Central Oregon has been laying the groundwork for a growth-oriented – and diversified – economy for years, one that produces a virtuous circle of improved job opportunities, increased tax revenues, rising living standards, and greater investor confidence. One of the keys to the region’s strategy has been a consistent focus on startups with the potential to become high growth companies.
A strong entrepreneurial culture has emerged within our business community, and it hasn’t gone unnoticed – the August 2012 issue of Entrepreneur magazine even dubbed Bend the “next big city for entrepreneurship.”
A variety of factors can help create a healthy environment for entrepreneurship.
Successful companies in the market. Success breeds success. When companies do well, they generate new business for suppliers and partners, attract new employees to the area, and help create a more vibrant local economy that allows talented employees to move up and on to new challenges. Successful companies also develop a pool of potential entrepreneurs to start the next round of startups in the same industry, similar to what Microsoft has done for the tech industry in
Support for startups. Business incubators and accelerators can help entrepreneurs get their ideas off the ground. Incubators usually provide office space and shared administrative services, along with additional services, such as business advice, access to potential partners and investors, and marketing assistance. While a traditional incubator may be government funded and generally takes no equity in the companies it supports, an accelerator is a for-profit entity that provides an intense program of funding, mentoring, and training to startup teams for a short period often in exchange for an equity stake in the business. A local example is FoundersPad, which supports entrepreneurs with a 12-week program based on lean startup principles.
Angel capital interest. Early-stage startups that aren’t yet ready for institutional venture capital often seek support from angel investors. Entrepreneurs can approach individual investors or participate in an angel conference, such as the Bend Venture Conference (BVC). At the ninth annual BVC in October, five concept-stage finalists competed for a $10,000 grant while six launch-stage finalists competed for a $250,000 grant. The majority of the money comes from local investors, but several out-of-state investors participate, as well. This year, the Oregon Community Foundation and the Oregon Growth Account both provided matching funds that were contingent upon the BVC raising $200,000 from private investors.
Interest from institutional venture capital. Although funding can take place at any stage, institutional venture capitalists generally become interested in a startup when it has a product ready to go to market or has proven commercial viability. Venture capitalists look for the potential for rapid growth, a unique and innovative product, a well-developed business model, and a strong management team, preferably with successful startup experience. Traditional venture capital funds tend to locate in larger markets, such as the Bay Area or Seattle, where there are more investment opportunities. But there is nascent interest in
Interest from larger tech ventures. Many high-tech startups are ultimately acquired by larger technology companies. Location is often irrelevant as long as the acquired company is able to operate effectively and has access to enough qualified employees. PV Powered, for example, a maker of inverters for solar power systems, was acquired by Colorado-based Advanced Energy in 2010 and continues to operate as an independent subsidiary from its
Existence of enterprise zones. Enterprise zones, sponsored by local city or county governments, exempt businesses from local property taxes on new capital investments, usually for three to five years, and may include other incentives as well. To qualify for the incentives, the business must create new jobs in the enterprise zone. The goal is to encourage new investment that will create jobs, generate economic growth and diversify business activity in these areas. In addition to traditional enterprise zones,
Local educational institutions connecting to the entrepreneurial scene. Education is another key piece of the entrepreneurial ecosystem. Prospective entrepreneurs are more likely to be successful if they understand the basics of running a business.
Jason Conger is a partner in the