Launch-FallWinter2008

launchlaunch
TheMagazineforUtahEntrepreneurs
Vol 3,Issue 3 2008 Special Issue
Grow Utah Ventures
+Why Launch in Utah?
Our Entrepreneurial Future
Making Sense of VentureTerm Sheets
Spreading
StartupSuccessBusiness leaders are taking the initiative to move startup success beyond Utah’s
major cities to bring economic growth to regions throughout the state.
Utah entrepreneurs Jordan Avner, Rob Sanders and Audrey Penrod

The Utah Science, Technology and Research Initiative (USTAR) is a catalyst for technology
development through state-of-the-art research facilities and world-class science, innovation and
commercialization teams.
As part of a broad and integrated strategy, USTAR is designed to increase the research capacity at Utah’s
research universities resulting in accelerated flow and commercialization of discoveries, inventions,
and innovations.
We invite researchers, inventors, entrepreneurs, investors, and other interested parties to join our
Collaboration Network at:
www.innovationutah.com
For more information, call (801) 538-8622
or email ustar@utah.gov.
324 South State Street
Salt Lake City, Utah 84111
Aligned with Utah’s strengths in the energy, biomedical
innovation, brain medicine, digital and imaging technology
& personalized healthcare fields
Building world-class research teams & facilities
Multi-million dollar research & recruitment funding
Outreach services to help innovators strategize markets,
secure funding & commercialize

www.launchutah.com 3
contents
launchGrow Utah Ventures
4 Editor’s Note
coordinates <<
startup
columns
10 Our Entrepreneurial
Future
Who and what will make a difference?
14 Spreading Startup
Success
Business leaders are taking the initiative
to move startup success beyond Utah’s
major cities to bring economic growth to
regions throughout the state.
20 Why Launch in Utah?
Experts praise Utah’s business climate
and offer insight for improvements.
6 Opportunity Lost?
By Kent Thomas
7 Making Sense of Venture
Term Sheets
By Chris Anderson
8 Your Capitalization Table
By Brent Hawkins
full throttle
contents
The Magazine for Utah Entrepreneurs
<<

4 launch special report
alan e. hall
<<
editor’s note>>
We are pleased to present our first printed edition of
Launch magazine. As most of our loyal readers know,
we have been publishing Launch online for more than
three years now (www.launchutah.com).
This special print edition is our way of joining the
worldwide celebration of Global Entrepreneur Week,
Nov. 17 through Nov. 23. This great event, sponsored
by the Kauffman Foundation, recognizes the worldwide
contribution of entrepreneurs from across the globe
— a contribution that benefits the markets, regional
economies and living standards of the entrepreneurs
themselves. We in Utah are a vital element of that
worldwide fabric of entrepreneurism.
As a part of this special week, Grow Utah Ventures
and our partners are hosting an Entrepreneur/Angel
Summit in Salt Lake City on Nov. 20. We invite all
entrepreneurs and angel investors to attend this unique
event. You will have the opportunity to learn from
leading experts, network and share insights. For more
information, visit www.growutahventures.com.
Whether in print or online, we are committed to
providing you with the “street smarts” of launching
and growing businesses in Utah. In this issue, you will
find relevant articles about cap tables, term sheets and
sizing up your opportunity. We highlight some of the
leading initiatives that will shape Utah’s entrepreneurial
landscape, and we show how to drive Utah’s
entrepreneurial energy into some of the outlying regions
of the state. Finally, you will find out why some Utah
leaders think this state is such a great place to launch
a business.
Thank you for your support of Launch. We wish you
every success in your entrepreneurial endeavors!
-Alan E. Hall
Grow Utah Ventures Founder
and Chairman
Visit launchutah.com for the HTML version of this article.

Editorial Chairman
Alan E. Hall
alanhall@marketstar.com
Editor-in-Chief
T. Craig Bott
craig@growutahventures.com
Director of Partners and Sponsors
Justin Bott
jbott@growutahventures.com
Publisher
Arkin Hill
ahill@luminpublishing.com
Executive Editor
Kathryn Peterson
kpeterson@luminpublishing.com
Creative Director
Kevin Kiernan
kkiernan@luminpublishing.com
Production Artist
Shane Wolf
swolf@luminpublishing.com
Editorial Board
Christian Anderson, Brock Blake,
Brian Cummings, Jeremy Hanks, Tim Hunt, Chris Knudsen,
Jeremy Neilson, Kent Thomas
Contributing Writers
Chris Anderson, T. Craig Bott, Brent Hawkins, Kathryn Peterson,
Curt Roberts, Kent Thomas
Contributing Editor
Erin Stewart
Photography
Kevin Kiernan
For advertising information e-mail:
advertising@launchutah.com
Send press releases or editorial requests to:
press@launchutah.com
Send comments and feedback to:
feedback@launchutah.com
Published for Grow Utah Ventures by:
Lumin Publishing, Inc.
6183 S. Prairie View Drive Suite 103A
Salt Lake City, UT 84118
801.417.3000
launchThe Magazine for Utah Entrepreneurs
special issue 2008
Grow Utah Ventures
www.launchutah.com

