Creating a Growth-Oriented Economy: Start with Entrepreneurs

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 Seattle and what Deschutes Brewery and others have done for the craft brewing industry in Central Oregon. From homegrown success stories like Deschutes Brewery and Bend Research, to high-profile companies from elsewhere like Facebook and Apple, the number of growing companies in the area is on the rise and should create more opportunities for the local economy.

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 Central Oregon by venture capitalists.  Eventually one or more venture funds may form locally and in the meantime entrepreneurs can find networking assistance for out of the area funds when they prepare to seek institutional capital.

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 Bend location.

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, Bend and Redmond both have e-commerce enterprise zones that offer incentives to spur e-commerce investments.

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. Central Oregon Community College (COCC) has long offered workshops and one-on-one business advising to entrepreneurs through its Small Business Development Center, and this year COCC launched the Center for Entrepreneurial Excellence and Development. Oregon State University–Cascades is increasingly involved in the local startup scene and offers several business degree options with a focus geared toward entrepreneurs and small business owners and creating a trained work force for local industry. Creating a pool of competent potential employees available locally speeds hiring and ensures that companies aren’t forced to look elsewhere for growth.

Central Oregon’s promotion of entrepreneurship is producing results. If the business community and government work together to strengthen the culture of entrepreneurship and support these initiatives, we will be successful in attracting new businesses and generating new jobs – fueling that virtuous circle of economic growth.

Jason Conger is a partner in the Bend office of Miller Nash LLP. His practice focuses on corporate, securities and venture capital law. He also serves in the Oregon Legislature, representing House District 54.