SLTrib: Utah proves magnet for venture capital

click here to link to article in the Salt Lake Tribun

Article Last Updated: 7/08/2006 02:52 AM

Utah proves magnet for venture capital
Edge: A business-friendly stance is cited as a factor giving the state an advantage

By Bob Mims
The Salt Lake Tribune Salt Lake Tribune

Mark Heesen listened Friday as preceding speakers talked about the need to lure more venture capital to Utah's burgeoning technology sector.

Then the president of the National Venture Capital Association told leading state entrepreneurs they already had most of what today's investors yearn for - smart, innovative workers, and a cultural and recreational environment that's hard to beat.

"There are some very positive things we're seeing in Utah," Heesen said at an afternoon venture capital seminar at the Governor's Mansion. "Quality of life is an extremely important aspect" for a strong entrepreneurial base."

He compared a relatively smooth commute from a downtown Salt Lake City office to an affordable, spacious home to a trip of hours out of San Francisco to a "two-bedroom, $1 million" home in the suburbs.

"The people who are here want to stay here," Heesen said. "[That is] a very important distinction."

He also praised the Legislature's pro-business stance - especially its recent creation of a $100 million "Fund of Funds" designed to attract both dollars and venture capital firms to Utah.

But in comments echoed by other speakers Friday, Heesen cautioned that the state must continue to build its venture capital infrastructure to include so-called "C " and "D" series fund-raising, which takes promising startups through expansion to profitability.

Dinesh Patel, co-founder of vSpring Capital, agreed that capital for those later stages of corporate development are still lacking, though he was optimistic time - and "a very vibrant" investment climate in Utah - could close that gap.

In 2005 alone, Patel said, deal trackers identified $417 million invested in 84 Utah transactions that ultimately will produce more than 20,000 jobs. (Other VC estimates range both lower and higher).

In earlier opening remarks, Gov. Jon Huntsman Jr. also saw success in his efforts to help make Utah "attractive to capital," vowing that, "We in state government are doing everything we can to create an environment of [economic] growth."

Through incentives and successful entrepreneurship, Utah must become "a safe haven" for investors. Further, Huntsman said, a capital-friendly environment depends on tax reform, proactive investment in research commercialization at the state's public universities, and promoting the state's natural beauty and tourism opportunities.

bmims@sltrib.com

Investing in Utah

* Venture capital is money invested in private companies with the goal of taking a business public (trading stocks), or having it acquired.

* Utah ranks 15th nationally for venture capital invested, according to thePriceWaterhouse Coopers-Thomson MoneyTree Survey.

* In 2005, the MoneyTree Survey put Utah venture capital investments at $248 million, up 32 percent from 2004. (Other estimates range as high as $447 million in VC for the state last year).