On Feb. 3, Tom
Snyder, Executive Director of RIoT, hosted the annual State of the Region
Address at Raleigh Founded. Embracing the State of the Union theme, Tom
discussed the economy and jobs, domestic and foreign affairs and North
Carolina’s opportunities and threats. You can read a written version of that
address here.
Economic security and current events
I’d like to start
this year’s State of the Region from a place that may feel uncomfortable, but
necessary.
Last month,
Minneapolis became the center of a national conversation about institutional
trust, individual safety, and public confidence in economic and civic systems.
The killing of Renee Good and Alex Pretti, on the heels of at least six other ICE-related deaths in Texas, Illinois and California sparked widespread
demonstrations, sit-ins, and civil unrest that resonated far beyond the Twin
Cities.
These deaths, and
the reactions they provoked, are not merely local news. They cut to a deeper,
broader question about how people feel about their future, whether they
feel secure in their communities, in their institutions, and in the basic
economic and social contracts that undergird a functioning society.
This speech isn’t
a commentary on immigration policy. Instead, I want to acknowledge the context
in which we gather: a time when the absence of economic comfort, when people
feel unstable, overlooked, or without clear opportunity, can fuel broader
social tension.
Because the truth
is this: when people feel economically insecure, anxiety rises. When people
feel that hard work does not lead to opportunity, faith in systems erodes. When
people feel disconnected from the economic engines around them, they turn
inward or outward with equal intensity.
Economic comfort
is one of the strongest stabilizing forces any region can have. And that is
what makes the work that RIoT conducts so important. It is what drives our
passion to support entrepreneurship, helping people to build income and
generational wealth through small business creation and sustainment.
And that leads us directly back to the core question
of this address: What is the State of our Region in 2026, and what must we do
to build an economy that produces broad economic comfort, not just
headline growth?
The economic baseline
By conventional standards, North Carolina’s economy remains strong. As
of late 2025, the state’s labor force exceeded 5.29 million people, with total
nonfarm employment at approximately 5.12 million jobs. Unemployment has
remained consistently below the national average, hovering around 3.7 percent,
signaling a tight labor market rather than one in distress. Year-over-year job
growth of roughly 1.5 to 2 percent places North Carolina squarely in the middle
of the national pack. We are not overheating, but not stagnating.
Wages continue to rise. Average private-sector hourly wages reached
roughly $33 per hour, increasing more than 4 percent year over year, with
higher averages in metro areas like Charlotte and the Triangle. At the same
time, housing, transportation, and childcare costs continue to pressure
household budgets, particularly for younger families and middle-income workers.
Population growth reinforces this picture. North Carolina surpassed 11
million residents, adding more than 80,000 net domestic migrants in a single
year. People are still choosing to move here, a sign of confidence in the
state’s economic prospects and quality of life.
Taken together, these numbers describe an economy that is growing. But
they do not yet tell us how resilient that growth will be as technology
accelerates.
Work in transition: AI, automation, and uneven
exposure
Beneath the topline indicators, the structure of work is changing
rapidly. As you already know, AI is a primary lever of this current
change. To give an idea of how pervasive
AI has become, consider that today the major internet monitoring companies like
Cloudflare and Akamai report that only 20-25% of all internet traffic is
conducted by humans. Everything else is a combination of bots, crawlers, RAG
engines and other machine-driven effort.
Large language models are part of the shift. Each human query to a
large language model typically drives 5-15 web queries to “trusted authority”
sites, which were previously vetted by millions of digital interactions.
Agentic AI will drive even more non-human web traffic.
AI has not eliminated work wholesale, but it has compressed job
descriptions, automated tasks once considered secure, and raised expectations
for output per worker. In logistics, manufacturing, administrative services,
and food processing, all major employment sectors in North Carolina, between 30
and 45 percent of current tasks are already technically automatable with
existing or near-term technology. Robotics adoption in warehousing and
manufacturing is growing at double-digit annual rates, driven less by novelty
than by labor scarcity and cost pressure.
This does not point to mass unemployment. It points to volatility.
Humans that augment their workflows with AI become far more productive,
particularly for mid and senior career positions that replace with AI, work
traditionally conducted by entry level workers. Productivity gains driven by
automation and artificial intelligence are reshaping work faster than
institutions are adapting.
Workers who can adapt and reposition themselves will often do well.
Workers whose roles are automated faster than they can transition will
experience periods of insecurity. The challenge for regions is not stopping
technological change, but ensuring that opportunity keeps pace with disruption.
The human jobs of now and the future
Let’s
get more specific about what adapting and repositioning actually means.
