Charlotte’s Tech Scene Faces Promising Future But Challenges Remain
Posted on July 31, 2012 by Steve Kwon
When you think of hotbeds for tech innovation, Silicon Valley, Boston and Austin come to mind. Companies such as Facebook and HubSpot along with events such as the annual South by Southwest conference have bolstered the reputation of these places in respect to tech entrepreneurship. Charlotte and tech entrepreneurship? The two seem mismatched to one another but recent efforts by individuals passionate about entrepreneurship and the long-term success of Charlotte have broken down barriers. The groundwork is being laid for the potential to have an exciting tech and startup culture in Charlotte.
The main organization behind this effort in Charlotte is Packard Place. Founded in 2010, the entrepreneurship and innovation hub invests heavily in growing the tech community in the city. According to Adam Hill, Director at Packard Place, the launch of RevTech Labs is one of the key ways that the organization is investing in the tech community. The organization addresses the problem of insufficient early stage funding for Charlotte’s tech startups. RevTech Labs has adopted seven tech startups in a three month program, focused on community, mentorship and connections to investors and customers. Hill says two of Packard Place’s earliest tenants, DealCloud and MailVU have shown tremendous potential and are helping to mentor companies involved with RevTech Labs.
These efforts mirror similar ventures in cities such as Durham, NC which has become the tech entrepreneurship hub of the Triangle. Durham has transformed itself with its support of the tech industry. Not long ago, downtown Durham turned into a ghost town as huge tobacco companies shut down production. Despite economic challenges stemming from the 2008 financial crisis and recession, Durham seems to have turned its previous economic malaise into opportunity. Risk-taking entrepreneurs turned rundown buildings into low-cost places of business and the city’s downtown area gentrified, becoming a more attractive place to live.
As Durham’s penchant for innovation continued to grow, organizations such as the American Underground, which provides resources and a central place to gather for Durham’s entrepreneur community, helped to fuel the entrepreneurship culture. Michael Goodmon, one of the Underground’s founders and a vice president of real estate for the Capitol Broadcasting Company, which owns American Underground, believes that the “Underground threw gas on a fire”. As people became more interested in tech entrepreneurship within Durham, organizations such the American Underground helped to accelerate the process. “As the fire has grown, we’ve become home to many different groups making Durham as entrepreneurial-centric as it can be,” Goodman says. “There’s an amazing sense of community in Durham that attracts talented, well educated people who want to build something here.”
Kacy Fortner, the first hired engineer for Durham-based startup Adzerk, is attracted to the sense of community that Goodman talks about. “It’s a really awesome place to hang out and meet new people,” Fortner says of the Durham community. “Really smart, innovative designers and developers.” Adzerk was one of the first tenants for the American Underground and although the company outgrew the space, the tight knit culture of the Underground helped Adzerk in its early days. “Every other day, for the first three months, we had someone stopping in the door and introducing themselves to us, ” Fortner says of his experience at the Underground. “All types of angel and venture capital investors walking the halls…it became a central place for entrepreneurship meetings.”
Can Charlotte have a thriving tech industry?
With its neighbors in the Triangle experiencing significant success in growing its tech industry, will Charlotte be able to make similar strides? David Rizzo, president and CEO of entrepreneurial catalyst NC IDEA and former Charlotte entrepreneur, sees promise. “I think Charlotte has a lot of the ingredients in terms of an educated workforce and people who are interested in entrepreneurship,” Rizzo says. “If Charlotte is able to import research technology and intellectual property based technology into the community, it has all the ingredients for successful entrepreneurship.”
Packard Place’s Hill echoes some of these sentiments. “There is good talent in the city…it’s an inexpensive place to start a company and a great place to live,” Hill says of Charlotte. “Its much cheaper to start a company here and that’s a real value for tech startups in the city.”
However, Charlotte’s lack of a well-established tech culture and network present problems. “Charlotte’s challenge is the lack of the infrastructure in terms of research universities and corporate research,” Rizzo says. “For example, you can’t drive down the street to Duke…there are a lot of research scholars, intellectual property and entrepreneurship that comes out of the universities.”
Rizzo mentions that a very fragmented population and lack of entrepreneurial density are obstacles for Charlotte and North Carolina as a whole. The lack of an established culture hurts the community’s willingness to take risks.