You spent months, perhaps years, working on your
business idea and countless hours refining and
perfecting your business plan. You may have mortgaged
your home, borrowed against your retirement plan
and maxed out your credit cards, and your spouse
is reaching the end of his or her patience with your
idea. You now have a working prototype that you can
show to potential investors and you’re perfecting your
PowerPoint presentation. You have the opportunity to
spend 20 minutes with a group of investors (a venture
capitalist firm, a group of angels or friends who have
agreed to meet with you) — now what?
I’ve seen this drama replayed many times during
my years of mentoring and far too frequently, I see
the same result — a lost opportunity because the
entrepreneur or management team hasn’t done their
homework. They just aren’t prepared.
Think about what you have invested and consider
that your financial future may rely on the outcome of
this presentation. Would you ever consider taking that
kind of risk without proper research and preparation?
Far too many entrepreneurs do just that. Why, you ask?
Because they don’t know what they don’t know.
My friend Chuck Coonradt, author of “The Game of
Work” calls this “unconscious incompetence.” Allow me
to share some of the more common mistakes I’ve seen:
>>The financial forecast is incomplete and has
little or no basis in real life. The entrepreneur
likely hired his neighbor — a student at the
local university or an accountant — who does
not understand the complexities of preparing
projections that are supported with well
explained assumptions, a forecasted balance
sheet and cash flows, and that allow the
entrepreneur or a potential investor to conduct
“pro-forma” analyses of the forecast.
>>The entrepreneur does not understand his or her
customer. Can you imagine spending the kind
of time and money that I described at the
beginning of this article and having never
actually talked to a potential customer about your
product or service? Neither can I, but I’ve actually
seen that happen.
>>The team has no practical experience in the
distribution channel they have identified to
reach their customer. They may have identified
the right channel, but if they do not know how to
execute that strategy, the likelihood is that
much of the money invested in their venture will
be wasted with false starts and errors.
>>Arrogance. This is perhaps the saddest of all,
but too many entrepreneurs believe they are the
“final source” of all knowledge about their product
or service and do not want to have anyone tell
them what to do or that there may be a better way
to market, sell or produce their product.
Before you risk it all, learn everything that you
can about your industry — study existing business,
accounting, marketing, distribution and production
strategies and consider how you can incorporate or
improve them. Build a team that has experience and
knowledge in the areas in which you are weakest. Ask
for advice and above all, listen and learn.
Kent Thomas, the founder of
CFO Solutions LC, serves in a
variety of leadership positions
for companies and charitable
organizations and is a
frequent speaker on finance
and accounting issues. Mr.
Thomas can be reached at
kent@utahcfo.com.
funding>>
Opportunity Lost?
By Kent Thomas

