NCInnovation Turns Appalachian Research into Real Businesses

A half-billion-dollar bet on Appalachian innovation

North Carolina is doing something unusual: using state money to turn university research into actual businesses. NCInnovation, a public-private partnership backed by a $500 million state endowment, is funding applied research at Appalachian State University and guiding researchers through the messy process of commercialization.

The results so far include an AI-powered robotic microscope that could save North Carolina farmers real money, a smart beehive monitoring system, and a digital health tool for childhood development screening. These are not theoretical exercises. They are products being built to ship.

For small businesses across the region, this signals a shift. The technology pipeline that once flowed exclusively through the Research Triangle is now reaching into the mountains.

What NCInnovation is doing at App State

NCInnovation operates on a straightforward model. The $500 million endowment stays intact permanently. Investment returns — roughly $35 million per year — fund grants that help university researchers move their work from proof-of-concept to commercially viable product.

App State serves as NCInnovation’s West Region hub, with offices on both the Boone and Hickory campuses. Regional director Meagan Coneybeer connects researchers with industry partners, legal support for IP protection, market analysis, and mentorship on starting a business and attracting private investment.

This is not just grant money. NCInnovation provides the full wrap-around support that turns a lab breakthrough into something a customer can buy.

AI research being commercialized in Appalachia

Three projects stand out for their AI components and commercial potential.

AI-driven robotic microscope

Dr. Zach Russell, an assistant professor of physics and astronomy, received a $2.3 million NCInnovation grant for a microscope system that combines robotics and AI to automate fecal egg counting — a critical but tedious step in livestock parasite detection. The AI segments images into regions of interest and classifies what it finds.

The project is at Technology Readiness Level 3. Over the next two years, NCInnovation funding will push it through TRL 4 (system integration) and TRL 5 (field testing with veterinarians and Cooperative Extension offices). After that, the team plans to work with the North Carolina Department of Agriculture for certification.

North Carolina’s agricultural sector is worth over a billion dollars. A tool that makes parasite screening faster, cheaper, and more accurate could have real market impact — especially for the small livestock operations common across Appalachia.

Beemon hive monitoring system

Dr. Rahman Tashakkori received $641,951 in NCInnovation funding to commercialize four components of Beemon, a monitoring system designed to reduce honeybee hive die-off and increase production. The system uses sensors and data analytics to give beekeepers actionable insight into hive health without constant physical inspection.

Digital health screening tool

Dr. Gavin Colquitt is developing a scalable web-based tool that helps families and educators identify early movement-skill delays in young children. Funded as part of a $10 million NCInnovation round supporting AI-enabled tools for health, mobility, and safety, it represents the kind of accessible digital health product that rural communities particularly need.

What this means for local small businesses

University-to-market pipelines matter for small businesses in ways that are not always obvious.

New technology becomes accessible locally. When a product like the AI microscope goes commercial, regional veterinary practices and farms get early access to technology that might otherwise only reach large-scale operations in other states. Small ag businesses benefit directly.

The talent stays. App State’s Research 2 designation and its growing AI program — its MBA in AI was recently ranked nationally — mean graduates with AI skills are being trained in the mountains. NCInnovation gives those graduates a reason to stay by creating startup opportunities close to home.

Supply chain and service opportunities. Every research spinoff needs vendors, contractors, and service providers. A startup commercializing an agricultural AI tool needs packaging, distribution, IT support, marketing — the kind of work local small businesses can win.

The consulting pipeline opens up. Researchers moving toward commercialization need business expertise. If you run a consulting practice, accounting firm, or marketing agency in western North Carolina, these university spinoffs are potential clients. Organizations that offer AI consulting and development services are particularly well-positioned to support this transition.

The risk: legislative clawback

This story has a catch. The North Carolina General Assembly is debating whether to reclaim NCInnovation’s funding. House Bill 154 would dissolve the endowment entirely and redirect the $500 million to other budget priorities, including western NC disaster relief. The Senate has proposed a compromise: replace the endowment with four years of $25 million annual appropriations.

Either outcome would fundamentally change NCInnovation’s model. The endowment approach generates perpetual funding without recurring appropriations. Annual appropriations depend on political will and budget cycles — exactly the kind of uncertainty that makes long-term research planning difficult.

NCInnovation’s CEO Bennett Waters announced his departure in 2026, and the organization’s board has frozen new investment plans while the budget debate plays out.

If you care about the Appalachian innovation ecosystem, this is worth watching.

How to tap into university-business partnerships

You do not need to wait for NCInnovation’s fate to be decided. University-business connections are valuable regardless.

1. Attend the Appalachian Research in Business Symposium. The 2026 ARBS runs April 16-17 at App State’s Boone campus. It is a direct line to researchers working on commercializable projects.
2. Contact App State’s Office of Research and Innovation. They actively seek industry partners for applied research. If your business faces a problem that could benefit from AI or data analysis, there may be a researcher looking for exactly that use case.
3. Explore SBIR/STTR grants. The Senate recently reauthorized SBIR/STTR programs through 2031, including new Strategic Breakthrough Awards up to $30 million. Small businesses collaborating with university researchers are strong candidates.
4. Build your AI readiness. University partnerships work best when both sides speak the same language. Understanding what AI development can and cannot do for your business puts you in a stronger position to collaborate.

The bigger picture

The Appalachian region has long exported talent and raw materials while importing finished products and technology. NCInnovation, whatever its political future, represents an attempt to reverse that pattern — building the capacity to create and commercialize technology locally.

The projects at App State are proof that it works. An AI microscope for livestock health. A smart monitoring system for beekeepers. A digital screening tool for childhood development. These are practical tools built by Appalachian researchers for problems that Appalachian businesses and communities face.

Whether the endowment survives its legislative battle or not, the model is clear: invest in applied research, provide commercialization support, and let the region build its own technology economy. Small businesses that position themselves near this pipeline — as partners, vendors, or early adopters — stand to benefit the most.

Interested in bringing AI tools into your business? Get in touch — we help Appalachian businesses find the right AI solutions.