“The community as a whole in Charlotte needs to learn to accept failure,” Hill says about what needs to happen for Charlotte’s tech community to thrive. “Tech startups are usually very risky and by definition have a high potential for failure”.
“What you see in other tech communities across the country is an acceptance of failure…Charlotte doesn’t really have that yet.”
The importance of the tech industry to Charlotte
The importance of a successful tech industry to Charlotte’s future cannot be understated. The 2008 financial crisis and the volatile nature of the banking industry proves that Charlotte needs other successful industries besides banking.
“In spite of all the things that have happened in the last decade, the tech industry is still a growth industry,” Rizzo says. “I think its critically important.” According to Forrester Research, the U.S. tech market is projected to grow by 7.5 percent this year and even faster in 2013.
If Charlotte is able to take advantage of the tech wave, that means more high-growth companies and high-skilled jobs for the city. With more successes, Charlotte could establish a solid reputation for tech entrepreneurship. More companies, even those that are not part of the tech industry, will want to become part of the infectious culture. This could create a vicious cycle. You can see how a growing and successful tech industry could secure Charlotte’s economic future for the next decade and beyond.
The good news for Charlotte is that initiatives such as Packard Place will help foster a tight knit entrepreneurial culture while Charlotte’s business leaders are becoming more aware of the need for encouraging tech entrepreneurship.
Adam Hill asserts that tech entrepreneurship in Charlotte is growing rapidly. “There are 30-50 early stage tech startups in the city that I’m aware of, ” Hill says about the state of the tech industry in Charlotte. “In the next 12 months, I think you’ll see a dozen or more tech startups raising a total of $10M+ within the ecosystem here.”
Rizzo identifies a positive trend as well. According to Rizzo, about two-thirds of NC IDEA grants go to the Triangle while the rest goes to other parts of North Carolina. “Recently, Charlotte has been the predominant part [of grants given] out of the Triangle,” says Rizzo.
Packard Place needs to be successful for the tech industry to skyrocket here. Creating a culture similar to the American Underground will mean more early stage and angel investors connecting with startups. It will provide a higher chance of accidental encounters among smart and driven people, allowing for more collaboration and ideas.
Charlotte is also not on its own. “For any of us to be mentioned in the same breath as Silicon Valley or Boston, North Carolina needs to show as many successes as possible,” Goodmon says. “Looked at that way, the Triangle is key to Charlotte’s success and Charlotte is key to the Triangle’s success.”
“We’re complementary when it comes to central themes such as capital, access to talent and an ongoing supply of ideas. We need more collaboration because we have things to share.”
Want to learn more? If you want to get involved in the entrepreneurial community in Charlotte and across the state, the organizations listed below are excellent resources.
Packard Place is located in the heart of Uptown Charlotte, across from the future location for Romare Bearden Park. We are becoming the hot spot for entrepreneurs, as we are the first true home in Charlotte for entrepreneurs built by entrepreneurs. We have space for meetings and events and are currently leasing out space for high growth, entrepreneurial businesses.
Telephone: 704.248.5660 Address: 222 South Church Street, Charlotte, NC 28202
The American Underground is an entrepreneur’s dream — offering a unique mix of world class amenities and clustered resources positioned in the heart of one of the nation’s best places to live and work. For our tenants, the Underground is a place to enjoy the high energy of a start up campus, the resources of an international research and business destination, the amenities of a top flight office complex and the culture of a dynamic downtown.
Telephone: 919.433.1566 Address: 318 Blackwell St Suite 150, Durham, NC 27701
NC IDEA is a 501(c)(3) not-for-profit organization created to serve as a catalyst for young, high-growth, technology companies in North Carolina. We help these innovative companies mainly by providing early financing in the form of grants.
Telephone: 919-941-5600 Address: 334 Blackwell Street Suite B-015, Durham, NC 27701
Adzerk started as a proprietary solution for two ad networks, The Lounge and Ruby Row, run by our founder James Avery back in 2008. In 2009 Adzerk was spun out as a separate company and in 2010 went into beta with publishers including StackOverflow, StatSheet, and other great sites. In 2011 we raised money from an incredible group of investors and have continued to grow and expand.
Telephone: 1-866-786-7925 Address: 303 South Roxboro St. Suite 30, Durham, NC 27701