If
we accept that AI will become exceptionally good at technical execution, and in
fact is an expert at pattern recognition, optimization, and repeatable
decision-making, then the obvious question is: where do humans still create
durable value?
The
answer is not in competing with machines at what they do best. It is in doing
the things machines are structurally bad at: identifying unmet needs,
navigating ambiguity, building trust, persuading customers, and stitching
together solutions across messy real-world constraints.
There
has never been a single way to make a living. There are millions of niche
markets, and new ones emerge every year. To give an example, in New York City,
people rent unused air rights above buildings to developers to work around
zoning limits. Highly creative and not the kind of niche market opportunity
likely to be identified by or executed upon by an AI.
In
North Carolina, entrepreneurs build profitable businesses around hyper-local
logistics, specialized manufacturing services, regulatory navigation,
agricultural optimization, and industry-specific software that is far too
narrow to interest large incumbents.
In
nearly all of these markets, the critical work is still human. AI may help
design a product, automate a back office, or optimize pricing. It might even
operate the equipment. But people still identify the opportunity, initiate the
relationship, explain the value, negotiate the deal, and ensure the customer
succeeds. Selling, trust-building, and accountability remain human activities.
Entrepreneurship is not threatened by AI. It is amplified by it.
Entrepreneurs
equipped with AI can reach markets faster and at lower cost. They prototype
sooner. They operate with smaller teams. They replace overhead with software
and redirect effort toward customer acquisition and problem-solving. What
disappears are not entrepreneurs, but generic roles that once existed between
idea and execution.
The
human jobs of the future are not narrowly technical. They are combinatorial.
They sit at the intersection of domain knowledge, customer empathy, persuasion,
and execution. Regions that understand this will focus less on training people
for static job titles and more on equipping them to create work where none
previously existed.
So
how is North Carolina positioned to capture this future, and how is our region
supporting entrepreneurs? Let’s look
first at our regional advantages.
Industry diversity: A structural advantage in a
horizontal technology era
This is where North Carolina’s long-standing diversity of industries
becomes more than a hedge. No single sector accounts for more than one-fifth of
the state’s GDP. Finance, healthcare, life sciences, manufacturing, logistics,
agriculture, energy, and technology all play material roles in the economy.
Historically, that balance protected the state from sector-specific downturns.
In an AI-driven economy, it becomes a competitive advantage.
AI is not a vertical industry. It is a horizontal capability whose
value is unlocked only when embedded into real businesses solving real
problems. Regions that are over-rotated toward a single sector eventually hit
diminishing returns. Regions with breadth can apply AI across multiple domains
simultaneously, shortening feedback loops and accelerating adoption.
In North Carolina, startups and innovators can pilot solutions in
hospitals, factories, farms, logistics hubs, and research labs without leaving
the state. That proximity reduces commercialization risk and increases the
likelihood that productivity gains spread broadly rather than concentrating
narrowly.
Agriculture as a case study in applied innovation
Agriculture illustrates this dynamic clearly. When measured
comprehensively, agriculture contributes more than $90 billion annually to
North Carolina’s economy through direct and indirect activity. Yet employment
in the sector continues to decline, reflecting labor shortages, consolidation,
and rising productivity demands.
Technology adoption is no longer optional. Precision sensing,
automation, robotics, and data-driven decision systems are becoming
prerequisites for competitiveness. What has changed is accessibility.
Initiatives like The Source in Wilson represent a new model of economic
development, allowing small and mid-sized farmers to experiment with advanced
technology before committing scarce capital. By lowering the cost of adoption
and accelerating learning, these testbeds help keep ownership local, improve
resilience, and strengthen rural economies.
This is entrepreneurship in practice, even when it does not carry that
label.
Research strength is not the problem — Translation is
North Carolina’s research capacity remains one of its defining
strengths. The state consistently ranks among the top ten nationally in total
R&D expenditures, with annual spending exceeding $9 billion. The Triangle’s
three major research universities alone attract more than $2.5 billion per year
in research funding, placing the region among the most research-dense in the
country on a per-capita basis.
Discovery is not the bottleneck. Translation is. Historically, programs
like SBIR and STTR served as the bridge between research and commercialization,
providing early validation and non-dilutive capital to first-time founders and
deep-technology startups. Over the past decade, North Carolina firms received
roughly $170–220 million annually through these programs, consistently placing
the state in the national top tier.
Today, uncertainty around federal reauthorization and appropriations
has weakened that bridge. There is hope. A recent analysis in the Economist
showed that over the past 40 years, Republican led Congresses have provided
higher research funding to every single federal agency (except the Department
of Energy) than Democratic led Congresses. But as of today, SBIR and STTR
funding has still not been reauthorized in the US budget.
