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The Next 100 Startups: Why We’re Advocating for the Venture Winston Grants

The City’s new economic development focus areas include “Making Winston-Salem the best place in N.C to start and grow a company” through growing Winston Starts and Flywheel, creating an aerospace innovation hub, and leveraging the global network of Venture Café to help connect startups with capital. This plan accomplishes all those goals and makes significant progress toward starting 250 thriving businesses.

We believe we need a dual strategy to achieve that milestone – stronger support for emerging and current startups in WS, and an import strategy to create density, increase sophistication levels, and attract new talent. This plan only addresses the import strategy.

SITUATION ANALYSIS:
Our current startup landscape is shallow and wide. Our three accelerators are producing fewer than 20 new scalable startups a year and our incubator is only in its second year of operations, having yet to graduate a significant number of startups from its early cohorts. Our ecosystem is still young and ill-defined – we have few truly investor-ready companies, and fewer still Series A companies. We have yet to see a successful exit.

At this point in our ecosystem’s lifespan, it’s time to find focus areas and declare our major. Venture Cafe WS proposes the following industry verticals that are future-focused, build on existing assets and are distinctive from other NC metro areas.

The Future of Flight
The Future of Healthcare
The Future of Augmented/Virtual Reality
The Future of Connectivity
The Future of Cybersecurity

We will strategically recruit startups in these sectors to quickly create emerging innovation hubs in Winston Salem. Within five years, we could have 20+ companies in each sector coming to our city, with some of them deciding to stay. If we replicate the success of the Arch Grants, we will retain 90% of recruited talent, augmenting our workforce and providing much-needed tech skills to our startup ecosystem.

With increased density comes increased deal flow, and we fully expect outside investments to increase exponentially in the next five years. We would like to see at least $5 million in outside investment by 2025.

To create transformation, we need a tool that will deliver short term results, jobs and revenue, and attract outside investors. We recommend that WS adopt and fund the Arch Grants model from St Louis. Arch Grants is a nonprofit organization that is building a new economy by providing $50,000 equity-free grants and pro bono support services to entrepreneurs who locate their early-stage businesses in St. Louis. Through its competitive Global Startup Competition, Arch Grants retains and attracts the most innovative entrepreneurs to the St. Louis region, 20 per year.

The model has impressive and proven results over seven years of operations:

  • Since 2012, they’ve awarded over $7 million in grants to attract and retain more than 150 early-stage businesses in STL.
  • Received nearly 5,000 applications from 44 states and more than 80 countries
  • Created more than 1400 jobs, generated $135 million in revenue, attracted $173 million in follow-on capital
  • 74% of companies are owned or co-owned by women, veterans, immigrants or people of color
  • Companies receive wrap-around incubator-type services in addition to the non-equity, non-dilutive grants
  • Startups are required to locate 51% of their operations and at least one co-founder in STL for one year – and 90% decide to stay beyond the one-year requirement
  • Arch Grants are industry-agnostic. Venture Winston Grants would give preference to startups in our Future Business Sectors and leave space for synergistic startups
  • The Venture Winston Grants will also strongly encourage grant recipients to give back to the WS startup ecosystem by donating 1 percent of their profits to non-profit entrepreneurial support organizations and/or a local investment fund, creating a virtuous circle and ongoing funding source
  • Arch Grants has attracted national media to St. Louis and accelerated culture change. What was once described as a wasteland is now widely acknowledged as a startup hub.
  • Some applicants who were not awarded grants moved to St Louis anyway after learning about the high level of entrepreneurial support and affordable cost of living. The grant application itself serves as an economic development tool by targeting promising startup founders.
  • The Venture Winston Grants will also be available to local startups, a lesson learned from early experience at the Arch Grants.
  • Applications from are MWBE founders will be weighted heavily in selection criteria

IMPLEMENTATION:

  • Venture Café WS will lead the global competition process leveraging our global reach throughout North America, Europe, Asia Pacific and Australia.
  • Winston Starts can lead the incubator/support services with their established list of experts and mentors. Startups can be housed at Winston Starts and/or an airport-based aviation incubator called HangarOne.
  • WS Chamber of Commerce will house and administer the grants through their non-profit foundation, ensuring all donations are fully tax-deductible.

FUNDING SOURCES:
The Arch Grants initiative is funded by Foundations, State and Global Technology Corporations, Corporate Philanthropy, Sponsors, City and State Governments, Universities and Wealthy individuals. The annual budget is $2 million, $1 million of which goes directly to the recruited startups. Other organizations like the Missouri Technology Council have made large donations and Arch Grants has a multi-million dollar endowment. You can see the donor list here.

We propose a similar public-private partnership here in WS involving the City of WS, Forsyth County, The WS Chamber of Commerce as well as private donors. Ideally, we’d like to see a 50-50 split in funding but are open to possibilities as well.

WHAT YOU CAN DO
We’re working on funding now, and we have the private money pledged. Now we’re working with City and County officials on this idea. Please let them know you support the Venture Winston grants, that you want to see the next beautiful leap here for startups.

Stay tuned. Lots of things happening. Thanks for your support!