PRESIDENT'S MESSAGE
Growing Local Talent and Ideas
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Economic development comes in various shapes and
sizes. The highest profile projects are those that
are actively recruited from out-of-state.
However, another important aspect of ED is that of
growing local talent, ideas and start-up companies.
In order for this to happen, venture capitalists are
often the groups and individuals responsible for
allowing small companies to grow their business into
large-scale, productive enterprises. Today’s
Economic Review gives our perspective on the
importance of venture capitalists and the role they
play in economic development.
As always, this issue includes a number of
ED-oriented stories of the past week and another of
our Investor Spotlights. If you have comments,
suggestions or topics you’d like to see in Economic
Review, please send your comments by clicking the
“Comments” button on the bottom of this page.
Enjoy!
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FEATURE STORY
Utah Enjoys Increasing Flow
of Venture Capital Investment
Utah is enjoying an increasing flow of venture
capital investment. During the first three quarters
of 2005, Utah companies raised about $223 million--a
$35 million jump over 2004 and an average increase
of $44.5 million per year since 2002. Utah’s average
deal size is also on the rise, having grown from
$3.6 million four years ago to $9.7 million in 2005.
Not only has there been an increase in venture
capital investment in the state, the ratio of Utah’s
venture capital investments to that of the nation
over the past four years has more than doubled. Joe
Strain of PricewaterhouseCoopers and a member of the
Mountain West Capital Network, says the increased
deal size and number of deals, coupled with the
increased overall ratio of venture capital
investments in Utah, speaks to the increased
attention the state is getting from all over the
U.S.
(Source:
MoneyTree Survey, PricewaterhouseCoopers)
Strain says Utah’s marked, consistent venture
capital growth since 2002 is above the national
average and should be attributed to the state’s
entrepreneurial spirit, excellent education, and
hard work ethic. According to the
PricewaterhouseCoopers quarterly MoneyTree Survey,
Utah has consistently had larger deals than other
states in our region—the one exception being a very
large deal ($63 million) in Nevada in the third
quarter 2005.Regional 2005 Venture Capital
Investment
(Source:
MoneyTree Survey, PricewaterhouseCoopers)
Time-To-Market
Increased venture capital investment is important to
Utah’s economy. It helps grow Utah companies,
produces more jobs, and adds to the tax base.
Furthermore, venture capital can be pivotal to a new
or expanding company’s ability to take product from
conception to sales. Consider Control4, a high-tech
Utah company bringing home automation into the
mainstream. Three years ago Control4 was simply an
idea. Today, Control4 has 100 employees, 450
dealers, and millions in sales. Through the use of
about $30 million in venture capital, Control4 has
funded its R&D, established its manufacturing
systems and marketing channels, recruited dealers,
and taken its products to market coast to coast
throughout North America—all within three short
years. Within the next four to six months Control4
expects to have established markets overseas as
well.
Time-to-market means everything, and Glen Mella,
chief marketing officer at Control4, says the use of
venture capital has accelerated the company’s
ability to take product from concept to sales. By
partnering with venture capitalists, Control4 was
able to build its marketing channel rapidly and
receive excellent management assistance.
Mella says Control4 sees its venture capital
partners as “thinking partners” because they provide
more than financial support. Venture capitalists
typically take an active role in the companies with
which they invest, thus providing new startups or
expanding companies with sound business advice, key
industry contacts, and assistance with business
strategy and management recruiting.
Control4 raised $15 million in venture capital in
the third quarter 2005. Its venture capital partners
are: Thomas Weisel Venture Partners, Frazier Tech
Partners, Foundation Capital, and Utah-based vSpring.
Other Utah companies to raise venture capital money
during the third quarter include: Cognetix, Inc.,
$679,800 (biotechnology); CanyonBridge, Inc.,
$8,370,000 (software); Sunforce Technologies,
$3,700,000 (software); and Alianza Global
Communication Services, $2,350,000
(telecommunications), to name a few.
A Strong Venture Capital Infrastructure
Utah is fortunate to have an established and active
venture capital infrastructure, providing early
stage angel money to start-ups and expanding
companies. Utah’s venture capital infrastructure
includes such companies and organizations as:
vSpring – a traditional early-stage venture capital
firm that targets information technology and life
sciences companies headquartered in the
Intermountain West region.
