector as is a city like San Francisco.
The benchmark cities chosen include cities that are comparable in terms of economic developers (Nashville, Kansas City) and other cities that are aspirational, such as San Francisco, Raleigh-Durham, with expansive entrepreneurial ventures, a large number of innovative businesses and vast investments in entrepreneurial and innovative ventures. Charlotte trails those metros in most comparisons. The report indicates a need for action by businesses, investors and the community to strengthen the regional environment for innovative entrepreneurial growth.
Because data cannot tell the entire story, the report highlights successful entrepreneurial companies, illustrating the work that has led to successful ventures in Charlotte. Those companies range from human resources to software to IT services. The stories show how Charlotte entrepreneurs compete effectively in national and global markets, while creating high-quality jobs locally. The company stories are available online at the UNC Charlotte Urban Institute’s regional data portal.
Ventureprise is a nonprofit organization affiliated with UNC Charlotte that serves as a venture development organization for the university and the Charlotte region. The Business Innovation & Growth Council is a nonprofit, membership-based organization to help develop high-impact entrepreneurs enlarge their business. The Charlotte Regional Fund for Entrepreneurship, which commissioned the study, is a nonprofit, public-private initiative between the city of Charlotte and the Foundation For The Carolinas.
Download the summary report and the full report below.
Summary Report Comprehensive Report
