Utah Valley Economic Outlook

September 9, 2013

ALDER: That’s the situation I face almost daily—an entrepreneur sitting across the table saying, “Where can I locate and where can I find funding?”

Those are two questions from an economic development standpoint that must be answered if we want to do more. It’s really hard to get the venture capitalists to come down to Utah Valley from Salt Lake. They’ll come as a courtesy once; then they’ll say, “Well, I’ve done my BYU thing for the year.”

We have to stimulate a more active investment community.

FUGAL: On a positive note, the mid- and late-stage companies don’t seem to have any problem raising capital at all.

RICHARDS: That’s because private equity is a healthy industry, but the venture capital industry is in disarray. They’re trying to figure out where they fit into this new economy, and they’re having a hard time determining what size they need to be and how to deploy their capital in an efficient manner. The most successful VCs in the state right now are the ones that just followed the Silicon Valley funds with their money. They have millions of dollars, but it doesn’t necessarily go to Utah companies. They’re second and third followers with the big funds out of Silicon Valley.

ALDER: Next year, the new life sciences building at BYU will be completed. It’s a palace of life science buildings in the country. It will attract the faculty that will begin to spin out more and more life science.

The chemistry building was completed. It is an excellent building. Two years ago, 52 percent of our inventions came from chemistry. When I arrived here seven years ago, it was all from engineering. So there is a lot coming from the engine of invention that is at the universities. 

FUGAL: BYU and UVU really are perfect east-west bookends to the valley. We really have the makings of an institutional corridor that can hopefully fuel the employment needs of these companies.

ALDER: There’s a real change happening. I watched it happen in Salt Lake, and at first it seemed just like a dream. Now it’s there. There’s a lot of capital at work. There’s a lot of technology-based businesses growing. But we have a great opportunity right now if we recognize it and take advantage of it. 

When Novell and WordPerfect started up years ago, they eventually sold. Now it seems a lot of our companies—like Altiris, Omniture—they grow, they sell, but they stay, and they become great companies that employ our people. Are we seeing that more?

HOLMES: We certainly hope so. Up in the Riverbottoms, we have Qualtrics, Vivint and Ancestry all within a stone’s throw of each other. They’ve raised billions of dollars in capital, and we hope they’ll stay.

It’s a combined effort that all of us have to play into to make sure those businesses stay local in Utah Valley. A job in Lehi, a job in Provo, a job in Spanish Fork helps everybody. We just need to keep them healthy and happy.

PESCI: We hope we’re an example. The company that purchased us is a company called Total Systems. We’ve worked with them in the past and are pretty happy to be a part of their team. They’re publicly traded, so we don’t control it. But the fact is they came here, saw what they saw, and said they want to stay. 

FUGAL: The last five years, big companies have come in, bought smaller, fast-growing enterprises and continued to grow them. EMC with Mozy, Microsoft with Fast Search and Transfer. We’ve seen it most recently with Infusionsoft, GroSocial. Of course, Omniture is kind of the darling with Adobe. Xactware, a lot of people don’t realize, is owned by Verisk Analytics out of New Jersey. And they chose to expand their business here in Utah, not only because they want to continue to tap into this entrepreneurial environment, but we have very favorable state and local governments for incentives.

HUNT: That’s just a part of it. We have to keep that regulatory environment favorable to businesses, we have to keep the taxing structure favorable, and all of the other components.

LOCKHART: IM Flash is a joint venture with Micron and Intel. We have over 1,600 employees, and we manufacture more than $2 billion worth of product a year.

They could put that plant anywhere in the world—and they’re getting offers that would really surprise you as states and countries come in and make their pitch over and over again. And we stay in Utah. We’re here for a few reasons. No. 1, we have a very business-friendly environment. The second reason is that we have a workforce that is trained and qualified and ready to go to work. The workforce in Utah is phenomenal.

But keeping a qualified workforce, getting more kids interested in science, technology, engineering and math education is really, really important. As we do that and build a pipeline and get more of those kids into those careers, then we’ll see. And if we can’t get the workforce, then you can’t remain here. That’s probably our greatest future risk, outside of normal competitive pressures for IM Flash. Can we get the workforce that we need that is qualified to produce the state-of-the-art flash memory chips?

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