UV Partners – an early stage private equity
investment group with offices in Salt Lake City and
Los Angeles that helps entrepreneurs develop
early-stage concepts into industry-leading
information technology and life science companies.
Peterson Partners – invests in companies across the
U.S. with specific focus in the Intermountain West,
bringing firsthand expertise in the areas of
finance, accounting, legal and operations to the
portfolio companies in which it invests.
Sorenson Capital – a private equity firm with
offices in Salt Lake City, Utah; Palo Alto,
California; and Phoenix, Arizona. Sorenson Capital
provides small to middle-market buyout and growth
equity investments, with a particular focus on
opportunities in selected states in the Mountain and
Western regions of the U.S.
Canopy Group – venture capital firm focused on
funding and growing emerging
leading-edge technologies.
Grow Utah Ventures – seeks to stimulate and
facilitate the establishment and expansion of
Utah-based businesses through conditioning, rallying
and financing.
Wayne Brown Institute – offers entrepreneurs
educational and training programs that transfer
experience, knowledge, contacts and capital from the
world's leading business and financial organizations
to promising early-stage, technology-based
companies.
Mountain West Capital Network – Utah's first and
largest business networking organization devoted to
supporting entrepreneurial success. Members include
a broad mix of entrepreneurs, venture capital
providers, professional consultants, attorneys,
bankers, accountants, and educators from
universities and institutions of higher education.
Utah’s venture capital infrastructure is also
supported by the Venture Capital Enhancement Act,
which the legislature enacted in 2003 to accelerate
the formation of venture capital within the state.
The bill uses contingent tax credits to induce the
flow of investment capital to venture capital firms,
based upon the firm’s commitment to establish a
presence in Utah.
(The MoneyTree Survey is made in cooperation with
PricewaterhouseCoopers, Venture Economics and the
National Venture Capital Association. The survey
captures equity investments but excludes debt,
bridge loans, recapitalizations and initial public
offerings.)
USTAR to Replicate Innovation Campus Success
An
article published on-line by
Digital IQ magazine
about Utah State University’s Innovation Campus
illustrates the value of the Utah Science,
Technology and Research (USTAR) economic development
initiative. The article commemorates the 20th
anniversary of the highly successful Innovation
Campus, noting that 45 companies have been created
employing 2,100 people and generating about $121
million in revenue each year.
The mission of USTAR is to replicate the success of
Innovation Campus and the University of Utah’s
Research Park and dramatically accelerate the number
of new businesses and jobs that will spin out of
university research. The USTAR initiative will
attract national-caliber research teams focused on
creating new businesses and industries in
billion-dollar markets where Utah has a distinct
competitive advantage. Many of these businesses will
be housed at Innovation Campus and the U’s Research
Part to take advantage of the synergies of the
research universities.
Many of the high-paying jobs of the future will be
in science and technology, and USTAR is the state’s
best hope to keep Utah wages high and the economy
strong. Check the
USTAR Web site for more
information about this initiative.
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IN THE NEWS
Business Headlines from the Past Week
Salt Lake City and Ogden Rank Among Top 10
Digital Cities for Their Size
- The
Center for Digital Government (www.centerdigitalgov.com)
has ranked Salt Lake City and Ogden among the top 10
most technology-advanced cities in America for their
size. The designation is based upon the CDG’s 2005
Digital Cities Survey. The annual study
examines how city governments are utilizing digital
technologies to better serve their citizens and
streamline operations. Salt Lake City ranked 10th in
the 125,000-249,999 population category while Ogden
ranked third in the 75,000-124,999 population
category. (Marketwire)
Spanish Fork Recognized for its Tech Savvy; 2nd
Year on List Due to Fiber-optic System
- Move
over Moab. Another Utah city is hobnobbing with the
world's elite. While Spanish Fork may not be sharing
bumper sticker and T-shirt space with the likes of
Paris and New York, it is getting attention for its
tech savvy along with London, Melbourne and Taipei. (D-News)
Utah’s Economy Perks Up
-
Utah businesspeople had a reason to be thankful in
November, as the state's business conditions
improved during the month, according to a Creighton
University report. (D-News)
(Standard-Examiner)
Cold Weather Heats Up Sales for Insulation
Company
- Most
Utahns are facing this winter’s high heating costs
with dread, but rising prices have been a blessing
for ThermGuard. The Utah company brought its new
window insulation product to market this fall, just
in time to catch a tidal wave of consumer demand
caused by Questar’s higher natural gas rates, up 38
percent from last year. The company is racing to
keep up with consumer demand, and has had to delay
out-of-state distribution deals. ThermGuard has
ramped up production and is continuing to hire
additional staff. (Utah
Business Magazine)
Home Furnisher IKEA Announces Plans for Store,
Restaurant in Draper
- The
310,000-square-foot IKEA store will be the first in
the Mountain West for the wildly popular Swedish
home furnisher. As part of a larger 40-acre project,
the IKEA store will be built on 22.5 acres at the
northwest corner of I-15 and Bangerter Highway, IKEA
spokesman Joseph E. Roth said at a news conference.
