‘There’s Utah, and Then There’s Everyone Else’

In November, Utah took its place, once again, as Forbes' best state for business, a ranking the Beehive State held for three straight years from 2010-2012. 


Utah's business climate is increasingly revered by businesses looking for a stable environment in which to relocate or expand. But did you know Utah is also a magnet for venture capital investment? In fact, two Utah metro areas rank first and third in terms of venture capital dollars per deal.

An October story by the Associated Press, which focused on the dollar amount of venture capital investments in tech startups during the first nine months of 2014, ranked the Provo-Orem metro number eight with nine deals that totaled $462 million, while the Salt Lake City-Ogden metro ranked number 12 with 16 deals totaling $275 million. (See the rankingshere.)

Some people may yawn at such rankings, but Inc. magazine writer Ilan Mochari saw the Associated Press rankings and drew an interesting conclusion–one that shows just how strongly Utah's Silicon Slopes rivals Silicon Valley and every other tech center in the country. In the story, which leads with the headline "Move Over, Silicon Valley: Utah Has Arrived," Mochari says, "When it comes to staggering sums of venture capital raised in 2014, there's Utah, and then there's everyone else."

Gone are the days when venture capitalists shrugged at Utah tech companies. As Mochari explains, companies in San Francisco and Silicon Valley brokered more venture capital deals than companies in Utah, but as the Associated Press numbers show, companies in the Provo and Salt Lake City metro areas got more venture capital dollars per deal during the first nine months of 2014. In fact, the Provo-Orem metro had the highest average dollar amount per deal of any metro in the country, at $51.3 million. San Francisco was next with $18.4 million, while Salt Lake City came in a close third with $17.2 million. (Read Inc. magazine's take on the study here.)

"It paints a different picture, does it not? Mind you, paeans to Utah's entrepreneur-friendly culture are nothing new. Nor are the leadership lessons you can cull from Mormon principles. Yet the astronomical per-deal averages in Utah indicate something bolder is afoot," writes Mochari.

The Wall Street Journal has also recognized the buzz the Beehive State is generating among venture capital investors, saying 2014 will be a record year for venture investment in Utah. "Companies there raised $405.8 million in the first half of the year, and including third-quarter investments, more than $690.8 million has been invested in Utah companies, crushing the prior record of $565.5 million in 2000, according to Dow Jones VentureSource."

Insight Venture Partners Managing Director Jeff Lieberman told the Journal his firm isn't targeting Utah, but "the ecosystem there happens to be more fertile" than many other areas.

Overall, "Utah was the sixth most popular destination for venture capital investments in the first half of this year," according to the Wall Street Journal. The preponderance of venture capital-backed investments went to companies in California.

Two of the Utah companies brokering significant venture capital dollars include Qualtrics and Domo, both based in Utah County. Qualtrics received $150 million in Series B funding in September and Domo garnered $125 million in Series C funding earlier this year. The acquisition of Utah County-based Vivint by the Blackstone Group for $2 billion in 2012 is said to be the largest tech buyout in Utah's history.

IT and software are not the only sectors where Utah is catching the eye of businesses around the world. The state has stepped into the lime light for its life sciences, energy development, aerospace and defense clusters.

"We've been working hard to streamline the growth process for manufacturers and other businesses here in Utah," says Todd R. Bingham, president of the Utah Manufacturers Association. "Not only is Utah growing in the tech industry–which is a significant part of what makes manufacturing so great here in the state, but Utah is growing significantly in other industries, and that only makes for an even more promising future."

Utah is often recognized for its high-profile business acumen, unrivalled linguistic talent, business-friendly "best practices" in economic development and is seen as a place where companies need to be and want to be. Thanks to this ecosystem, high-tech and innovation continue to fuel its growth, with more business creations year over year than business deaths. Add in the state's relatively low labor cost, low commercial rents, low utility costs and large labor pool and Utah stands out among the best of the best for quality of life, economic growth, industry growth, culture and talent. It's also a great place to raise a family.