Reopened for business? City money could help unlock an East Durham gateway
RDU unveils Terminal 1 redesign: Terminal 2, meet your Mini-Me version

Blackstone announces major grant initiative to support new businesses

Some of the most prominent figures in the Triangle and the state joined forces Monday morning for the announcement of a new type of entrepreneurial incubator

The launch of the Blackstone Entrepreneurs Network, held in Bay 7 of American Tobacco Campus, drew around 300 attendees. The network, described as the first regional integrated initiative, is being funded by a grant from the Blackstone Charitable Foundation. 

Steve Schwarzman, the co-founder, CEO and chairman of investment and advisory firm the Blackstone Group, predicted that the foundation’s investment would provide an enormous boost to the state’s economy. 

“In creating an ecosystem to support aspiring entrepreneurs, the Blackstone Entrepreneurs Network [is] expected to double the number of startups coming out of this region, attract venture capital at all stages, create approximately 17,000 jobs, attract over $800 million in venture capital, generate revenues of close to $5 billion and [have] countless secondary impacts on the local economy,” he said. 

“The potential is tremendous. The time is right, and the talent sitting in this room, [exemplified] by the heads of these universities and the Research Triangle, is really a remarkable group.” 

~ ~ ~ ~ ~

Schwarzman, whose son graduated from Duke Law School and whose brother attended UNC, caused some titters during his speech when he exaggerated the size of the grant by a factor of 1,000. He said the investment would be $3.6 billion. 

The grant, which actually amounts to $3.6 million, will be used in part to hire 15 “master entrepreneurs” who will help form 30 startup teams a year for the next five years. Many of the startups will involve research being conducted at UNC Chapel Hill, Duke, North Carolina Central and North Carolina State, which are all partners in the program. 

Gov. Beverly Perdue hailed the grant as an important investment in the North Carolina economy of tomorrow. 

“With academic leaders like those seated at the front of this hall today and business leaders like Steve Schwarzman, we have the ambition to do whatever it is we need to do in North Carolina,” the  governor said. “This investment today will ripple across our economy for years to come and create thousands of jobs and bring millions of dollars in new investments in technology to this great state. 

“It’s that creativity, that innovation and entrepreneurship, that commitment that we as a people have to stay strong on,” Perdue added. 

The Blackstone grant is a new example, she said, of the “generational commitment to education” that has powered and will continue to drive the state’s economic life. 

Perdue and U.S. Sen. Kay Hagan were among multiple speakers at the event to compare the grant to the creation in 1959 of the Research Triangle Park. The park helped lure innovative businesses to a state where tobacco and textiles had long been dominant industries and softened the transition to an economy in which information, electronics and biotechnology are increasingly prominent. 

“Investments in innovation and creativity are investments in our future economic vitality, and I greatly look forward to seeing these ideas grow and mature,” Hagan told the crowd. 

“I’m looking forward to great success and the rest of the world knowing about our young entrepreneurs and their entrepreneurial spirit,” added the legislator, who serves on the Senate’s Small Business and Entrepreneurship committee. 

~ ~ ~ ~ ~

U.S. Rep. Brad Miller of Raleigh — a Democrat like Perdue and Hagan — told the audience that he believed Blackstone’s grant would aid local researchers in taking their work to a new level. 

“We have lagged behind some other research centers in turning research ideas into commercial applications, into new businesses,” Miller said. “We've lagged behind Silicon Valley. We've lagged behind the Boston corridor. And a big reason for that is they’ve established support systems in those areas for scientists to try to figure out ... how to take those ideas from the laboratory to the marketplace. 

“This grant from the Blackstone Charitable Foundation goes a long way to filling those gaps — goes a long way helping to turn ideas into businesses.” 

Ginger Lew, a senior counselor on the National Economic Council and the head of the nation’s Small Business Administrator, took to the stage to praise the importance of new ventures like the ones Blackstone will nurture. 

“Startups play a key role in job creation in the United States, since young companies generate the lion’s share of net new jobs,” she said. “We also know that startups hit above their weight on innovation and will continue to develop the breakthrough products and services that allow the United States to compete and win in the global economy — breakthroughs in industries such as information technology, biotechnology and clean energy.” 

~ ~ ~ ~ ~

Monday’s announcement was co-hosted by Holden Thorp, the chancellor of UNC Chapel Hill; Charlie Nelms, the chancellor of North Carolina Central University; Richard Brodhead, the president of Duke University; and Randy Woodson, the chancellor of North Carolina State University. The boss of three of those academic leaders — Tom Ross, the president of the University of North Carolina system — attended, although he didn’t even get a seat on the dais, let alone a moment behind the microphone. 

