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April 25, 2011

Comments

clif

If the idea is to hire un(der)employed entrepreneurs, I like it.

Denny Clark

This is an affirmation in the grandest sense of the potential for the RTP area due to the continuous impact which the Council for Entrepreneurial Development (CED) has had on the region. It was founded some 20+ years ago by four very visionary folks, one of whom was Dennis Dougherty of Intersouth Partners who was an early commit to tenancy in the ATC and one it's current tenants, and is the CED.

Khalid

Its exciting to see the continuation of the entrepreneurial culture in the Triangle! There is plenty of talent in this area to help these startups succeed. Maybe we'll get to the point where the next IBM or Glaxo layoff is seen as an opportunity for a startup to add some great talent.

clif

Isn't anyone else amazed that with some of the biggest banks in the nation and institutional establishments in engineering and energy development we need a government partnership to beget growth industries? Making light where the sun don't shine.

Reyn

Master entrepreneurs is a contradiction in terms. Hope they aren't just consultants but more like Bull City Forward, a network that already exists.

Bull City Rising

I'm glad to see the gift from Schwarzman and Blackstone, just to be clear.

But I will note the truly exceptional level of press coverage and political attention this story received for the size of the donation. (And of course, BCR -- in the personage of Matthew Milliken -- was there, along with many local traditional media outlets, for the story.)

A $3.6 million grant to promote entrepreneurship is terrific. At the same time, based on recent philanthropy, it's not a stand-out figure in terms of major gifts to universities.

A search of the UNC web site notes the $3.5 million gift from J-school alum Reese Felts' estate to create a new-media newsroom and studies program there. A search of Duke's web site reminds of multiple eight-figure gifts for everything from new medical education facilities to rehab of several campus student facilities to the M.U.R.D.O.C.H. facility in Kannapolis.

None of those -- well, save Murdoch's flight of Kannapolitan fancy -- seem to have drawn anywhere near the attention from politicians at all levels of government as has Blackstone's $3.6 million gift to the Triangle.

Mind you, the goal is very ambitious, in terms of the number of jobs proposed to be created and the economic impact sized. Like Reyn may be implying here, we've also got efforts like Bull City Forward and the like, too, playing in this space.

My real question is, what's the secret in the sauce that has folks *this* excited over this announcement -- excited enough to get a senator, a governor, a Congressman, an Obama administration official, four university presidents and the like all together for the event?

Take $3.6 million and divide it over the five year program run; that's about $700,000 a year. Assuming a percentage of it as overhead for space, program coordination, operating expenses and the like. You're left with an interesting, but mathematically modest operation -- one which certainly doesn't seem to be exponentially, or even linearly, that much larger than efforts like CED, BCF, the incubators in American Tobacco, etc. ... none of which have, in part or in whole, drawn this level of engagement and attention.

Mind you, again, this isn't to criticize the gift horse.

I'm more curious: is there more to this than we're seeing that has generated what would appear to be, based strictly on the dollars, a disproportionate level of interest by officialdom? Or is it the interest and engagement of one of Wall Street's better-known firms, and better-known CEOs, that's the difference?

I'm certainly hoping the former -- in part because it's frustrating to see poli-critters of both sides of the aisle jump excitedly every time Wall Street shows a little leg, but in larger part because, if the effort really holds the potential that it seems some thinks it does, you'd love to see it be an economic game-changer for the Triangle.

(Disclaimer -- as always, speaking for myself, not any local institutions, and without any institutional foreknowledge of the matter at hand; see the About page for more.)

Bull City Rising

Annnd, just after I posted this, I noted that the N&O's coverage has the same meme:

"As a Wall Street titan whose private equity firm The Blackstone Group manages $150 billion in assets, Stephen A. Schwarzman is presumably no stranger to being fawned over.

But even Schwarzman seemed surprised by all the elected officials, university leaders and business executives who came to hear him speak Monday.

...

