With a population of only 2.9 million, compared to California’s 39 million, Utah is going up against Goliath in the battle for venture capital. Lucky for Utah entrepreneurs, recent funding seems to show they have a fighting chance.
Utah’s Unicorn count, startups worth $1 billion or more, reached five this last year. That’s a lot considering Forbes reported only 80 unicorns existing so far in 2015.
Background
Omniture set the stage in 2009 when the web analytics company sold to Adobe for $1.8 billion. Then, Vivint, the home-automation company, was bought out by Blackstone for $2 billion in 2012, the largest exit in Utah history. In 2014, Qualtrics, a survey company, and Pluralsight, an online developer training platform, both reached the $1 billion mark. This year, InsideSales, sales automation software, and Domo, a business management platform, both joined the club.
Venture Capital in Utah
Things are speeding up along the Wasatch Front and outside investors are taking notice, as Utah is seeing more venture capital than ever before. In 2014, Utah companies raised almost $1 billion, the most in the state’s history. This year, companies are on pace to exceed that number, having raised over $500 million. While neighboring Colorado and Arizona are often regarded as startup hubs, Utah surpassed them both last year, according to CB Insights.
Raising after profitability
The large per-deal sums that Utah is seeing, happen in part because by the time companies receive them they already have revenue, proven products and a large employee base. For example, Qualtrics had $48 million in revenue and 300 employees before it took any money.
Pluralsight had $16 million in revenue in 2012 before it took its first round of financing in 2013. Their revenue that year jumped to $38 million. The company has now raised over $160 million and acquired six companies.
Domo recently raised the largest single round in Utah history in a $200 million Series D.
Talent in Utah
Utah is home to great talent and is learning how to attract more talent. With Brigham Young University, University of Utah and Utah Valley University all turning out great talent along the Wasatch Front, companies have no shortage of young talent to pull from.
Companies are also hiring impressive talent from around the country, promising executives a better lifestyle, cheaper housing and less traffic than big cities.
InsideSales recently hired Jim Steele, previously Salesforce’s chief customer officer. The company also hired David Rudnitsky and Lindsey Armstrong to head global expansion and enterprise sales, both former Salesforce employees.
Jive Communications, an enterprise hosted VoIP, snagged Theo Zourzouvillys, previously at Skype, as their chief technology officer.
In a competitive landscape, Utah companies are finding it easier than ever to attract and retain top talent to the state and they are making it harder for people to say no to the Beehive State.
Business-friendly Environment
Utah has won Forbes’ “Best State for Business” award four out of the past five years. This is in part because of tax breaks available and low energy costs. Utah’s energy costs are 26 percent below the national average. The cost of doing business is also 12.9 percent below the national average, according to Forbes.
24/7 Wall Street named Utah the Best State for Business in 2015, ranking highest in their eight categories. The categories included business costs, cost of living, economy, regulation and infrastructure. Because of the business friendly environment, large companies that are headquartered elsewhere are opening up offices in Utah.
Ebay opened its first building of a planned campus in 2013. The Governor’s Office of Economic Development approved a $38.2 million tax incentive for the company if it built its campus in Draper. Ebay promised to create 2,200 jobs in the state by 2031. Other companies who have opened offices in Utah include Adobe, Thumbtack, Workday and Ghostery.
With Utah’s tech ecosystem growing and investor money flowing into the state, exciting things are sure to come in the future for Utah.