The company expects the store to open in spring of
2007, a year after breaking ground. (D-News)
(SL
Trib)
Growing Number of Utah Women Own Businesses
- There
are over 100,000 businesses in Utah owned and
operated by women, and that number is growing. The
trend is amazing local experts who say Utah is even
turning heads nationally. Utah leads the nation when
it comes to women starting up their own businesses. (KSL)
Rise in Utah County Tourism
-
Tourism in Utah County is on the rise, and a
business and marketing plan is in place to make sure
it stays that way, Utah Valley Convention and
Visitors Bureau officials say. Statistics show the
room tax collected by the county is up 8.7 percent,
the occupancy rate is up 6.7 percent, room rates are
up 8 percent, and the amount per available room is
up 14.8 percent. (D-News)
(Daily
Herald) (SL
Trib)
Huntsman to Home Builders: Prepare for Growth
- With
Utah's population topping 2.5 million, and 2 million
more projected to arrive over the next 20 years, it
seemed only appropriate that Gov. Jon Huntsman would
speak to the Northern Wasatch Home Builders
Association about growth. "In 10 years, Utah will be
one of the fastest-growing states in America,"
Huntsman told the group. (Standard-Examiner)
4-Year Biotech Degree Proposed For Utah Colleges
- UVSC
and Salt Lake Community College students could soon
have the option to earn a bachelor's degree in
biotechnology in an effort to supply a growing
demand for biotech workers in a state where life
sciences are seen as a keystone to economic
development. The Governor's Office of Economic
Development is promoting biotechnology - an applied
biological science often used by pharmaceutical
companies - as part of its economic development
plan. (KUTV)
Utahns Spreading Out; State’s Residential
Building Boom Still Going Strong
- A
record number of new housing permits were issued in
Utah during the first nine months of 2005,
indicating no slowdown in a residential construction
boom stretching from Ogden to St. George. Across the
state, 21,347 residential permits were issued from
Jan. 1 through Sept. 30, a 13.1 percent increase
compared to 18,876 permits during the same
nine-month period in 2004, according to the
University of Utah's Bureau of Economic and Business
Research. St. George topped the list of Utah cities
issuing the most residential permits at 1,551. Lehi
was second at 1,035. (D-News)
Technology Council to Receive Face Lift
- A
legislative group wants to give the Utah Technology
Industry Council a face lift to make it better able
to address tech-sector issues. The state Technology
Industry Commission has delivered draft legislation
that would make sweeping changes to the council, a
state entity since 2003 that has discussed industry
matters and suggested legislation considered by the
commission. (D-News)
Novell Flush With Good News
- A
month after slashing its global work force by 10
percent, Novell Inc.'s fortunes show signs of
rallying - both at home and in an expanding overseas
market. On Tuesday, the computer networking and
Linux distribution company reported dramatically
better quarterly results than expected, won top
honors for its SuSE Linux Enterprise Server suite
and unveiled a $39 million deal with the British
health agency. (SL
Trib)
Interest in Utah’s Uranium, Limestone High
- The
Utah Geological Survey has just published maps of
hot spots for uranium and limestone. There's keen
interest in both commodities. The construction
industry, gripped in a building-products shortage,
needs more limestone to make cement, and western
Utah offers an abundance of good-quality reserves.
