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KUNZ: At BoomStartup, we give each of the companies $20,000 cash and about $60,000 or $80,000 in value or in-kind services. So it’s not even cash, it’s having major people like Microsoft and Rackspace coming to the table and contributing their corporate resources to help the company succeed. With the combination of cash and the in-kind services, surrounded with the mentorship that we do at BoomStartup, the issue becomes the talent pool.
One of our selection criteria is we have to have at least one tech co-founder and one business co-founder. Every single year, as we short-list the applicants, we get 60–70 percent of the teams having the business team but not the tech team. So a major hurdle is identifying and mobilizing the tech resources and keeping them here in Utah instead of Silicon Valley. A number of the leading startup companies are going to California, so that tech talent pool is leaving the state. I now see that as a larger problem for us to resolve than getting the capital.
Outside of tech, how is Utah’s more traditional entrepreneurship activity doing?
BOTT: There’s great entrepreneurship across the state. But the ecosystem does not travel very well. It is not very robust in some of the outlying areas. In fact, it’s kind of in this 30-mile little stretch here, and that’s about it. It’s hard to get us to travel, hard to get money to travel, hard to get professional services to travel and get the talent and interests there.
Utah has to figure out how to capitalize on some of the entrepreneurial centers that are growing up around the institutions. Snow College has a great little center in the arts that is growing. Dixie State College has done a lot. Up in Logan, Utah State University is just now beginning to figure out how to leverage what’s going on in entrepreneurship.
What we are finding is not a lack of interest. There’s a huge amount of interest. We are actually finding that these businesses can become revenue generating, which is a new thing. A few years ago we didn’t worry about revenue generation. Now they are able to get to revenue generation on a shoestring and make the deal much more attractive for an outside investor.
The observation I have about talent is there seems to be a lot of “me too” following. You get somebody who does a little thing in social media, and then everybody does something in social media. It’s surprising how much energy young entrepreneurs will spend on bad ideas because somebody else did it last quarter. We have to stir the pot a little bit more, get them to think a little bit more innovatively.
BELL: Ragnar has seen growth through the slump. Today our Utah race has about 6,000 people on the waiting list that we just can’t fit in. We are trying to launch races. In sort of a microcosm of a larger industry, the event industry, we are seeing this proliferation of events. So what we started eight years ago has grown into a lot of these really great events that are making people more active and excited about participating in events.
We are a little bit recession-proof because when people don’t have a job, they want to run and get their mind off of it. And when things are going good, they want to run because that’s when they think best. But right now, as the economy recovers, we have started to see some real demand and real excitement in our industry.
Luke, you are a capital provider and you’ve been doing deals. What have you seen and what do you anticipate is going to happen in the future?
SORENSON: The economy has been tough for a lot of different sectors. But in many ways the economy is a great sieve—the businesses, the opportunities that we are seeing, we know that they are performing in a challenging economy and that brings more merit to a business and demonstrates more staying power. So in this economy, you have an opportunity to prove that your business can thrive by taking market share, not just by rising with the tide.
In terms of the outlook, as investors, as we are looking at businesses it’s tough to underwrite a big, fast recovery. We don’t see that happening very quickly. We think things will continue to get better but you still have some big risks out there. There’s big risk with an oil and gas cycle that has kept a lot of the economy propped up. Every business we see, whether it’s in technology or some other industry, has to be positioned and prepared to succeed in challenging times.
We do have our finger on the pulse of the fundraising market, and as you can imagine it’s been very tough relative to the days of 2007. A lot of firms were going out to raise their capital at the same time, so the timing for those that are raising capital in the last year, and probably the next year as well, is difficult. That will start to abate a little bit over time.