Blackstone's announcement drew an inordinate number of officials considering the amount of money involved."

http://www.newsobserver.com/2011/04/26/1154248/time-is-right-for-support-network.html


The N&O's take? Schwarzman's brand-name will carry clout in the circles of California and other VC areas and help them take notice of what's happening in the Triangle.

So perhaps this gift is more about the clout and the buzz, and less about the actual dollars?

The GronBear

The importance here, in my mind, is not about the size of the gift. The importance as BCR suggests is about the stature of the firm making the commitment.

Heretofore Blackstone has not been a philanthropic supporter of major initiatives in the area. Nor have they been a major investor in companies or real estate in the Durham area. That puts them on a long list of organizations and individuals with serious investment capital that just don't play in this area.

With Blackstone making a commitment in the Durham area it alerts other major investment banks, VC's, commercial banks, investors, philanthropists, Angels, etc. that something is happening here and they should investigate.

Durham can benefit largely from major corporations and investment firms taking note of the movement and growth of this area. Right now capital is flowing to major metros because it is considered safe bet. Blackstone making a commitment to the Durham area provides a good housekeeping seal of approval for many folks to put Durham on their list of places to consider investment.

Durham also has great potential to benefit from the broader Blackstone network - individual companies and the broader economy. Blackstone making a commitment to the Durham area raises the level of discourse about Durham internally and amongst peers. I think to show success Blackstone will continue looking for ways to grow and benefit the area. Nothing like follow-on investment to ensure your success. Other investors will likely think to themselves that if Blackstone wants it to be successful maybe there are opportunities for us.

The commitment was tied to the Startup America program. There are many other corporate and investment supporters of that effort. I would look for other opportunities to engage these potential partners and get them active and invested in Durham. Investors love a cluster and Blackstone has just stepped up to support the one growing here. Let's hope they are the first in a line of partners to grow and support the next generation of economic activity in Durham.

And on a final note, I think BCR makes a good point. The politicians showing up was a bit overdone. It was a great gift that has potential to benefit the area, but they were a little too eager to get in the photo-op with a Wall Street Titan.

Khalid

Let's hope this drop in the pond reaps benefits beyond its initial size and scope. This area has never been short on ideas but we have been short on capital. Whether it be private, philanthropic or public, our ideas have always been larger than our wallets.

I will forgive the politician's eagerness for the simple fact that they can use this investment in economic development pitches across the board. Corporations, startups, existing businesses, talented people, etc.

I am curious how they plan to create this ecosystem. I spent last summer interning for a Fund of VC Funds that was a public-private partnership between the State of Ohio Economic Development Office and an Ohio-based PE firm. They used their $50-100M fund to invest in VC Funds that were interested in opening satellite offices in Ohio and investing in Ohio-based early-stage startups.

I believe we some of the infrastructure in place in NC but I'm not sure how coordinated and intentional the ecosystem building process is here. We have several Golden Leaf-funded incubators, etc. but we could use more private funds so that a non-stop flight to Cali becomes a non-issue.

Another goal of the Ohio-based partnership was bringing native Ohio talent home. As much talent that we have in the Durham area, there is even more that has moved to the cities where the capital is available.

At the end of the day, I hope this initiative will strengthen our existing organizations and initiatives (CED, BCF, First Flight, etc.) while bringing in more resources to build up these current efforts and provide the stated tangential benefits.

Michael Bacon

If nothing else, it's refreshing to see politicians not out throwing public cash at yet another Fortune 500 company trying to get a bone thrown to NC, but feting the idea that NC can be a place where new companies grow.

For the last 20 years, the biggest economic stories in the area have revolved around such names as IBM, Lucent, Nortel, Glaxo, Merck, Compuware, Lenovo, and such. That's not a terrible thing, but in the end, a homegrown company is going to be much less likely to "pull a Dell," and much more likely to pump investment into NC.

crowd SPRING

We have several Golden Leaf-funded incubators, etc. but we could use more private funds so that a non-stop flight to Cali becomes a non-issue.

Kripaluji Maharaj

This would a great help to expand the small businesses to a greater extent.

Making Money From Home

That'll be great then. I think that'll help the economy of that place. Good thing they've considered it.

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