During his address at the NVCA Leadership Gala & Summit as the incoming Chair of the NVCA Board of Directors, Venky Ganesan of Menlo Ventures discussed his priorities for the year ahead. In addition to creating a more inclusive venture capital industry, Venky said his main priority for his term as Chair is to shine a spotlight on entrepreneurial ecosystems beyond the mature, well-established giants of San Francisco, New York and Boston.
One such ecosystem that deserves more attention is the state of Utah. Known for its national parks, the Great Salt Lake and some of the best powder skiing on the planet, the Beehive State is the perfect example of an entrepreneurial ecosystem quietly on the rise. In fact, in 2015 Utah ranked 11th in venture dollars deployed, and its 55 deals last year marked the most since 2000.
Since 2010, Utah has experienced some dramatic growth to its ecosystem. The annual growth rate of Utah companies receiving venture funding between 2010 and 2015 ranks 10th, number of venture deals ranks 6th and amount invested ranks 7th. In addition, the Provo-Orem, UT MSA has been one of the fastest growing ecosystems over the past five years, tied for 6th by annual growth in number of companies receiving venture funding. Not too bad for a state with only 3 million residents.
Aside from Utah’s rapid ascent toward the top of the charts, what is most impressive about Utah’s ecosystem is the diversity of sectors represented. Not surprisingly, like overall venture investment trends, software companies lead the charge, accounting for 84% of venture dollars invested in Utah last year. However, there is much more activity beneath the surface. From medical devices and health care services to networking equipment and IT services, Utah’s entrepreneurial ecosystem is just as expansive as the state’s natural beauty.
None of this should really come as a surprise. After all, Utah is nicknamed the “Beehive State” because the beehive is a symbol of hard work and industry, and bees themselves are notoriously hard workers just like Utahans. This hard work and determination has undoubtedly contributed to Utah’s rise as a prime destination for venture capital investment and is why Utah has produced prominent venture-backed startups Qualtrics, Domo and Pluralsight, to name just a few.
In April, NVCA President and CEO Bobby Franklin and I had the opportunity to travel to Utah to witness firsthand what makes Utah such a burgeoning entrepreneurial ecosystem. Invited to attend and speak at the 10th Annual Utah Economic Summit hosted by Utah Governor Gary Herbert, we spent two days fully immersed in Utah’s startup scene and came away thoroughly impressed by what we saw.
What became clear to us is that Governor Herbert and other leaders from the state know they are on the rise and want to keep it that way. Not ones to rest on their laurels, Utah’s leaders intend to continue their rise to the top and are working with stakeholders from the community to execute on a plan to grow Utah’s entrepreneurial ecosystem and perhaps supplant larger ecosystems from the top of the pecking order.
One such example of this community engagement is the recent groundbreaking of the Lassonde Studios by the Lassonde Entrepreneur Institute at the University of Utah, which Bobby and I had an opportunity to tour during our visit. Featuring 412 unique student residences and a 20,000 square foot space with tools and equipment for students to meet, build and launch startup companies, the project is a great example of the critical role universities play in supporting a local entrepreneurial ecosystem.
From touring the Lassonde Studios to meeting with Governor Herbert to interacting with Utah’s startup community, our visit to Utah was an influential event for Bobby and me. What became clear to us is that Utah has a very special story to tell and we want to help tell it, both in Washington, DC and nationally.
At NVCA, we are often asked what it takes to build and grow a thriving ecosystem. Everyone wants to know how they can become the next Silicon Valley. The truth is, there is no secret recipe, but there are good models to follow. Utah is one such model, and if I were a betting man, I’d say Utah’s rise isn’t even close to plateauing.