The Impact of Innovation...Charlotte Entrepreneur Growth Report

The Charlotte Entrepreneur Growth Report (CEGR) is the region’s first systematic evaluation of its diverse and rapidly growing innovation-driven entrepreneurship community. The initial 2015 edition was funded by the Charlotte Regional Fund for Entrepreneurship, a public-private, entrepreneurial initiative supported by the City of Charlotte and the NC IDEA Foundation. The report was researched and created through an effort led by Ventureprise in collaboration with the Business Innovation & Growth Council, and UNC Charlotte’s Urban Institute.

The report consists of primary and secondary research in four parts:

1. Survey of 248 young, innovative ventures in metro Charlotte;
2. Survey of community residents assessing entrepreneurial support;
3. Analysis of innovation and entrepreneur metrics for Charlotte, seven national benchmark metros, and four Carolinas metros;
4. Profiles of seven successful Charlotte area entrepreneurial companies.

The survey of companies revealed substantial revenue and employment growth among ventures that compete effectively in national and global markets. Strong support for the importance of entrepreneurs to Charlotte’s economic vitality was identified in the survey of the general population. Analysis of data sources highlighted Charlotte metro strengths and favorable national rankings while uncovering significant shortcomings for action.

The featured stories of seven very different ventures illustrate the breadth of Charlotte metro entrepreneurial success. InfoSense, the fastest growing company on the Charlotte Business Journal’s 2015 Fast 50 list, is noteworthy for its roots at UNC Charlotte and its successful engagement with Ventureprise including as a winner of the 2012 Charlotte Venture Charlotte.

The report provides baseline metrics that will be used to measure progress as the community undertakes initiatives to support our entrepreneurial ecosystem.

The Charlotte Entrepreneur Growth Report focuses primarily on Innovation-driven Enterprises (IDE). These businesses generally include these characteristics that differentiate them from small businesses:

• National and global markets
• Innovation as core competitive advantage: tech, process, business model
• Initial losses followed by rapid growth…or failure
• Often require external equity capital

The Innovation-driven Enterprises are vitally important to metro Charlotte because of their substantial economic leverage. Enrico Moretti (The New Geography of Jobs) documents that each high-tech job leads to five additional jobs in local services (lawyers, nurses, plumbers, etc.). The innovation sector multiplier is 3X the manufacturing sector multiplier.

The Charlotte Entrepreneur Growth Report (summary and comprehensive editions) can be viewed at https://ui.uncc.edu/data/partner/CEGR.

Key messages include:

• Charlotte per capita overall startup activity lags leading benchmarks; achieving the Austin rate would yield 700 additional Charlotte metro startups annually.
• Charlotte’s innovation industries include 11% of total business establishments, pay compensation of $71,707 which is 48% above metro average and deliver 2013 employment growth of 7.5% which is over twice the overall growth.
• Companies founded in 2000-2015 (“young”) in innovation industries report rapid growth:
  • 23% revenue growth in 2014, and expected 44% growth for 2015
  • 18% employment growth in 2014 and expected 23% growth for 2015.
• The 248 young innovative company survey respondents collectively are estimated to produce $1.3 billion 2015 revenue, equivalent to Charlotte’s tenth largest public company.
• Charlotte’s academic R&D lags benchmark metros
  • At Kansas City (CSA) academic R&D per capita, Charlotte would gain $280 million of annual R&D spending.
• Charlotte venture capital is considerably below almost all benchmark metros
  • At Atlanta venture capital per capita, Charlotte metro companies would gain $158 million of annual investment.