Early-stage startups in the Charlotte area now have a new potential source for funding: Innovation Fund North Carolina, a pilot program planning to award up to $1.2 million in grants and loans to high-tech startups around the state over the next year.
Dozens of entrepreneurs gathered at uptown startup hub Packard Place on Tuesday afternoon to hear about the initiative, which is a partnership between Catawba Valley Community College, Innovation Fund America and the Ewing Marion Kauffman Foundation, which is based in Kansas City, Mo., and is dedicated to entrepreneurship.
The fund is directed at startups involved with agriculture, advanced manufacturing, health care and information technology/communications.
“We know that in North Carolina, the future of our economy is going to be dependent on new business startups and small business,” said Garrett Hinshaw, president of Catawba Valley Community College.
To apply for funding, startup applicants should be in the “pre-seed” stage, meaning they’ve exhausted their personal resources, don’t have angel investors or venture capital backing, and now need capital to grow. They should also have plans for long-term growth in the state.
The awards consist of $25,000 grants and up to $100,000 in non-recourse loans.
A non-recourse loan “means that if a company fails, they’re not obligated to pay back that money,” says Jon Robinson, the manager of entrepreneurship programs at the Kauffman Foundation. If the startup is successful, the founder can pay back the loan with no interest.
The grand plan is for the fund to be a revolving door of sorts: Successful startups repay their loans, and that money is then used to help another high-potential startup get off the ground, Robinson said.
There will be three application cycles per year. Innovation Fund North Carolina will begin accepting applications for the first cycle Sept. 20.
Successful applicants must agree to milestone-driven plans and intensive mentoring programs.
IFNC is based on the successful model of the Innovation Fund, a regional fund through Lorain County Community College Foundation in northeast Ohio.
Since it started in 2007, the program has raised nearly $100 million for 120 startup companies, Robinson said. And those businesses have created 300 jobs with an average salary of $47,000.
“Those are impressive economic numbers,” Robinson said.
In May 2012, the Kauffman Foundation and Lorain County Community College partnered to create Innovation Fund America, a nonprofit designed to develop similar programs around the country.
The North Carolina program is the first of threeto roll out and is the first statewide initiative.
Initially, Innovation Fund America wanted to test the program in the Catawba region, a more rural environment with, ostensibly, less capital and fewer resources for high-tech startups, Hinshaw said.
But he pushed to make it a statewide effort.
Hinshaw plans to work with North Carolina’s other community colleges and universities to raise the $1.2 million through partners and private investors.
“The community college system was developed for workforce development,” Hinshaw said, “and this is another strand of our comprehensive mission to change the economic development landscape in North Carolina.”
The recipients of the first round of funding will be announced in December, Hinshaw said.