The above image is a screenshot of Startups-against-HB2.com, a site launched yesterday by members of the state's startup community.
For startup founder Karl Rectanus
, investor calls have had a different tone since March 23 when Governor Pat McCrory
signed the controversial “Bathroom Bill”.
Rather than 30 minutes to share updates or pitch his education technology startup Lea(R)n
, Rectanus spends at least the first 10 of each call fielding questions about the impact of the bill on his ability to recruit talented young people and achieve the growth he’s promised as he’s raised $1 million from mostly out-of-state investors over the last year.
Rectanus, a proud UNC-Chapel Hill graduate, has been recruited to leave the state during those calls. He’s been told investors won’t put money into North Carolina companies as long as the bill is in place.
“It puts North Carolina entrepreneurs that raised $1.2 billion last year on our heels as opposed to talking about disrupting the educational technology market or other industries,” Rectanus says. “It’s just maddening.”
The national backlash against House Bill 2 has been well documented by the press—Google Ventures and investor Chris Sacca
have announced investment boycotts. Mayor Rahm Emanuel
of Chicago said he’d openly recruit
businesses out of North Carolina in protest. And just this morning, PayPal cancelled its plans
to expand and add 400 jobs in Charlotte citing HB2.
The bill is also impacting an increasing number of startups across the state—companies committed to North Carolina because of its strong education system and talent pipeline, and its traditionally progressive stance on social issues and business growth.
Many of them have shared their stories through an ExitEvent
poll conducted over the last week
(read a compilation of responses here
) and via a new website, startups-against-HB2.com
, which launched yesterday with dozens of comments and social media posts from North Carolina organizations and entrepreneurs against the bill.
The CEOs and founders of at least 100 companies representing more than 1864 jobs across the state have also signed a petition
against the bill.
A leader in the movement is Shoeboxed
CEO Taylor Mingos
, a Kansas City native and Duke graduate who has spent the last decade building his 45-staffer software company in Durham. He’s listened to Governor McCrory take credit for the startup community’s growth in the state—his campaign website
details the state’s high rank for successful business startups per capita, its 260,000 new jobs created since he took office in 2013 and “Made in North Carolina” exports growth—and position North Carolina as the third leg in a national “Innovation Triangle” that also includes Silicon Valley and Boston. He believes McCrory should take just as much interest in the startup community's feelings on HB2.
Besides a repeal of the law, Mingos and many of his peers are calling for better state leadership overall.
“I support a full frontal attack against this bill,” he says. “It’s important to send a clear message to our families, to our coworkers, to our customers that we oppose this discriminatory measure.”
ExitEvent’s poll found that 78 percent of 170 respondents strongly disagree with the bill and more than 82 percent believe it will have at least some impact on the desirability of the state for business (53 percent believe it will have a serious impact). About 45 percent of respondents are startup founders or small business owners.
A small percentage of respondents are investors in the state, but one is Dave Kirkpatrick
, who founded his national impact investment firm SJF Ventures
in Durham in 1999. Three of the firm’s 43 portfolio companies hail from North Carolina.
Just a week ago, SJF added Durham startup TransLoc
to its portfolio and was joined by Salesforce CEO Marc Benioff
, who less than a month ago threatened to pull Salesforce out of Georgia
when it was considering a similar law. Though Kirkpatrick hasn't had many discussions about the bill with his limited partners or other investors, he fears that prominent investors like Benioff may not be as bullish on investing in the state with the law in place.
"We've got very progressive Silicon Valley folks supporting talent and investment in the region and this certainly will not be helping in that regard," Kirkpatrick says. He's also concerned about the ability of TransLoc and Validic, SJF's other Durham portfolio company, to hire talented people as quickly as needed.
"Anything that sends a chill to Millennials and savvy tech people coming and building great companies is a negative signal," he adds.
The goal of the startups against HB2 site, created over the weekend by a handful of local founders and a developer, is to give founders and startup community supporters a place to voice their concerns about the bill alongside others who feel the same way. Mingos hopes it becomes to clear to national investors and startups that HB2 does not represent North Carolina's startup community.
Though the pressure national players are putting on the legislature is helpful, Mingos and others don't agree with the boycotts. No one stopped making investments in California during its five-year, same-sex marriage ban, he points out.
Mingos says the site is bipartisan and won't endorse any candidates in the upcoming election. It will, however, encourage startups across the state to think about their businesses' future.
"If you look at the Triangle adding a million residents in the next 10-15 years, most of those jobs will be created by startups and small businesses," Mingos says. "This is also about building the future of North Carolina."
"I would encourage startups, even if they don't feel they are impacted directly right now, to think about the community and state we are shaping over the next 10 years and how they want that to look."