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Kenan Institute 2022 Annual Theme: Stakeholder Capitalism
Market-Based Solutions to Vital Economic Issues
News & Media
Mar 4, 2019

North Carolina Investment Forum Looks to Bolstering Economic Development

On Feb. 21, the state’s leading investors, researchers and policymakers gathered at the Kenan Center in Chapel Hill for the 2019 North Carolina Investment Forum. Discussions at the forum, sponsored by the Kenan Institute of Private Enterprise, ranged from the federal Opportunity Zones program to making the transition from angel to institutional investing.

The forum opened with a luncheon keynote by Linda McMahon, the 25th administrator of the U.S. Small Business Administration (SBA). McMahon outlined five pillars with which she said the Trump administration and the SBA are bolstering small businesses: tax cuts, regulatory rollbacks, workforce development, improved health care coverage and updated trade agreements.

With respect to regulatory rollbacks, McMahon said that elimination of federal regulations under the current administration has saved U.S. businesses close to $33 billion. She also related the story of a small business owner, a landscaper in Jacksonville, Florida, who said federal tax cuts have allowed him to increase his business by 50 percent.

After McMahon’s presentation, Kenan Institute executives unveiled their newest initiative, called CREATE. The effort aims to establish and implement new models for shared economic prosperity through a unique combination of rigorous research and data analytics, on-the-ground applied interventions and targeted policy development.

Forum attendees greeted the announcement with enthusiasm. Panelist Thomas Stith stated, “The commitment that the Kenan Institute made today in making sure that North Carolina moves forward as we all move forward and improve on our bottom line is significant.”

The critical importance of that commitment was made clear by Dale Folwell, Treasurer of North Carolina. In his remarks, Folwell focused on funding issues with the state employee pension and health plans, saying that the plans are costing the state too much, and preventing investment in other critical areas. “Every dollar that goes toward [these plans] is a dollar that can never be spent on public education, can never be spent on public safety, and can never be spent on public roads, and the ports, and the parks and all the other core functions of our state government.”

The afternoon also included three workshops. Panelists at a workshop on transitioning from angel to institutional investing shared their stories of how they became funders, and suggested ways in which to build and strengthen the investment funnel in North Carolina. Among other ideas, they proposed reaching out beyond North Carolina to ensure that outside investors are aware of opportunities here. Panelists included Jan Davis, entrepreneur in residence at Innovate Carolina; Alston Gardner, a venture partner with Fulcrum Equity Partners; Mark Roberts, CIO of Ironsides Asset Advisors; Kirill Sheynkman, co-founder and general partner of RTP Ventures; and moderator Ted Zoller, faculty director of the UNC Entrepreneurship Center.

A workshop on search funds and small business growth included moderator Shawn Munday, Professor of the Practice of Finance at UNC Kenan-Flagler Business School; Brandon Garcilazo, operating partner with Tobacco Road; Badge Stone, managing director and co-founder of WSC & Company; and Katie Walker, vice president at Plexus Capital.

The panel explored search funds from the perspectives of financers, equity investors and searcher entrepreneurs. Stone referenced a 2018 Stanford University study that showed the search fund asset class has generated annual equity returns of more than 35 percent for 30 years. Said Stone, “It’s really gone beyond proof of concept.”

A third workshop delved into the relatively new federal Opportunity Zones program. Panelists included moderator Napoleon Wallace from the Kenan Institute of Private Enterprise; Jeanne Milliken Bonds, head of community development for the Federal Reserve Bank of Richmond; Don Dwight, executive tax director at EY; Tyler Mulligan, director of the Development Finance Initiative at the UNC School of Government; and Thomas Stith, co-founder and CEO of Rivermont Capital.

Dwight said that the program is designed to attract investment capital to low income areas, providing qualified investors with certain tax benefits when they invest unrealized capital gains into these areas. Nationally 8,700 opportunity zones have been designated, with 252 in North Carolina.

The panelists agreed that, because the program is relatively new, there are still unanswered questions. Stith said, “One of the gaps I see, not only from a fund perspective, but from a policy perspective, is: is someone taking a step back and saying how do we put all of these pieces together?” Bonds concurred, stressing the importance of investors, communities and local governments to work together on a shared vision for sustained economic development.

To learn more about the 2019 North Carolina Investment Forum, check out the luncheon livestream.

Watch Live Stream

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