Region’s High-Growth Companies Bring Global Capital and New Jobs
Economic development occurs when regional economies are infused with wealth from outside. It happens when companies from other countries and states invest in new locations – or in relocating existing ones. Along with that capital from outside comes direct and indirect job creation.
This may be common knowledge for those working in, volunteering for or leading economic development organizations. But less well known is another avenue for tapping global investment, one in which our region used to lag – but does no longer. Initial Public Offerings (IPOs), the process whereby privately held companies become publicly traded, enable investors around the world to stake a claim in some of today’s most innovative and promising businesses.
On this front, there is good news for the Research Triangle Region. In 2014, six Triangle companies issued shares to public investors.
The largest of these IPOs was by PRA Health Sciences, a contract research organization (CRO) headquartered in Raleigh and employing some 10,000 workers worldwide. The company’s share offering raised nearly $306 million, capital that will be re-invested into the ideas and people holding the key to next-generation medications to enhance and extend our lives. INC Research, Argos Therapeutics and Scynexis were among the other firms in our region successfully undertaking IPOs. Also noteworthy was Square I Financial in Durham, a global bank specializing in venture banking and structured financing to technology and life science start-ups. Square 1’s IPO last March raised $104 million from investors.
IPOs equal jobs. A recent report by the Kauffman Foundation examined job creation figures of the 2,766 U.S. companies that went public from 1996 through 2010. Researchers found that the roster of companies employed just over 5 million workers before their IPOs, but by 2010 their collective workforce had grown to 7.33 million -- an increase of 822 workers per company. They also looked at employment growth during the ten-year period following an IPO and found that headcount had grown by 37.5 percent in that time.
But it can take years for a company to reach the point of launching an IPO. PRA, for instance, began modestly in 1976. Getting businesses ready to issue stock typically comes well after they’ve proven themselves to angel investors, venture capital organizations and other funding sources.
Here, too, there is good news for our region. In the first six months of 2014, 127 North Carolina companies raised a total of $266 million through equity investments, grants and awards, according to the Council for Entrepreneurial Development (CED). The list included firms in technology, life science, advanced manufacturing and cleantech. CED, one of the nation’s oldest and largest support organizations for entrepreneurs, is among the many resources that make the Research Triangle Region fertile ground for high-growth companies. Other assets include the American Underground, HQ Raleigh, numerous incubators, the community college small business centers and our Small Business and Technology Development Center (SBTDC). The SBTDC is just one facet our university system’s role in transforming good ideas into real jobs and maximizing the economic impact of promising companies.
Last year’s strong IPO showing in our region is ample evidence that ideas and innovation are flowing here at an impressive clip. So too is the global capital that is fueling them.