The Raleigh-Durham Economy Was Built on Big-Company Innovation. Can Startups Flourish There?
There are a few different names for the region in central North Carolina that includes the state capital of Raleigh, as well as its sister cities of Durham and Chapel Hill. Basketball fans know the area as ‘Tobacco Road’, a nod to both the region’s agricultural roots as well as the in-state sports rivalries between Duke University, The University of North Carolina, North Carolina State University, and Wake Forest University, all located within 100 miles of each other along Interstate 40, which bisects the state from east to west.
Geology buffs know it as the ‘fall line’, in reference to the waterfalls and rapids that are common in nearby waterways. The region, which happens to be located where the hilly, upland North America Piedmont and flat Atlantic Coastal Plain meet, has a rolling quality marked by short, steep hills and winding streams that can be markedly different from the flat lowlands in the state’s eastern counties.
The Research Triangle
But it is also ‘The Triangle,’ so named after the Research Triangle Park, a 7,000-acre office and research park located near the intersection of I-40 and the Durham Expressway, roughly equidistant from downtown Raleigh and Durham. Created in the early 1950s, the nonprofit entity that runs the Park was designed to keep the many Ph.Ds and other researchers coming out of the local universities in the area after graduation by attracting major research institutions to Raleigh-Durham to employ them. And the plan worked, as of today there are more than 170 tenants operating out of the Research Triangle Park, including IBM, Cisco, NetApp, GlaxoSmithKline, Microsoft, Merck, and many others working on everything from cancer research, to nano-technology, to semiconductor design. According to Park officials, more than 40,000 people come to work each day within its boundaries.
For more than 60 years, established companies like these have helped put Raleigh-Durham on the map as a center for innovation and economic development. But that model has been changing in recent years, favoring entrepreneurship and smaller, more agile companies over those of earlier generations.
“The Park was designed in the 1950s to be the new suburban research park,” Bob Geolas, the current CEO of the Research Triangle Park, told me on my visit to the Park. “It was very dynamic thinking at the time. Mom and dad would live in the suburbs. Dad would drive his car to the research park. And that worked great.” But driving from the suburbs to the office park has recently given way to a preference for more dense live-work developments, shared office spaces and less reliance on traditional commercial real estate.
Modern Day Innovation!
“How do we secure a place that’s not just a place of innovation, but a place of new startup innovation?” Geolas asked when describing the steps that the Park itself is taking to appeal to today’s workers, including smaller, more flexible facilities and more walkable amenities. “And we want to do it in a way that’s as big and significant as the creation of the Park itself was fifty years ago for America.”
Sure, the major players in the Research Triangle are still doing well, but they are no longer the only game in town for the Raleigh-Durham area when it comes to technology. Need proof? According to AngelList, the state of North Carolina is home to more than 1,100 technology companies as of 2015, including both startups and more established firms. This list includes everything from ShareFile, a cloud-based file sharing and storage service that is now a subsidiary of Citrix and was once named to the Inc. 500 list of Fastest Growing Private Companies; ChannelAdvisor, a now-public ecommerce platform that connects online retailers with new customer groups; and WedPics, a photo and video sharing app aimed at the wedding market. PlotWatt, based in Durham and backed by more than $4 million in funding, offers customized energy monitoring services to help commercial and residential customers cut their energy spending, while Raleigh-based KnowledgeTree maximizes sales teams effectiveness by shaping sales messaging.
The Triangle region these days ranks in the top ten municipalities nationwide in terms of venture capital investments, and more than a few homegrown companies are near-household names in the tech space, including open-source software pioneer Red Hat and analytics developer SAS Institute.
Still, despite the area’s long history as a part of the innovation economy (thanks to the Research Triangle Park), and its deep bench of available workers (thanks to the three major research universities in the Triangle), the North Carolina startup ecosystem is still in the growth stage, with a handful of local success stories but ongoing challenges finding funding, attracting talent, and growing self-sustaining businesses. Part of the problem is that the area itself is so large and spread out. According to the U.S. Census Bureau, the greater Raleigh-Durham-Cary Combined Statistical Area, which makes up The Triangle, encompasses eight counties with a combined population of more than 1.9 million people. The metro area consists of more than 4,500 square miles, including everything from Downtown Raleigh, Cary, and Apex to the east, to Durham and Chapel Hill to the west. That can make it tough for like-minded tech founders to find each other, let alone work together as part of a cohesive startup ecosystem.
Even just within the City of Raleigh there are seven or eight active submarkets, according to Derrick Minor, Raleigh’s Innovation and Entrepreneurship Manager, each with different types of companies and different populations living there. The challenge is not only getting these companies together, but getting them to participate in the entrepreneurship community that he is trying to build. The eventual goal, he says, would be to the benefit of everyone involved, including the regional economy, and would enable startups to better share talent, publicize mentorship opportunities, and discuss investor leads.
“I probably once a week or so find a company, a new company, and they’re decent sized—thirty, forty, fifty people, but still in growth mode—that I had never heard of before,” Minor says. “Those are good problems to have, sure, but it’s just about uncovering those guys and communicating those successes to everyone else that, hey, there’s stuff going on here.”
By Tim Sprinkle