Venture Capital - The Key to Boosting Economic Prosperity in Utah
By many measures, Utah has “arrived” as an economic powerhouse. The national rankings tell the story.
We rank at or near the top in nearly every labor market measurement, with exceptionally strong employment growth and low unemployment. We rank as one of the top states for innovation. And we have the fastest-growing tech workforce in the nation.
The Kauffman Foundation ranks Utah as the second-best state for growth entrepreneurship, and we have been designated an “Innovation Champion” by the Consumer Technology Association. We also enjoy the second-most diverse economy in the nation.
How did we reach these heights? I believe four key factors are responsible:
- We have a positive business environment with limited government regulation.
- Our tax climate is favorable.
- Our state government provides appropriate support and encouragement.
- And we have sufficient capital availability.
That last factor is relatively new for Utah. It wasn’t very long ago that startup businesses in Utah had a difficult time finding early stage funding. Many startup entrepreneurs felt they had to be in Silicon Valley to attract venture capital and to be taken seriously.
Today, Utah has emerged as one of the best states in the nation for capital investment. We have some 50 venture capital firms in the state, and our businesses also attract significant venture capital from other financial centers.
This strong capital investment climate didn’t happen by chance. Former Gov. Jon Huntsman Jr. practiced what I call “state capitalism.” Just after he took office in 2005, he proposed two bills designed to stimulate our economy. One was the Utah Science Technology & Research initiative. The other was the Fund of Funds.
These programs provided state investment in basic research with potential for commercialization and also leveraged private investment dollars to kickstart the state’s venture capital industry.
USTAR leveraged the proven success of Utah’s universities in creating and commercializing innovative technologies to generate new businesses, new industries, high-paying jobs and additional business activity. Promising high-tech business startups attracted more investment capital, leading to an expansion of our tax base and enhanced economic prosperity for all Utah citizens.
Huntsman’s efforts not only boosted the economy while he was in office but also set in motion programs that would drive investments to propel Utah’s economy for years to come. By 2017, 12 years after the launch of these initiatives, Utah had the nation’s fastest-growing tech workforce.
We’ve seen an enormous increase in venture capital investments in the state over the past decade.
- From 2010 to 2016, total capital investment in Utah grew roughly $1.4 billion, from $3.8 billion in 2010, to $5.2 billion in 2016, a 36 percent increase.
- As the tech sector has expanded, it has spurred growth in Utah-based venture capital firms. Typically only common in the major U.S. financial hubs, home-grown venture capital funds have been popping up in Utah, seeking to capitalize on Utah’s strong entrepreneurial culture, excellent economy and remarkable workforce.
- In 2017, Utah’s 50 venture capital firms raised $56 million to fund startup companies and to support expanding companies. In total, Utah companies received $818 million in venture capital investment in 2017.
- Over five years, Utah venture capitalists raised $1.4 billion. From the end of the great recession in 2009, venture capital investment in Utah companies has grown by 450 percent, nearly double the national growth rate. The number of deals per year has also more than doubled in the same time period.
- The number of venture capital deals and the funding per deal in Utah have both outpaced the national average since 2009.
This relationship between Utah’s tech industry and burgeoning venture capital community will be of significant importance going forward as Utah’s Silicon Slopes challenges other tech meccas, like Silicon Valley. Support from venture capital firms often includes long-term managerial and business development support of a company.
Today, Utah is certainly in the venture capital game and is leading America’s charge into the future.
By: A. Scott Anderson, Deseret News
Photo: Laura Sietz, Deseret News