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From working late nights to raising much-needed capital, being an entrepreneur isn’t easy. We brought together a diverse group of entrepreneurs to discuss the challenges and opportunities they experience day after day. The group discussed securing capital, finding talent and the unique challenges Utah entrepreneurs experience.
We’d like to thank Brad Bertoch, of Wayne Brown Institute, for moderating the discussion.
Larry Ribgy, ZARS Pharma; William Borghetti, Sendside Networks; Hal Widlansky, Matchbin; Adam Slovik, Salt Lake City Angels; Brad Bertoch, Wayne Brown Institute; Tanner Bell, Ragnar Relay; Drew Peterson, Veracity; Marc Porter, Holland & Hart; Craig Bott, Grow Utah Ventures; Luke Sorenson, Sorenson Capital; Robb Kunz, VentureBlue; Scott Johnson, AtTask; Ed Esber, Utah Fund of Funds; Jason Wells, Contact Point; Ted McAleer, USTAR; Lance Black, Eli Kirk
How has the economy impacted Utah’s entrepreneurs?
McALEER: Speaking as an angel investor, we have seen a great deal of flow and, quite frankly, it’s been a great time for entrepreneurs to start companies. And it’s been a great time for angel investors to invest in companies.
Representing the state of Utah, we have seen a bounce certainly in the last 18 months in terms of job creation. My sense is that entrepreneurs are still screaming for seed capital, but the good companies are finding the later stage A and B capital that they need.
RIGBY: It’s still not easy raising capital—it’s not as easy as it was in the good years. We are still in a kind of a trough. There is angel money in Utah, but there isn’t a lot of venture capital in Utah. It’s sort of disappeared. There is a little, but not as much as there was, say, 15 years ago. So the capital issue is still a major one.
ESBER: The environment for starting companies is great. It is still tough to get capital in a certain range. There’s a lot of money around—California, here—but getting it, or taking it out of their cold, dead hands, is tough. And there’s a huge gap between what angels can do and what the big funds do. If you need under a quarter million dollars, there’s a lot of opportunity to get that here from angel groups. If you need $10 million or more, there’s big funds that can do that. In the middle it’s still tough.
There’s starting to be a fair amount of talent in the state, although at the top level, the C-suite, there’s maybe one or two individuals you’ve got to try to recruit. There’s a ton of jobs around, but there’s also a ton of churn. People are losing their jobs; there’s not quite the fit between the people that are looking and what’s available. There’s tons of jobs, but there’s still a lot of people out of work.
In the ‘90s, Silicon Valley became relatively insular and it was hard for people outside to get money. How does it look now?
ESBER: There was a time when the Silicon Valley venture funds would open offices in places like Texas. Most of them have pulled back from those offices. I would say that Utah is on the map. The first Utah Fund of Funds certainly helped, because a large part of the investments of the Utah Fund of Funds were in Silicon Valley venture firms, as well as some of the local venture firms.
JOHNSON: Bad economic times are great for starting companies because you can get good talent. We have seen an 8 percent increase in base salaries in the last six months. And that’s continuing to go up. I think the pressure is from a lot of great companies from the Bay Area that have set their sights on Utah talent and our burgeoning tech hub at the Point of the Mountain. At least for us, trying to hire experienced, top-tier talent has gotten really tough.
What are the challenges your company has experienced?
BORGHETTI: The biggest thing that is a struggle for us is the philosophy of going for talent as opposed to going for location. It is always better to have somebody sitting in an office or cube next to you, where you can collaborate and deal with issues. But we found it to be incredibly tough to find the right person who has the right skills. They are out there, but generally speaking they are employed. So you’ve got to figure out how you can extricate them from where they are, and that tends to be more expensive.
I also think there’s risk. It’s very expensive for a small company to make a wrong hire. Not so much at a C level or VP level, but even a technical person. With the investment of time and training to get them up to speed on the technology, to have that person not work out is highly disruptive.