Utah Technology

For those who know about Salt Lake City and its vibrant business and tech­nol­ogy base, it comes as no surprise that the city consistently gets a thumbs-up from national publications and surveys. In the May 2005 issue of Inc. magazine, the Salt Lake City-Ogden area was ranked 31 out of 274 population centers in a study of the best places to do business. The magazine noted that in 2000, there was only $100 million in early-stage funds in Utah, while today the total is “more than $650 million.”

Brad Bertoch, executive officer of the non­profit Wayne Brown Institute, in Salt Lake City, which helps start-up companies attract venture capital, says that the present, “is probably the most robust it [venture capital] has ever been. The venture capital industry in Utah has 16 venture funds and $1.5 billion in capital, while at the height of the [Internet] boom in 2000, there were two venture funds in the state.”

The biggest deal last year was Linux Networx, which received $40 million from Oak Investment Partners and Tudor Ventures, making it the largest single investment in a Utah company in 2004.

The national 2004 MoneyTree Survey, compiled by PricewaterhouseCoopers, Thomson Venture Economics and the National Venture Capital Association, ranked Utah 17th among in the nation for venture capital raised.

“Utah has become the epicenter of the Inc. 500 Fastest-Growing Private Companies in recent years, specifically Provo,” said a fall 2004 Inc. article. The number two company on the list was software developer uSight, based in Orem, which is adjacent to Provo. The article noted that Utah had the highest number of Inc. 500 companies per capita in the U.S. with 6.8 per million residents, with the next state being a distant second, with 3.9 per million residents.

And Salt Lake City is proving remarkably open-minded to newcomers. You won’t find an old-boys-network here. In the fall of 2004, the Washington, D.C.-based Center for Women’s Business Research ranked the Salt Lake City-Ogden metro area tops among U.S. cities in its growth rate of women-owned businesses. Stoel Rives, a law firm in Salt Lake City, reported in late 2004 that during the 1983 to 2003 time period, patents awarded per year in Utah quadrupled from 210 to 847. Patents only tripled nationwide.

Of course, traveling over Utah’s technology landscape isn’t entirely smooth sailing. Fifteen years ago or so, Utah was a technological power­house, home to such major companies as Novell, WordPerfect, Iomega, and Evans and Sutherland, among others. But then, as a result of mergers and competition from larger companies, Utah’s stock of high-tech firms began to dwindle.

But it seems the corner has been turned and the future of technology is looking ever brighter. In fact, Utah’s IT Industry grew over 13 percent last year, from 2,638 companies in 2003 to 2,984 companies according to the latest data released by the Utah Department of Workforce Services (September 2004). The average IT salary is 76 percent higher than the statewide average annual nonagricultural wage.

The Utah Venture Capital Enhancement Act, which was amended in the Utah Legislature in 2005 to facilitate the launch of Utah’s $100 million Fund of Funds, should attract even more venture capital and investing in Utah’s young companies.

Another important legislative issue of the 2005 session was funding for the High Technology Economic Development Initiative, earmarking $7.35 million for the state’s research universities, the University of Utah and Utah State University. The funds will be used to hire new research faculty in high-tech areas ripe for commercialization. The Salt Lake Chamber, the Governor’s office, the universities, and the Utah Information Technology Association are working closely together to insure that this initiative results in long-term economic growth and more high-tech, high-paying jobs for Utahns.

The University of Utah announced in January 2005 its intension to turn faculty research into business revenue and, in the process, keep billions of dollars in lab-generated business activity inside the state. The university has formed an Office of Technology Venture Development to reach this goal. In 2003, according to school estimates, research spending and technology transfer from schools to private companies contributed about $1.1 billion in business activity and nearly 30,000 jobs to Utah’s economy.

Bertoch reports that in biotechnology, drug delivery and drug discovery are particularly robust areas for the state. On information-technology side, web services, enterprise software, security stuff and home automation are showing strength.

Overstock.com Inc., a Salt Lake City-based retailer of discounted brand-name merchandise acquired from suppliers looking to unload excess inventory, has become one of the major retailers on the Internet. Sales for the first quarter of 2005 more than doubled to $166 million, and sales for all of 2004 also more than doubled to $495 million. Overstock.com is becoming one of the genuinely branded names among Internet companies.

Another major Internet brand is MyFamily.com, based in Provo. ComScore Media Metrix, found MyFamily.com was among the top 10 Internet properties in terms of its percentage gain in unique visitors, and was second only to ESPN for the number of unique visitors among these 10 highly popular websites.

Anyone familiar with technology knows that every geographic area with a strong technology sector has a strong educational sector supporting technology. The University of Utah, Brigham Young University, and Utah State University all have national reputations in various aspects of technology. A recent addition to technology education in Utah is Northface University. The school is unique in that its sole focus is computer science. Its students can complete their Bachelors degree in 28 months with the university’s accelerated program. The university’s chairman and CEO, H. Scott McKinley, reports that the school now has 150 students, which should double by the end of 2005, making it one of the larger computer science programs in the U.S. Northface, along with all the other well-regarded computer science programs in Utah, promises to keep Utah’s employee pipeline filled with highly qualified technology workers.