WILMINGTON -- Starting a company can come with challenges, and raising money is often one of the biggest. One group of investors visited Wilmington Tuesday to explain how they can help start-ups looking for funding.
One man, Scott Kanyok, knows well how tough it can be for young businesses to raise money.
His 2-year-old nutritional shake company, UB Real, is based in Wilmington and is currently exploring retail distribution strategies. Kanyok says this process requires capital and that getting that money won’t necessarily be easy.
"It's a learning curve, because when you live your story everyday, it obviously makes complete sense to you; but, trying to educate people of where you're going and to come in and fund your mission is challenging," said Kanyok.
That’s where Innovation Fund North Carolina hopes to step in. The program is a statewide initiative that came to the University of North Carolina Wilmington (UNCW) Center for Innovation and Entrepreneurship (CIE) on Tuesday. The goal was clear: to raise awareness of funds it offers early-stage companies.
"We want to make sure that the people in Wilmington as well as UNCW understand the availability of these funds...for these entrepreneurs,” said Dr. Tony Mifsud, Innovation Fund North Carolina’s executive director.
The awards come in two forms. One is a grant of up to $25,000 for companies in the “proof of concept” stage. These are start-ups that need to advance a prototype or file patents, for example.
The other form is a loan of up to $100,000 for companies that are more mature. These monies can be used for projects like customer acquisition and testing market demand.
Both types of awards are non-dilutive, meaning that business owners do not give up equity in their companies in exchange for funding. The capital itself comes from Innovation Fund’s partners, which include educational institutions, city governments and private investors. Innovation Fund has completed one round of funding, is close to completing its second and will launch a third in the coming weeks.
GO2, a Wilmington-based medical device company, was awarded a $75,000 loan in December 2013.
While a loan is a standard product offered by many banks, Dr. James Hundley, a company vice president, feels that Innovation Fund’s system makes more sense for them.
“It’s interest free and on very generous terms. It’s not like borrowing from a bank. It turns out to be an award,” Hundley said.
Although providing capital is Innovation Fund’s main function, Mifsud emphasized that it’s also about guiding the companies and helping them grow. Businesses that are awarded funds must agree to accept professional mentorship.
Mifsud also said Innovation Fund’s mission goes beyond the individual start-ups. The program requires that selected companies remain in-state for at least six years, in the hopes that North Carolina will feel an economic benefit.
“We’re building sustainable businesses here in North Carolina, to stay in North Carolina,” Mifsud said.
It’s that emphasis on North Carolina and creating jobs that made CIE Director Jim Roberts invite Innovation Fund to UNCW’s campus in the first place. Roberts believes that if some local businesses can win Innovation Fund capital, that Wilmington ultimately benefits.
“The community gets the money back through the jobs that are created,” Roberts said.
Getting these awards is no easy feat, however. The selection process has three levels, and Mifsud warned that applicants will be questioned extensively on the ins and outs of their businesses and industries. He also said that competition is getting stiffer.
All of that isn’t deterring Kanyok though, who plans to apply after applications open on May 1. For young businesses like his, the prospect of capital plus connections makes Innovation Fund North Carolina worth the effort.
"The mentoring aspects, with the experience of the individuals who run the fund, is crucial,” he said.