It’s been hard to miss hearing about the Utah business scene in national news this week. Several weeks ago the National Venture Capital Association published a top 20 list in technology startup funding…Utah had two cities listed. Forbes named Utah the best state to do business in for 2014. Inc. magazine is telling Silicon Valley to move over. It all sounds like great news for Utah business.
With all things considered, Utah really is a great place for business creation and business expansion. A favorable regulatory environment with a highly educated workforce and low cost of living provide a solid formula for growth. But the headlines are a bit misleading.
The tech startup funding list helped get some of the national press. What it doesn’t reveal is those Utah companies that received on average $29.5 million dollars each weren’t really startups. They were established businesses with solid track records operating for longer than the three years typically considered to be startup phase. Inc. wrote, “‘They’re getting VC money, but they’re way beyond startup phase,’ observes Pedersen of Utah’s VC recipients.”
What about the staggering amount of funding – $737 million in the first three quarters of 2015? That’s attributable to the existing size of the companies being funded.
The per-deal sums are huge because the companies–by the time they receive them–have major payrolls and products to support. Qualtrics, for example, had $48 million in revenue and 300 employees when it received its Series A round. It was well beyond napkin-scrawled ideations and fail-fast iterations.
While this is bad news for Utah’s entrepreneur hopefuls, it also shows that building a business here is possible. There are a number of creative ways to fund a business without VC cash including grants, loans, personal savings, bootstrapping, crowdfunding, pre-sales and more. The key, it seems, is developing a product or idea people are willing to pay money for.