North Carolina's growing biomanufacturing industry will get a $42 million boost this year, and possibly another $108 million more over the next six years, from Golden LEAF, the foundation that invests money from the tobacco settlement for the long-term economic advancement of North Carolina, officials announced at an Aug. 14 news conference in Raleigh.
"Today's announcement provides the jumpstart, the one that we need to make North Carolina the biomanufacturing capital of the world," said Gov. Mike Easley.
"It's all about jobs," added Senate President Pro Tem Marc Basnight. "We will lead this country in this new environment of new jobs."
The biomanufacturing funding is the centerpiece of an $85.4 million economic stimulus package from Golden LEAF to strengthen North Carolina's economy and the state's competitiveness in the biosciences.
The $42 million for biomanufacturing will be invested in venture capital funds that will provide funding for bioscience companies developing or manufacturing their products in North Carolina. If those investments are successful, Golden LEAF anticipates making additional investments of $108 million over the next six years, bringing its total investments in the bioscience sector to $150 million.
"For a long time, members of the Board of Directors have thought that the life sciences can offer tremendous economic potential for North Carolina," said Valeria Lee, president of Golden LEAF. "After considerable research and discussion, they have decided to make investing in the bioscience industry a major Foundation initiative."
"The North Carolina Biotechnology Center is delighted that Golden LEAF has recognized the critical importance of biotechnology to the state's continued economic development," said Leslie M. Alexandre, Dr.P.H., the Center's president and chief executive officer. "The foundation's commitment to $42 million in venture capital investments will help build on the state's existing strengths in biomanufacturing and biotechnology development."
Another initiative in the biotechnology sector will be a $10 million investment in a proposed biodiesel plant in Eastern North Carolina, which Golden LEAF officials say will be a boon to soybean farmers and put the state on the cutting edge of the alternative fuels industry.
Lawrence Davenport, chairman of Golden LEAF's Board of Directors, said the economic package will:
- Allow the people of North Carolina to capitalize on advances in the biotech industry.
- Create a major new market for North Carolina agricultural products and put the state on the cutting edge of the alternative fuels industry.
- Make North Carolina a more attractive place to locate new industries.
- Make it easier for new businesses, especially in rural areas, to get the capital they need.
- Allow people to continue living in their rural communities and to find gainful employment.
- Help train a work force prepared to step into the jobs created.
- Increase tax revenues at the state and local levels and help avoid future budget crises.
The initiatives are as follows:
- $42 million for investments in venture debt and venture capital funds that, in turn, will invest in biopharmaceutical companies developing and manufacturing their products in North Carolina. By being a lead investor in these projects, Golden LEAF will leverage an estimated $150 million to $200 million in total investments in new and emerging companies in the life sciences. These companies will provide jobs and increase the tax base for state and local governments.
- $10 million for investment in a biodiesel plant that will use soybeans in the production of alternative fuels. There are no similar plants anywhere near North Carolina, so the new venture will serve a multi-state market. Annually, it will use approximately 9 million bushels of soybeans in the production of 10 million to 12 million gallons of diesel fuel that will be used primarily for vehicle fuel. The plant, to be built in Eastern North Carolina, will cost $45 million and employ between 75 and 100 people within two to three years.
- $10 million for jobs training, primarily through the North Carolina Community College System but including the state's universities and other training providers. A total of $5.5 million will be used to support training initiatives required by industries looking to start up, expand or relocate in North Carolina - $3.5 million for industry-specific training and $2 million to support industry-cluster training in a particular region. This initiative also will include money for research and development and a reserve fund to assist governmental agencies and nonprofits with predevelopment costs associated with industrial relocations and expansions.
- $3.4 million for the North Carolina Rural Economic Development Center to create a loan loss reserve for the Rural Center's second Capital Access Program. This program will prompt lenders, such as commercial banks, to extend credit to borrowers who might not qualify for traditional loans. An earlier program of the Rural Center was successful in helping to close more than $31 million in loans for small businesses in rural areas.
- $5 million to help local governments and regional economic development partnerships finance the certification of industrial sites. North Carolina has a shortage of certified industrial sites, compared with other states, and is operating at a disadvantage. Many local governments do not have the funds - approximately $40,000 to $50,000 for each site - to have industrial sites certified for development.
- The final component of the economic stimulus package is the planned round of approximately $15 million in annual grants to be made in November. The Foundation received 346 grant proposals by the Aug. 1 deadline.
With the announcement of the economic development package, the Foundation is departing temporarily from its policy of making grants only from income from invested funds. The package includes $18.4 million in direct grants funded from principal, which allows the Foundation to continue uninterrupted its regular, annual grant process.
Of the $85.4 million package, $52 million is in the form of equity or debt investments in new ventures. It represents an effort by the Foundation to invest some of its resources in projects that not only will generate income for the Foundation but also encourage investments in North Carolina, create jobs, generate tax revenues, and boost the state's economy. The remaining $15 million of the package will be in the form of grants to be made this fall.
"Because the Foundation is unique," said Davenport, "it can do things that State government and public agencies cannot do. We can remain true to our mission and, at the same time, complement the actions that Governor Easley and the General Assembly are taking to bolster our state's economy and ensure our future competitiveness."
Golden LEAF is a statewide foundation, but, by law, it has a very specific purpose - helping tobacco-dependent and impacted counties deal with the long-term consequences of the decline of the tobacco industry. It is not a general-purpose foundation. Its offices are in Rocky Mount.
