An insider’s view on how to fix the Charlotte startup ecosystem

(1) What’s the problem?

(2) What are the causes of it?

(3) How do we solve the issues?

Here goes. What’s the problem? 

Charlotte has a drastically underdeveloped startup ecosystem. Very few startups, very few successful ones, very little funding, very little customers interested in startups, etc.

What are the causes of the problem?

(1) The “TechCrunch” effect

I talk to a lot of people about starting companies, some casually, some seriously. Eventually it almost always gets to a point where they start brainstorming with me on where to get funding. These people are into technology and they read TechCrunch and Venture Beat and some VC blog like USV or whatever.

The problem is this isn’t a normal way to start a company. Especially not in Charlotte. Get a customer, then get 10 customers. Be a cockroach, as AirBnB was once called. Just beat down the doors until someone will pay you money for your product. Then you realize that you have something but to scale quickly you need an influx of capital. That’s how you get venture money in a town that doesn’t invest in ideas. Stop thinking that you’re going to get a million-dollar seed round pre-revenue. Ain’t gonna happen in Charlotte. Get customers.

(2) Small startup founder talent pool

There’s brilliant people that have started companies in Charlotte. I’m not knocking them. What I mean is that most of the talent in Charlotte is locked up in banks at secure high paying jobs and isn’t really that interested in starting something. They’ll say that they are and they might do it on the side but there’s a lot of people in their mid-to-late 20s running around making 6 figures+ talking about starting companies they’ll never actually quit their jobs to start. Most of the people I’ve met that would be excellent founders are not in fact founders and likely never will be because of this issue.

(3) Small customer pool

Those same 20-something-year-old bankers who didn’t start companies turn into 60-year-olds with plenty of money to invest but they’re even more risk averse than when they were in their 20s. The decision makers in Charlotte are reluctant to take chances on startups when it comes to buying products and investing.

How do we solve these issues?

(1) How to solve the TechCrunch effect

Education is the obvious answer. Guys like Dan Roselli (co-founder of Packard Place) and others should be talking about this at every startup event. Get customers not funding. Pound that drum. What do you have to lose? No one in this town is getting funding anyway.

BUT I think it’s critical to take that answer a step further. Why doesn’t Charlotte have an incubator where at the end of the session you present to a panel of potential customers not a panel of potential investors. I’m not sure if that would be a first of its kind but if it is we should market the heck out of it.

(2) How to get more founder talent

Sorry, not going to happen until there is more success in the space. You aren’t going to get rid of the banks and PE firms that pay great salaries but you could attract new talent to Charlotte. When Charlotte startup success happens we need to promote it across the country so other young would-be founders consider moving here. I’m looking at you Chamber of Commerce, HQ Charlotte, Sierra Maya 360, and others; even if they aren’t your companies attracting talent to Charlotte benefits all of us.

(3) How to get a bigger customer pool

Ted proposed several potential solutions the other week.  Here are my thoughts:

Speed dating: This is the idea that I really liked. It needs to be corporate function-specific though. We should have one night for marketing where you get as many CMOs as possible and as many marketing related startups in the same room. Another night for CFOs, operators, HR directors, etc. That way we’re not wasting anyone’s time. On the potential customer side there are groups around town that you could tap into for each of these; SHRM for HR for instance. On the startup side we’d need to get the word out through Packard, UNCC, or dare I say Axios Charlotte?

Open challenge: Love this one. The trick is getting a big company to step up to the plate. Duke and BoA are bureaucratic risk-averse companies. Lowe’s seems like a possibility though. We’d need to make this a really big deal so that it encourages other companies to do it after they see all the positive press coming out of it.

Corporate point person: I just have a really hard time seeing this actually happening. You’re asking companies to add workload to someone in their organization and for them to have enough expertise in every organizational function to be able to evaluate products in addition to the startup company itself. I just don’t see this one.

Recap

We got some issues but they’re all solvable. We ought to at least be doing the following:

(1) Ted’s speed dating idea, there’s a clear path to pulling it off.

(2) The start-up open challenge.  Calling on all you insiders at big Charlotte companies to help us pull it off!

(3) An accelerator or incubator program that puts startups in front of customers not investors.

(4) The Charlotte Chamber and others need to make a commitment to promote Charlotte startups as broadly as possible to ultimately draw more talent to the region.

Editor’s Note: Mike Funderburk is an executive at Novarus Healthcare, a local tech startup that recently landed a $750,000 investment.