Beehive of Tech Activity: A Look at Utah’s Surging Technology Community

Utah, the “Beehive State,” has long been known for being home to world-class ski resorts, breathtaking national parks, and the Mormon church. Over the past decade, however, Utah has also earned a reputation for being home to a thriving technology community.

Wednesday, November 25, 2015

While many cities and regions across the United States are currently laying claim to being the “next Silicon Valley,” Utah’s Salt Lake City-Provo-Ogden region has clearly established itself as one of the fastest-growing hubs for technology activity. In this report, we examine recent trends in venture capital investment in Utah and the drivers of the state’s growing technology ecosystem.

Venture Capital Flows to Utah
Situated on the western front of the Wasatch Range, Utah’s Wasatch Front is home to a growing number of large, high-growth companies. In addition to more-established firms that began emerging in the 1990s, such as Omniture and Ancestry.com, the region is home to several companies that have achieved—or are knocking on the door of—unicorn status by reaching $1 billion valuations. This list includes Domo, InsideSales.com, Qualtrics, and Pluralsight. On November 12, educational technology provider Instructure went public at a valuation of about $450 million. We expect several of Utah’s unicorns to follow suit in the near future.

In 2014, Utah companies received venture investments totaling more than $800 million, the eighth-highest total of any state, according to the Money Tree Report from PricewaterhouseCoopers and the National Venture Capital Association. Included in this total were four companies that completed funding rounds in excess of $100 million. Through the first three quarters of 2015, Utah companies have raised $667 million of venture funding.

Drivers of Utah’s Tech Ecosystem
With an entrepreneurial culture and a workforce that is highly educated and multilingual, Utah is especially well-suited for fostering start-ups. Brigham Young University in Provo, the University of Utah in Salt Lake City, and Utah State in Logan produce a steady stream of science, technology, engineering, and mathematics (STEM) talent, and BYU’s graduates often bring a unique skill set that is highly valuable to start-ups. In 2015, Forbes ranked BYU as the No. 2 school for entrepreneurship.

Beyond these demographic and cultural benefits, Utah also offers a business climate that is very favorable for entrepreneurs. The cost of office space and talent (other than development) is significantly less than other burgeoning technology hubs such as Boston or Chicago—let alone Silicon Valley. The cost of living and quality of life in Utah is very appealing as well, especially considering that Park City, Deer Valley, and several other world-class ski resorts are less than an hour from Salt Lake City and Provo.

Talent Arbitrage Evens Out
In the past, relatively inexpensive development talent was another major advantage for tech companies in Utah. But as Utah’s tech economy has grown faster than the local universities’ ability to generate qualified programmers, this talent arbitrage between Utah and Silicon Valley has begun to even out. Utah companies are getting increasingly aggressive in their efforts to lure top talent away from Silicon Valley. Part of this effort is Silicon Slopes, an organization that was founded to promote Utah’s tech community.

At William Blair, we have strong relationships with business owners, corporate development professionals, and venture capital investors who are connected to Utah’s tech community. In November, we hosted more than 30 CXOs and VCs from many of Utah’s most-promising tech companies for an exclusive peer networking event at the Sundance Mountain Resort.

To learn more about these and other trends that are shaping capital-raising and M&A activity in the technology sector, please do not hesitate to contact us.

Venture Capital Invested in Utah-Based Companies

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Christopher Lane
+ 1 415 796 6492
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Todd Speece
+ 1 415 796 6499
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