BREAKING NEWS – As I was about to hit “publish” on
this article, the House passed a budget to reopen the US government and it is
headed to Trump’s desk for signature. While this budget still does not include
SBIR/STTR reauthorization, it does include $1B for the Small Business
Administration, including $330M for Entrepreneurial Development Programs and
$160M for Small Business Loans.
Even short disruptions in award cycles can delay company formation,
stall hiring, and push intellectual property to be licensed or relocated
elsewhere. So where do entrepreneurs launching tech research-based startups
turn instead?
NC Innovation: A competitive differentiator among
states
In this environment, translation capacity becomes strategic. NC
Innovation represents one of the most ambitious state-backed commercialization
efforts in the country. Funded through a $500 million taxpayer-supported
endowment, NC Innovation is designed to move university research toward market
readiness before a company even exists. It allows for focus on proof-of-concept
work, prototyping, and commercialization planning across all UNC System
institutions.
Few states have built a comparable mechanism at this scale. Some, like
Utah, operate innovation intermediaries, but typically at an order of magnitude
smaller annual funding. Many others rely primarily on time-limited federal
programs such as SSBCI, which are broader in scope but not purpose-built for
university research translation.
Nationally, fewer than five percent of university disclosures ever
result in a startup. Regions that improve early translation measurably improve
those odds. NC Innovation functions as a stabilizer in the capital stack,
reducing dependence on any single federal program and increasing the likelihood
that intellectual property becomes companies and jobs in North Carolina.
This is an area where the state is quietly leading.
Entrepreneurship and capital: A comparative weakness
While North Carolina is strong in research translation, it is
comparatively weaker in one important area: direct financial support for
startups.
Several neighboring states have moved aggressively to deploy
taxpayer-funded equity capital into early-stage companies. Tennessee, for
example, has committed more than $100 million through its Fund Tennessee
initiative, including a dedicated venture equity component that invests
directly in startups and venture funds. Virginia appropriates roughly $17M in
taxpayer dollars annually to support startup grants, fund accelerator programs
and take equity investments in the most promising Virginia companies. The South
Carolina Research Authority, a public entity, just announced a new program that
will provide $5M to entrepreneurial support organizations across the state.
North Carolina does not currently operate a comparable statewide,
taxpayer-funded equity program. This gap is not theoretical. Entrepreneurs
notice it. Investors notice it. And over time, it affects where companies
choose to form, raise capital, and scale.
While North Carolina excels at helping research move closer to
commercialization, it lacks a complementary mechanism to provide early risk
capital once companies are formed. Addressing this imbalance is not about
copying other states. It is about ensuring that the state’s innovation pipeline
does not narrow precisely at the point where companies need capital most.
Silver lining: Early stage private capital
While
North Carolina lacks a large, taxpayer-funded venture equity program, it
benefits from a quieter but meaningful strength: a growing concentration of
early-stage private capital, particularly in the Triangle.
In
fact, right here in this building, Scot Wingo leads the Triangle Tweener fund,
one of the most active funds in the Southeast, and at times in the US. This fund makes 10-15 investments per quarter
– often the first institutional capital into a young business.
Primordial
Ventures, Jurassic Capital, Cofounders Capital, IDEA Fund Partners and others
are extremely active across our region. And new funds are being launched
regularly as more and more people consider venture investing as a part of a
diverse investment portfolio.
I
was unable to find exact financial data, but in my research I was unable to
find any region with more “first money in” style capital than North
Carolina. San Francisco and New York
certainly can write bigger checks. But in a world where AI will continue to
shorten time to market, reduce cost to first prototype and allow founders to
build with smaller teams, the amount of money needed to launch comes down
dramatically. Late stage capital becomes unimportant. Regions with early,
risk-tolerant capital are well-positioned.
What
differentiates this ecosystem is not sheer dollar volume, but alignment.
Much
of the Triangle’s early-stage capital is deployed by investors with deep
operating backgrounds in software, life sciences, cleantech, advanced
manufacturing, and data-driven systems. These investors understand
commercialization risk, are comfortable with long development timelines, and
often co-invest alongside non-dilutive capital sources such as SBIR, STTR, and
NC IDEA and NC Innovation-supported programs.
Compared
to peer regions, North Carolina’s advantage lies in density rather than hype.
Founders can access investors, customers, researchers, and pilot environments
within a single geography. Capital circulates locally. Relationships compound.
