America at work
This North Carolina City Has Emerged as the Startup Capital of the South
Kim Lachance Shandrow | June 15, 2017

If you’re launching a tech startup in the South, there may be no better city right now than Durham, North Carolina. The historic, brick factory-filled burg that tobacco and textiles originally built is in the midst of an entrepreneurial renaissance and continues to blossom.

The Bull City’s resurgence has turned heads across the country, drawing ambitious innovators and investors from Silicon Valley, New York City, Boston and beyond.

Durham, recently dubbed the “Startup capital of the South” by CNBC, is home to the Tar Heel State’s renowned innovation hotbed Research Triangle Park and to Fortune 100 technology titans such as IBM, Sony Ericsson and Cisco Systems, not to mention several top universities, including Duke University and the nearby University of North Carolina at Chapel Hill and North Carolina State University in Raleigh.

More broadly, the mid-sized metropolis sits at the top of a state that added the third most technology jobs in the country in 2016. In fact, North Carolina remains a Top Five state for job growth, ranking second in a CompTIA report with a 5.9 percent increase in available tech jobs last year.

Brimming with technology jobs (biotech, software engineering, network analyst and IT security specialist, to name a few currently open positions) — and an abundance of STEM talent flowing out of the area higher education institutions to fill them — isn’t the only major driving factor drawing enterprises big and small to the Durham area.

Adam Klein, formerly of the Durham Chamber of Commerce and currently the chief strategist at American Underground, a leading coworking space headquartered out of the American Tobacco Campus in the heart of downtown Durham, attributes the growing influx mainly to a certain mindset among the local entrepreneurs and business leaders.

“On top of affordable office space options in our landmark beautiful tobacco buildings, and in addition to our proximity to affordable housing and some of our nation’s greatest research universities,” Klein told Free Enterprise, “there’s one thing that’s probably the strongest draw, and that’s the predominant inherent entrepreneurial mindset of the people here. Durham-ites are resilient builders, rebuilders and innovative problem-solvers by nature.”

Related: HOW GOOGLE TEAMED UP WITH MINORITY ENTREPRENEURS TO CULTIVATE AN EVEN STRONGER STARTUP SCENE IN DURHAM

He continued: “Entrepreneurship is in Durham’s DNA. We persevered to where we are today because of the entrepreneurs who came before us in the textile and tobacco industries that rose and fell. Now we’re back, with more than 300 startups in our downtown area alone, and with 15 percent of the workforce in downtown Durham working at tech startups.”

“We’re accustomed to being reshapers of our future in an underdog city that just keeps getting back up — and getting back up together — and we’re becoming known for that resilience and team spirit. I like to say that there are so many of us here today that it’s like shaking a can of soda. You can’t help but have random collisions all the time. Tech founders run into each other on a daily basis. Making meaningful connections is unavoidable.”

With three locations in Durham and one in nearby Raleigh, American Underground is home to a successful business accelerator called The Startup Factory. In exchange for 7.5 percent equity, nascent companies that complete the rigorous program receive $20,000 to $150,000 in seed capital. They’re also furnished with one-on-one mentoring from veteran founders, open access to a wide breadth of angel investors, business model and product market-testing and three months’ worth of office space and office utilities use.

American Underground is one only of nine North American tech hubs in the Google For Entrepreneurs network. The landmark designation by Google in 2013 helped to land Bull City on the map as a fast-rising American tech epicenter, with the Mountain View, Calif.-based tech mammoth shining a considerably bright light on Bull City’s burgeoning tech startup scene. After Google put down roots, the downtown Durham area has seen more than $1 billion in exits, Klein said.

Additionally, the city — where the average salary for a tech support engineering job is $76,000, according to Glassdoor — ranked fourth among the country’s top 25 technology hubs in the latest Innovation That Matters study, an annual research project published by Free Enterprise, the U.S. Chamber of Commerce Foundation and 1776.

Related: HOW DURHAM’S HEALTH TECH STARTUPS ARE CHANGING THE CITY – AND FUTURE – OF MEDICINE

The study, based on survey responses from area founders, showed that the network connections amongst Durham startup leaders are stronger than those in larger and longer established tech hub cities. That’s in large part because the startup community in the Bull City is smaller, closely connected and intrinsically collaborative, according to Molly Demarest, senior director of operations and finance at American Underground.

“There’s an ‘If you win, I win,’ supportive feeling in Durham amongst our entrepreneurs,” Demarest said. “Everyone here is willing to give you 15 to 30 minutes of their attention and time to help you take your idea or your business to the next level. It’s a viral feeling that’s very unique to this area, and it’s at the core of our entrepreneurial culture.”

Said another way, she added: “We look out for each other.”

The Durham Chamber of Commerce (DCC) and Downtown Durham, Inc. also put in the time and resources to look out for their own, so to speak, and they bring in newcomers from tech startups outside of the area and state as well. Both entities, often working in concert American Underground, proactively foster the growth of area digital entrepreneurship by regularly hosting tech startup networking nights, pitch-offs and a variety of other founder-focused meetups.

One of the better known local grassroots startup initiatives is the annual Bull City Startup Stampede. Initially created by the DCC in 2010 and now spearheaded by American Underground, the two-month intensive incubator program brings seed-stage tech company founders to Durham to build their “digital storefront and scaling strategy.” To date, the Stampede, which last year received a $100,000 grant from the North Carolina IDEA Foundation’s Entrepreneurial Ecosystem Partners program, has lured approximately three dozen startups to the city, with more expected every year.

The Stampede, similar to the far-reaching impact of American Underground’s recent Google For Entrepreneurs designation, drew international attention to Durham’s “creativity, talent pool, university connections, quality of life and readiness to transition to a 21st century economy,” said Klein.

“Reviving the ‘Stampede’ brand reaffirms that our entrepreneurial community is strong and growing,” he said, “[and] that our history matters and that we remain open to new ideas and opportunities.”

Related: TRACING THE ORIGINS OF WILMINGTON, NORTH CAROLINA’S REVAMPED ECONOMY

“We still have the flavors of the South, and we don’t mean just good BBQ and hushpuppies,” Klein continued. “We’re known for what I call a horizontal, hospitable community. You can access about anyone in the Triangle regardless of where you’re from or how long you’ve been in the region.”

He added: “To maximize this opportunity, we encourage newcomers to jump into an existing event or program and volunteer their time and expertise. Don’t wait for the community to come to you.”