Provo’s population is only 116,000 people, but there’re more VC-funded firms than anywhere else in the world. What Asia can learn from this town?
There is a new Silicon Valley in town and it’s called Provo, Utah. Research shows that out of the top 12 venture-capital-backed startup locations in the US, Provo and Orem ranked eighth in 2014. Specifically, they received over US$460 million in venture capital spread among nine major deals. Equally impressive, Salt Lake City and Ogden received over US$275 million. Why is the Provo area so popular?
Provo, which is 45 miles south of Salt Lake City, is quickly becoming one of the most popular locations for tech jobs and startups. Provo has successfully attracted and retained top tech talent from all over the world because salaries, real estate and quality of life are excellent.
Even though Provo’s population is only approximately 116,000 people, there are more venture-funded companies than anywhere else in the world. Some of the most notable tech companies in Provo include Abode, Domo and Qualtrics.
Provo proudly provides their own entrepreneurial mecca, called the Startup Building, which rents space and provides collaborative resources for startups. Established Utah entrepreneurs are noted for consistently supporting new business ventures and other entrepreneurs. As a result, many successful business owners support and participate in local universities’ business programs.
Provo’s Successful Model
Provo has unique features that are also found in other fast-growing, tech savvy sectors. Geographically speaking, the Northern Wasatch area of Utah, which is the section that contains Provo, Ogden and Salt Lake City, is home to over eighty per cent of the state’s population.
Local universities have excellent STEM programmes, local cities provide commercial incentives and local companies maintain strong relationships within their respective industries. Everything is interconnected through a well-designed freeway and mass-transit system. Because communities are tightly knit, many startups are home-grown and venture-capital funding is generous, the so-called Silicon Slopes area has successfully established itself as a magnet for tech entrepreneurs.
A Strong Academic Foundation
Utah boasts high-quality universities and supportive entrepreneurial programmes. For example, the University of Utah provides the popular Utah Science, Technology, and Research Initiative (USTAR). The goal of this programme is to create new jobs through supporting business development and providing entrepreneurship opportunities.
To date, USTAR has helped over 180 local companies launch over the past 20 years. Today, over 120 businesses are still active, which include large employers such as ARUP, Sarcos, Cephalon and Myriad Genetics. The Utah government passed legislature in 2006 that allocated approximately US$180 million to the USTAR programme, with US$160 million dedicated to the construction of new research facilities.
There are other impressive universities, such as Weber State University’s Startup Ogden programme and BYU’s Rollins Center for Entrepreneurship that is attached to the Marriott School of Business.
Solid Government Support
The Utah Governor’s Office of Economic Development (GOED) offers plenty of support and resources to tech startups. First, there are guaranteed grants and tax credits available, but the actual amounts depend on the company’s historical stability and performance as well as long-term capital investment plans.
Second, the EDTIF tax credit is a refundable tax credit that provides post-performance rebates of state revenues, such as sales or withholding taxes. The EDTIF tax credit is available to companies that relocate or expand operations in Utah. The incentive typically lasts five to 10 years and provides a credit of up to 30 per cent of project costs. Third, GOED’s Technology and Life Science Economic Development act provide tax credits to qualifying tech and recognition companies.
Experts estimate that Provo will continue to grow and challenge Silicon Valley because local people, universities and the government strongly support tech entrepreneurship.
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Image Credit: Utah.gov
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