Utah’s ‘Silicon Slopes’ Thrive in Top Pro-Business State

Utah is booming as America’s top pro-business state, and its tech sector–“Silicon Slopes”–is beginning to suck in huge amounts of venture capital.

The Beehive State sports one of the lowest unemployment rate in the nation, at 3.5 percent .Forbes just rated Utah as the No. 1 Best State for Business for the fifth time out of six years. And the Pollina Corporate Real Estate and American Economic Development Institute for the third year in a row just gave Utah the #1 ranking in their “Top Pro-Business States Report.”

Pollina credits Utah moving up from the 23rd spot in 2005 to its support for favorable tax rates, right-to-work law, modern infrastructure, very low utilities costs, and a well-educated work force. The fact that housing is about 48 percent as expensive as California is also seen as a strong driver of immigration from other states.

The Silicon Slopes’ Domo, Pluralsight, Qualtrics and InsideSales are all hot tech start-ups with “unicorn” private market values of over $1 billion. There are also a dozen venture capital-backed companies that the TechCrunch blog refers to as “soonicorns” in the ready.

The San Jose Business Journal praises Utah’s history of tech entrepreneurship as the “birthplace of Omniture, WordPerfect and Landesk; Pixar co-founder Ed Catmul and Atari co-founder Nolan Bushnell both graduated from the University of Utah.”

On a statewide competitive basis for high school completion, Utah is ranked number 9 versus California at ranked number 48. In attainment of college and advance degrees–supposedly California’s strength, Utah is very close behind the Golden State. That probably explains why Utah commands a higher median income at $63,383 than California at $60,487, according Advisor Perspective.

Utah ranked number 11 in venture capital funding in 2014, with $304 million. That was only a fraction of California’s $14.1 billion.

But data obtained by TechCrunch from the National Venture Capital Association show that nearly $700 million was invested in Utah in the first three quarters of this year. There also is a new $17 million University Venture Fund headquartered in Salt Lake City that lets college students source and put together deals for possible startup investments.

Tech CEOs praise Utah for not being like Silicon Valley in focusing on immediate gratification. With historically less outside capital, Utah start-ups have pushed to become profitable much earlier than in Silicon Valley. It has also helped to ensure that young firms can maintain workforce stability to build solid fundamentals, rather than being at risk of having their best people jump to the next hot deal.

Property management software company Entrata, with over $100 million in revenue, is seen as a top example of a Utah company that bootstrapped its business model without the need for any outside venture capital.

Dave Elkington, CEO of Provo-based InsideSales.com suggests Utah’s business environment requires, “discipline to run a company profitability.” He says this contrasts dramatically with unicorns like Snapchat or Pinterest, whih reached $1 billion valuations in months, instead of years.

Utah has have a string of companies preparing for IPOs, including Domo, Pluralsight and InsideSales.com. Educational technology company Instructure (INST) led the parade by going public on the New York Stock Exchange with an $800 million valuation in November, raising $75 million.

Josh Coates, CEO of Instructure told the Business Journal, “I’ve seen incredible growth in the ecosystem in Utah.” There are, “half a dozen really exciting technology companies in Utah right now that are getting ready to access public markets.”

When pioneer Brigham Young first looked over the majestic Salt Lake Valley at the end of the Mormons’ trek west in 1847, he famously remarked, “This is the right place.”  Utah Governor Gary R. Herbert likes to say that, “Today, more than 165 years later, Young’s words still resonate.”