Newcomers Help Fuel Rise of Raleigh’s Startup Community

The tech startup community’s emergence in Raleigh, NC, shows itself in different ways, such as the expansion of co-working space or a company that lands investment from an out-of-state venture capital firm. At VergeNC this week, that progress was apparent in a show of hands.

Will Hardison, host of the monthly event for entrepreneurs and startups, asked how many of the nearly 100 attendees are not originally from Raleigh. Nearly every hand in the room went up.

Much of the change happening in Raleigh comes from people who move to the city and start businesses here, said Derrick Minor, the innovation and entrepreneurship manager for the city of Raleigh. Those companies weave their ideas and their technologies into the fabric of the growing startup community in Raleigh, as well as the rest of the Research Triangle.

Minor was the featured speaker for the event, hosted on Tuesday at Red Hat’s (NYSE: RHT) Raleigh headquarters. VergeNC is the North Carolina branch of Verge, a network of entrepreneurs and business leaders originally formed in Indiana to help foster startup communities outside of the country’s major innovation hubs, like Silicon Valley and Boston.

Minor’s job, part of Raleigh’s Office of Economic Development, is to help startups launch and grow in Raleigh. The role involves meeting with a lot of entrepreneurs and connecting them to resources that can help, such as potential investors or business partners. It’s a role that has grown as the city grows.

On average, 188 people move into Wake County every day, according to county figures. Those incoming workers are balanced by 148 people moving out, which means a net migration of 40 new people each day. More than half of the people moving into Wake County come from out of state and most of them come from the Northeast, according to the county. Wake County’s population surpassed 1 million in 2014. The county projects population will double by 2054.

Startups aren’t new to Raleigh. Before SAS became a global analytics giant, the company was a startup based on research started at North Carolina State University. But a startup community takes time to grow and develop, Minor said. Silicon Valley has evolved over decades. Minor pegs Raleigh’s startup community in its present form at about four years old. But he added that a lot has happened in the last three years. Co-working space in Raleigh was almost nonexistent four years ago. HQ Raleigh, which first opened its doors to co-working startups in 2012, recently broke ground on a 43,000-square-foot expansion. More startup space is on the way. A former Winn-Dixie distribution center just north of downtown Raleigh is under renovation. Called Loading Dock, the 7,800 square feet of office and co-working space is scheduled to open this winter.

The Research Triangle still lacks the investing firepower of larger and longer-running startup communities, Minor said. That’s starting to change as local companies draw interest from out-of-state investors. As an example, he mentioned Raleigh software startup Pendo, which last month raised $11 million in a Series A round led by Waltham, MA-based Battery Ventures. Out-of-state investors who have put dollars into a Triangle company will consider investing again in other North Carolina companies, Minor said.

Though Minor works for the city, he says his work extends beyond Raleigh’s borders. The success of one Triangle city does not come at the expense of the others, he said. College basketball rivalries aside, Raleigh, Durham, and Chapel Hill are not competing against each other.

“When people [outside of North Carolina] talk about Raleigh, or Durham, they’re really talking about the entire region,” he said.

The VergeNC event also included five-minute pitches from three startups:

BrewPublik. The Charlotte, NC-based startup, which recently expanded to Raleigh, offers a subscription-based service that delivers craft beer to people’s homes. BrewPublik developed an algorithm that selects beer according to a person’s personal tastes.

EmployUs. Raleigh-based EmployUs has developed an app to connect job seekers to job leads, through trusted referrals. When someone lands a job, the person who made the referral earns a payment that the company says averages $3,000.

Papilia. The Raleigh startup developed an app that helps users plan various aspects of travel—everything from what clothes to pack to which sights to see. Papilia’s business model involves partnerships with hotels and chambers of commerce.

Photo of Raleigh skyscape c/o Flickr user Patrick Connelly via a Creative Commons license.

Frank Vinluan is editor of Xconomy Raleigh-Durham, based in Research Triangle Park. You can reach him at fvinluan [at] xconomy.com Follow @frankvinluan

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