Joan Siefert Rose, president, Council for Entrepreneurial Development

Tax structure, regulation are key policy areas that impact entrepreneurial success

As November state and federal elections approach, Kenan Institute News invited Joan Siefert Rose, president of the North Carolina-based Council for Entrepreneurial Development (CED), to discuss public policies needed in North Carolina and on the federal level to promote innovation and entrepreneurship. CED is a key partner of the Carolina Entrepreneurial Initiative, UNC's campuswide education, research and venture creation initiative that is directed by the Kenan Institute.

Kenan Institute: Why should policymakers on the state and national level work to promote innovation and entrepreneurship?

Rose: It’s clear from the unprecedented events in recent weeks that stability of the financial markets is essential for all sectors of the economy. Entrepreneurs, even if they are more likely to be engaged in higher-risk businesses, need some predictability in making decisions, securing funding and serving their customers. If the credit markets are uncertain, innovation suffers.

That said, entrepreneurship seems to be alive and well in North Carolina. Business creation is holding its own through the first half of the year, helping offset some job losses among the manufacturing and service sectors. At CED, we have had record enrollment for our business training programs, such as FastTrac TechVenture. The fall session included 35 graduates from companies in the life science and technology industries, all boasting innovative ideas and products.

In addition, companies that are backed by venture capital help attract hundreds of millions of dollars of investment to North Carolina, creating wealth and adding to North Carolina’s tax base.

Kenan Institute: What are the measures of success that let us know how well we are doing?

Rose: We are fortunate to have such a wide range of research and development activity already thriving in North Carolina, starting with the major research universities. Many of our high-growth, high-impact businesses started with technology initiated at UNC-Chapel Hill, Duke or N.C State. Reducing the length of time it takes to move technology from the lab to the marketplace would be one measure of success, and I commend the universities for taking steps to make this a priority.

Nationwide, there has been a significant slowdown in the past few years in the number of companies that have gone public. We will know that the market has started to recover once conditions improve for initial public offerings and we see increased activity among North Carolina companies.

Kenan Institute: How does North Carolina compare to other states and the United States to other countries in these key areas of competitiveness?

Rose: North Carolina was among the first states to target technology and life science-based industries with incentives and research support, so that gave us a bit of a head start. However, other states—and international competitors—have borrowed a page from our playbook and are trying to lure early-stage companies from North Carolina to their locations.

North Carolina remains competitive by offering a positive business climate, reasonable cost of living and a skilled work force, but I think everyone engaged with entrepreneurship knows this is no time to rest on our past successes.

Kenan Institute: What public polices do you consider key to promoting innovation and entrepreneurship on the state and national level?

Rose: The tax structure plays a significant role in job creation, especially in research and development. As North Carolina is a center for the life sciences, the state’s research-and-development tax credit, which earlier this year was reauthorized through 2013, has helped attract new biotech companies and helped others grow. The state’s commitment to matching Small Business Innovation Research grants has been an investment in North Carolina’s efforts to attract high-paying, high-skilled jobs.

Health care reform, a big topic in the presidential election, could have a significant impact on North Carolina’s emerging medical device and advanced technology sector, especially if reimbursement rates through Medicaid and Medicare are reduced.

Finally, the regulatory process related to new drug development has become unpredictable and increasingly time-consuming, adding to the cost of bringing new, potentially life-saving medicines and technologies to the market. These and other key life-science-related topics will be covered thoroughly at CED's Biotech conference Feb. 16-17 at the Raleigh Convention Center.