And, with many talking about a renaissance of the
nuclear-power industry, those who stake claims are
hoping for a third uranium boom on the Colorado
Plateau in southeastern Utah. (SL
Trib)
Growing Utah Entrepreneurs
- Grow
Utah Ventures recently held its grand opening and
hopes to have its E-Station fully operational by
January. T. Craig Bott, Grow Utah Ventures
president, says the former bus station will serve as
a place where people gather to start their journey
and their great adventure, adding more fuel to the
region's economic engine and providing jobs. (Standard-Examiner)
Ogden Sells Bonds for Rec Center; Plans
Groundbreaking
- A
groundbreaking ceremony is planned in December for
the $18.5 million recreation center. Besides the
bond proceeds, the city is using a $2 million
federal HUD loan and property taxes from another
development project to pay for the center. (SL
Trib) (Standard-Examiner)
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INVESTOR SPOTLIGHT
Name/Title: Michael M. Lawson, President/CEO
Company:
Commerce CRG
Company's Mission Statement:
Commerce CRG is a regional real estate firm
dedicated first and foremost to our clients.
With the industry’s premier professionals, and
industry leading technology, our mission is to
exceed our client’s expectations through service
excellence.
Education: University of Kansas
(bachelor’s degree); Southern Methodist
University (Institute for Organizational
Management); University of Oklahoma (Economic
Development Institute); Kellogg National
Fellowship Program.
Growing up: Kansas City, Kansas.
 Family:
Wife Nancy, sons Steven and Jim.
Hobbies: Skiing, motorcycles,
camping and boating.
Motivations/Ambitions: Motivated to
do the very best job possible, leadership where
needed, support where possible, hard work and
focus at all levels.
Why economic development is important:
Economic Development is the foundation for all
aspects of community growth and development.
Without significant and well-formulated economic
development strategy and ACTION, any community,
state or region will eventually stagnate.
Hottest economic development issues you see
(either for the state or for your company):
This is where we could talk about tax
structure, incentives and marketing -- all timely,
and very important. But to me, the most significant
issue for any business, or for any economic
development organization, is our ability to listen
to our clients, to understand their needs, and, with
a real sense of URGENCY, to act on those needs. Too
often an organization’s output (whether that’s a
public, private or non-profit organization) is based
on “the way we used to do it,” what our competitors
do, what a consultant said, what’s the best
“acceptable” approach, etc. If we’re going to be
successful, if we’re going to provide cutting edge
services and products, if we’re going to have a
delivery system for those services that makes sense,
we have to first ask our clients, then listen, then
deliver.
Improvements in economic development you’d
like to see: Within this state, we’ve
taken a huge step forward – an enormous step –
by focusing our outreach efforts under a single
organization, a single voice for Utah’s business
development efforts. Now we need to make sure
that we financially support this effort. If
we’re going to be effective, we need to make a
major commitment in time and resources, far
beyond what we’ve done in the past. We need
additional state dollars put into the effort.
Equally important, we need to assure the private
sector provides support at a level that will
assure long-term participation of our outreach
efforts at the national and international level.
Proudest Moment: Every time I talk
to my sons.
Most embarrassing moment: No way am I
answering this one. However, I still have
trouble, with some frequency, with the send
button on e-mail.
Favorite book: Right now I’m reading
“The World is Flat” by Tom Friedman. A fun book
is “Texasville” by Larry McMurtry.
Favorite mentor: My Mom –
extraordinary work ethic, curious, always
learning, open to change and focused.
Your Personal Motto: Maybe it’s
not the most productive, but the one I’ve had
ingrained over the years is, “If you’re not
going to do it right, don’t do it all.”
Anything Else You'd Like to Share:
Governor Huntsman’s vision for economic
development, EDCUTAH, and the national economy
are all positioned, right now, to create real
opportunity for Utah. We need to be prepared to
provide the support necessary to realize that
opportunity. |
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CALENDAR
Dec. 7: GOED Open House
Dec. 8: Utah County ED Roundtable
Dec. 15: EDCUTAH Holiday Open House (EDCUTAH
Offices--RSVP to Erin Farr)
Jan. 11-13: "What's Up Down South" ED Forum (St. George)
Feb. 10-12: EDCUTAH Site Consultant Event (Park City)
March 8-9: Big Business and Technology Expo (Orem)
April 6-7: Utah League of Cities and Towns Spring Convention (St. George)
April 9-12: BIO 2006 Annual Conference (Chicago)
April 23-26: CoreNet Global Summit Spring Convention
(Philadelphia)
May 3-4: Salt Lake Chamber Business-to-Business Expo
May 21-24:
ICSC Spring Convention (Las Vegas)
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