Planning for the Blackstone Entrepreneurs Network began about a year ago. The network will be based at UNC Chapel Hill. Its first order of business is to recruit an executive director. She or he will then hire the 15 master entrepreneurs, who in turn will begin forming startup teams. 

Along with the four Triangle universities, the other main local partner in the new venture is the Council for Entrepreneurial Development

The Blackstone Charitable Foundation was founded in 2007. Initially, its work involved traditional corporate philanthropy such as grants to educational programs for disadvantaged children. 

That changed after the economic collapse, according to Christine Anderson, a senior vice president at Blackstone. In 2009, Schwarzman and other executives decided “we really need to do something to contribute to the rebuilding of the country,” Anderson said. 

One advantage of the pivot is that it plays to Blackstone’s expertise in advising past and present startups, said Amy Stursberg, the executive director of the Blackstone Charitable Foundation. 

“We could look at this project and really add value as a firm,” Stursberg said. 

Blackstone has already launched a program to teach college students about entrepreneurship. At least one other regional initiative such as the network that was announced Monday is being planned. 

~ ~ ~ ~ ~

The chancellor of NCCU believes that the entrepreneurial venture will provide a platform for biotechnology and biomedical researchers at his university to bring their work into the world. 

Nelms noted that about 300,000 square feet of scientific facilities have been built on his campus in the past 13 years, among them the Biomanufacturing Research Institute and Technology Enterprise

“Just taking BRITE alone, we’ve filed around four provisional patents within the last 12 months,” Nelms said after the event ended. 

Central is searching for a new dean for its business school, whom the chancellor hopes to have in place by September. “What we’re hoping to do then is to make entrepreneurship one of the tenets for the business school,” Nelms said. 

During his introduction of Hagan, Duke’s president said that there has been a surge of entrepreneurial activity among students and faculty at area universities. 

“People at nowadays don’t want to go to work for someone else,” he said. “They’d far rather create enterprise and have someone come to work for them. 

“But people need help to be successful entrepreneurs. We talk about self-made men and women, but every self-made man and woman needed a little help along the way,” Brodhead continued. “And I think that what’s so brilliant about the Blackstone Charitable Foundation’s concept is it’s supplying the mentors of the people with the experience to give you the help ... to go on and be effective. And it will enable our schools to be successful together in a way that none of us would have been alone.” 

NCCU already works with other area universities to conduct research and pursue other programs, Nelms noted in an interview. This partnership is different in that brings representatives of all four schools together for one initiative, the chancellor stated. 

“It’s a wonderful opportunity, not only for the university, but for the Research Triangle Park generally,” he said. 

Michaux, one of Durham’s state representatives — and also a Democrat — concurred. 

“It think it’s a very strong initiative, particularly as it’s going to be bounced from campus to campus,” he said. 

Startups are vital to America, Michaux commented, recalling that his father started a local real estate and insurance business in Durham nearly 70 years ago. “It’s put us into the mainstream of a lot of things,” the representative said. 

What’s more, Michaux added, businesses like Blackstone don’t begin fully fledged. As Thorp noted, the firm that now invests in a variety of operations that would if combined form the world’s seventh largest corporation by revenue started with just $400,000. 

“Unless you have the small startup, you don’t have the large startup,” Michaux said, calling small businesses the “life blood” of the economy. 

~ ~ ~ ~ ~

Norris Tolson, the president and CEO of the North Carolina Biotechnology Center, agreed that the Blackstone network represents a great opportunity to boost business in the Tar Heel State. 

“Out of this, you’ll get some fabulous new growth in North Carolina,” Tolson predicted. 

The Biotechnology Center was created in 1984 to help build the state’s biotech industry. Today, Tolson said, there are about 58,000 biotechnology jobs in the Old North State. Those workers have helped to create around 200,000 jobs that indirectly funded by biotech. 

With the help of the Blackstone Entrepreneurs Network, Tolson hopes to add up to 75,000 direct biotechnology jobs. That could push the state’s direct and indirect biotech job force to perhaps half a million people. 

“It’s going to take us to new heights of potential in this state,” the center’s leader said. 

The center already works with universities in the state, and its leader definitely plans to get involved with the Blackstone network. 

“We’re anxious to have them come out and see what we do at the center and link arms,” Tolson said. 

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.

Kevin Davis

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.)

Kevin Davis

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.

Verify your Comment

Previewing your Comment

This is only a preview. Your comment has not yet been posted.

Working...
Your comment could not be posted. Error type:
Your comment has been posted. Post another comment

The letters and numbers you entered did not match the image. Please try again.

As a final step before posting your comment, enter the letters and numbers you see in the image below. This prevents automated programs from posting comments.

Having trouble reading this image? View an alternate.

Working...

Post a comment

Your Information

(Name and email address are required. Email address will not be displayed with the comment.)