New Venture Capital Fund May Be Part of NC Commerce Remake

Source; Lee Weisbecker, Triangle Business Journal

The establishment of a state venture capital fund is on the McCrory administration’s agenda for revamping North Carolina’s approach to economic development.

Commerce Secretary Sharon Decker, in a recent public appearance, confirmed the initiative, but she offered few details, including the targeted size of the fund or the organizational structure for raising the capital or investing it in startups.

“We haven’t set a target,” says Decker, who added that administration officials in recent weeks have discussed issues with people in the venture capital and related sectors.

“I know that we bent her ear about the need for early-stage investment,” says Andrew Schwab, director of the Research Triangle Park-based First Flight Venture Center, the home of about 30 startups.

Schwab says Decker recently toured First Flight but didn’t offer information about the administration’s plans for a VC fund.

In fact, Decker spokeswoman Beth Gargan says the VC project and similar initiatives will remain on the sidelines as the administration focuses on winning legislative authority for the changes it wants to make.

One piece of that plan, encompassed in Senate Bill 127, sponsored by Jacksonville Republican Harry Brown, has passed the House and is before a Senate appropriations subcommittee.

That bill would divide the state up into “prosperity zones,” abolish existing regional economic-development commissions and launch a study commission to look into bringing many functions of the Commerce Department, community colleges and other agencies under one umbrella.

Gargan says the administration considers the bill a starting point for the changes it wants to make.

Other states have already gone through similar changes, including the state of Indiana, which set up its own venture fund, called Elevate Ventures. It’s known that North Carolina officials have examined the Hoosier model.

The nonprofit Elevate Ventures rolled a number of existing angel investor groups under its roof and also set up its own fund, taking on limited partners among banks, drug companies, chambers of commerce, real estate groups and other contributors.

The end result was a $34 million-plus fund with $3 in private capital for every $1 in public funds. During 2012, Elevate invested $6 million in 13 Indiana startups, according to its first annual report.

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