This
does not eliminate the need for larger-scale public investment mechanisms. But
it does mean the foundation is stronger than it appears from headline venture
rankings alone. The Triangle, in particular, has become a place where
early-stage companies can be formed, financed, and validated without
immediately relocating to the coasts.
That
is a real advantage worth building upon deliberately.
Defense and dual-use: A durable growth engine
If entrepreneurship represents the how of future growth, defense
represents one of the clearest wheres. No segment of the market is
expanding more consistently or at greater scale than defense and national
security–related technology. The Department of Defense accounts for more than
half of all federal R&D spending, and defense budgets remain at historic
highs.
Increasingly, that spending is directed toward software, data systems,
autonomy, cybersecurity, logistics optimization, advanced materials, and space.
And more specifically, there is an investment priority on defense technologies
that also power commercial markets.
North Carolina’s position here is unusually strong. The state supports
more than 3,600 defense contractors, over 575,000 defense-supported jobs, and
an estimated $65–70 billion in annual economic impact tied to defense activity.
It is one of only two states — along with Hawaii — where every branch of the
U.S. military operates.
Geography reinforces this advantage. North Carolina’s central position
along the East Coast, its deepwater ports, and a highway system originally
designed for military deployment efficiency make it a natural logistics and
operations hub. The state’s diverse terrain, from the highest peaks east of the
Mississippi to extensive coastal environments, supports testing and training
environments that few other states can match.
Compared with peers like Virginia, South Carolina, and Tennessee, North
Carolina offers breadth. Virginia’s defense ecosystem is deeply tied to federal
procurement and policy proximity. South Carolina and Tennessee host important
installations. North Carolina combines scale, diversity, infrastructure, and
industrial adjacency, which is a rare mix.
Defense is no longer a niche sector. It is one of the world’s most
important technology customers. It is important that our region organizes
around that reality to capture long-term value.
Entrepreneurship as economic infrastructure
All of this leads to a simple conclusion. Entrepreneurship is not
culture. It is infrastructure. Regions that make it easier for people to start
companies that survive the early years consistently outperform those that do
not. They create more middle-class wealth. They diversify their economies
faster. They distribute opportunity more broadly.
In an era when automation is compressing traditional job ladders,
economic agency increasingly depends on the ability to create work
rather than simply find it. States that invest in entrepreneurship through
translation support, capital access, and market-aligned demand are best
positioned for broad economic prosperity across their populations.
Designing the next phase of growth
Measured honestly, the State of the Region in 2026 is neither dire nor
complacent.
North Carolina is growing, but unevenly. It is innovative, but
constrained by translation and capital gaps. It is exceptionally well
positioned for defense and dual-use technology, yet under-organized for
execution at scale.
In a future where AI will increasingly automate workflows that once
were conducted by humans, we need to adapt. There will never be a shortage of
ways to make money. But there may be fewer and fewer “generic jobs” within
industry. Now is a pivotal time to adapt our investment strategy.
As you think about how you can be a partner in this transformation, or
how your organization should behave as we work through 2026, here are a few
points to consider:
●
Job
creation should outweigh job attraction
●
Creative
and people skills outweigh technical skills
●
Augmenting
humans with AI is more powerful than standalone AI systems
●
Workforce
development must prioritize teaching entrepreneurship
●
We must
invest in creating new companies instead of attracting existing ones
●
The
future is won by solving new problems instead of scaling old ones
With
this context, I am excited to announce that NC IDEA and the Wireless Research
Center have executed a joint venture agreement to bring the two organizations
closer together.
For
20 years, NC IDEA has been providing nondilutive capital to startups and
funding entrepreneurial support organizations, including RIoT. Since 2010, the
Wireless Research Center has been advancing technology and helping startups to
build the Data Economy. When RIoT launched in 2014, our first seed capital came
from NC IDEA.
After
years of being two organizations, working across contract boundaries, it made
sense to unite under our shared mission and complementary skill sets. With this
joint venture, Tom Snyder and Rachael Newberry will formally join the NC IDEA
team, and bring RIoT’s accelerator and entrepreneurial programs under the NC
IDEA roof. At the same time, the Wireless Research Center is launching RIoT
Labs to add focused support for defense and defense dual-use technology
development and commercialization.
We
want to capture the dual opportunity of the major economic trends I outlined
above. We believe this joint venture positions us to become the most
entrepreneurial-supportive state in the US and also the leading state for
defense sector innovation and commercialization.
This
is a new chapter for the North Carolina ecosystem and I could not be more
excited for the future we will create together. Our efforts remain focused such
that all people can reach a point of economic security, knowing that above all
else, economic security leads to health security, food security, housing
security, safety, education and ultimately to more peaceful and prosperous
communities.
