The startup funding landscape in Western North Carolina (WNC) presents unique opportunities and challenges for entrepreneurs looking to build and scale their businesses. Despite being outside the major venture capital hubs in the Research Triangle, WNC has a growing network of organizations and programs dedicated to fostering entrepreneurship and providing alternative funding solutions.

According to data from the North Carolina Department of Commerce, the state has seen a significant increase in entrepreneurial activity over the past few years. In the decades leading up to 2020, the number of new business applications in North Carolina hovered around 10,000 per quarter. However, since the onset of the pandemic, that number has nearly doubled, with more than 18,000 new applications per quarter. This surge reflects a broader national trend of increased business creation, driven by shifting economic conditions and growing support networks for entrepreneurs.

"Startups today face the twin pressures of achieving rapid growth while maintaining financial sustainability," said Jeffrey Kaplan, executive director of Venture Asheville. "Traditional venture funding often emphasizes hypergrowth at the expense of long-term viability, which can push founders to prioritize short-term metrics over sustainable operations."

A new initiative by Venture Asheville, Optimist Ventures takes a different approach by providing funding through a Shared Profit Agreement (SPA) rather than traditional equity. "This structure allows founders to grow at a pace that makes sense for their business without the pressure of forced exits or unrealistic growth trajectories," said Kaplan. "Additionally, our 15-week program is designed not just to help companies scale but to do so in a way that aligns with their values, their market, and their long-term sustainability. We focus heavily on founder resilience, operational efficiency, and capital discipline—all critical factors in growing a business responsibly."

Kaplan said the SPA model is not only more friendly for founders, but it's also more regionally aligned. "Unlike traditional equity investment, where founders dilute their ownership and often feel pressure to exit on an investor’s timeline, the SPA allows startups to retain full control," he said. "Instead of giving up a percentage of the company, founders commit to sharing a percentage of revenue or profit, based on a fixed sliding scale. This structure works particularly well in a region like Western North Carolina, where many businesses are capital-efficient, bootstrapped, and value independence. Founders appreciate that the SPA allows them to focus on profitability and long-term impact, rather than short-term valuations. So far, feedback has been overwhelmingly positive—entrepreneurs love the flexibility, and investors appreciate that it aligns incentives around building sustainable businesses rather than chasing the next funding round."

The economic and cultural landscape of WNC also plays a role in shaping its entrepreneurial ecosystem. Strengths of the region include a tourism-driven economy and a growing ecosystem of support organizations like Venture Asheville, Hatch Innovation Hub, and Mountain BizWorks. "The region is also home to founders who prioritize sustainability, social impact, and craftsmanship—qualities that align well with our investment philosophy," said Kaplan. 

But the area is rife with challenges, too, including access to capital and talent. "While WNC has a strong network of angel investors and local funding sources, it’s not yet on the radar of larger venture capital firms," said Kaplan. “Additionally, talent recruitment can be difficult outside of certain industries. Optimist Ventures addresses this by acting as a bridge between local startups and outside investors, while also fostering a tight-knit founder community that helps with talent retention and shared resources."

Kaplan hopes to see more than 50 companies invested through the SPA model in the next five years. "We want to see more sustainable, profitable businesses being built in WNC—businesses that aren’t just chasing an exit but are creating long-term value," he said. "Success isn’t just about exits or valuations; it’s about seeing more founders build thriving businesses that support our region’s economy and create meaningful jobs."

NC IDEA, another major player in North Carolina’s startup ecosystem, supports early-stage companies through its MICRO and SEED grant programs. "The NC IDEA MICRO ($10K) and SEED ($50K) grant programs support companies early in their life cycles and can have a significant impact on their future success by reducing risks typically faced by young companies," said Andrea Cook, senior director of the NC IDEA Foundation. "These grants provide critical funding needed to grow and scale faster, and it is often the first time that a group outside of friends and family say: 'We see you, we see your potential, and we think the world needs to see your potential.'"

The NC IDEA MICRO grant program had its inaugural cycle in 2018, and since then has awarded more than $2 million to 209 companies across the state, about 10% of which are from WNC counties. The NC IDEA SEED grant program started in 2006 and over its lifetime has awarded more than $10 million in non-dilutive grants to 219 companies, about 40% of which hailed from outside of the Research Triangle.

Sabrina Hill, owner of Spice Witch and a 2024 MICRO grant recipient, said it is “a pivotal boost for my business” that’s come at a pivotal time for scaling. “The grant has allowed me to move into a larger facility, hire more staff, and purchase materials in bulk—all critical steps for growth,” she said. “One of the biggest milestones has been transitioning my production into a new facility here in Asheville, which I share with two other small businesses. It’s been a huge achievement for us. Before receiving the grant, one of the biggest challenges I faced was not being able to hire others. Now, I’m finally able to delegate, which has been such a game-changer."

Samantha Coffin, CEO of Matcha Nude and recipient of both a 2023 MICRO and 2024 SEED grant, says the grant similarly empowered her to make essential hires and lease a commercial kitchen and shared office space. "Honestly, we wouldn’t be where we are today without the NC IDEA grants and ecosystem,” she said. “When you get to certain growth points, you have to make decisions based on your cash flow or ability to get more funds. NC IDEA empowered us to take the leaps into the next stage of our business by buffering the period where the costs outweighed the profit. But every time, it has turned around for us and we ended up being far more profitable and making significantly more sales."

Programs like Venture Asheville and NC IDEA are helping founders build sustainable businesses that prioritize long-term impact over short-term gains. As WNC’s entrepreneurial ecosystem grows, these resources will play a crucial role in ensuring that local startups not only survive but thrive—strengthening the region’s economy and fostering a culture of innovation and resilience.

Learn more at OptimistVentures.co and NCIDEA.org.