Be prepared — investors use a lot of unfamiliar terms.
A little homework will help you speak and understand
their lingo, and to know which terms are likely to
have the most significant impact on the founding
stockholders and their investments. The following is a
simplified key to understanding a few of the new terms
that might start swirling around as you look to raise
needed equity capital.
Common stock: The basic ownership unit in a
corporation. The holders typically have voting rights
and the right to receive the net assets of the corporation
upon dissolution, subject to any preferential rights
granted to holders of preferred stock.
Preferred stock: Consists of a group of shares that
are given certain rights and preferences regarding
matters such as voting, dividends, liquidation
preferences, conversion rights and anti-dilution
protections. Investors typically like preferred stock
because of the rights and preferences that can be built
into the shares.
Pre-money valuation: The value established for the
company immediately prior to giving effect to
the financing.
Post-money valuation: Refers to the state of affairs
immediately after completing the financing and is
simply the pre-money valuation plus the amount of
the investment. So when a valuation figure comes up,
any given number is more attractive as a pre-money
valuation because the post-money valuation will by
definition be higher, and the purchase price per share
will be based on the pre-money valuation.
Liquidation preference: The amount the purchasers
of preferred stock are entitled to receive before the
holders of common stock get anything. It is typically
calculated in reference to the purchase price paid for
the preferred stock. The basic right would be a return of
that investment (plus any dividend that is owed). This
provision will have the most direct impact on the return
ultimately realized by the founders when the proceeds
of a liquidation transaction are divided.
Participation rights: A participation right means
that after the preferred investors get their preferential
payment, they also share in distributions made to
the holders of common stock — typically on a pro-
rata basis. A company may negotiate for a cap on
what the holders of preferred stock may receive in a
liquidating transaction.
Anti-dilution protections: A mechanism to protect
the investors from having overestimated the value of
the company, or a downturn in company fortunes. It
is implemented by changing the conversion rate of
the preferred stock so the investor gets more shares
on conversion if the company issues shares to others
at a price below what the investor paid. They can be
in the form of either a “direct ratchet” or “full ratchet”
adjustment — with the investor treated as if he or she
paid the lower price, or a “weighted average formula”
adjustment — with the investor benefiting from a
weighted average adjustment to the conversion price,
based on the number of shares issued at the lower
price.
Pay-to-play: Extends the benefit of the full anti-
dilution protection and the right to participate in
future offerings only to investors who participate in
the lower-price offering.
Chris Anderson, a partner
at Ballard Spahr Andrews
& Ingersoll LLP, practices
primarily in the areas of
business, securities and
international law. Mr.
Anderson can be reached at
andersonc@ballardspahr.com.
sales <<
Making Sense of Venture
Term Sheets
By Chris Anderson

Entrepreneurs are sometimes confused when a
potential investor asks to see their “Cap Table.”
Many aren’t exactly sure what a Capitalization Table
(commonly called a Cap Table) is and, even if they do,
they’re not quite sure why an investor would want to
see it. Others may not know exactly what a Cap Table
should look like.
In short, a Cap Table shows who owns what stake in
your company. It should show all shares that have been
committed by your company to third parties (including
those promised, gifted, optioned, accrued, etc.).
funding>>
By Brent Hawkins
Your
CapitalizatioN
Table

Key Issues and Considerations
So how should you model a Cap Table? Start with
a Microsoft Excel spreadsheet. The math functions
in a spreadsheet will serve you well by providing a
mathematical cross check to your share numbers
and facilitating updates to your Cap Table numbers
as you add shares and shareholders. Then, with this
foundation, ask yourself some basic questions about
your capitalization plans and needs. Among them:
>>> Do you expect to raise money from investors
soon? Try to model your capitalization
structure so that your share price will be
roughly $1. Why $1? That’s what investors
in our market expect. Is it a problem to have a
share price different than that? Not at all, but
why not lead with what investors expect?
How, then, do you get to a price of $1 per
share? Understand an investor’s price formula:
Price equals valuation divided by your fully
diluted shares.
>>> How should you treat ownership between the
founders? Typically the founder in a CEO role
receives more stock than the others. Most
investors like the CEOs of their companies to
have at least a 10 percent stake on a post-
financing basis so that the CEO is properly
incentivized to make the company succeed.
Founders in CTO or CFO roles are typically
targeted at lesser percentages. But, there are
more exceptions than rules here. Some
founder groups like the egalitarianism of equal
percentages and some founders may have
more cash or intellectual property to contribute
to the company than others, so should receive
stock accordingly.
>>> Should there be some vesting among your
founder group? You may be starting a
company with a group of previously high-
income, hard-charging young guns. That’s
good. But young guns accustomed to
significant income may give up on your
business plan if you do not find success
quickly (and new companies rarely do). You
may want to model your capitalization to
allow for repurchase at an agreed price if a
young gun leaves, as sort of “golden
handcuffs” to keep them with the company.
At the same time, note that vesting can
sometimes trigger some unintended tax
consequences that can be avoided in large
part by making what is called an 83(b)
election with the Internal Revenue Service.
What a Cap Table is Not
A Cap Table is a mere summary that relies on
other documents — stock purchase agreements,
option agreements and the like, which I will refer to
as “issuance documents.” If there is a discrepancy
between a Cap Table and issuance documents,
issuance documents will control. And there are a
number of other actions and considerations that should
go along with issuance documents. Your board of
directors should approve all issuance documents.
Do It Right the First Time
While modeling a Cap Table is not very hard,
handling all of the issues and paperwork that goes
along with it is. It is also expensive in terms of legal
costs and drain on management’s time and attention.
So do it right the first time — it is hard to undo or
change. Then, keep your Cap Table up to date as a
resource to summarize what you’ve done.
Careful attention to your Cap table will
professionally depict your equity issuances to
investors and build their trust in you, even if they do
not agree with all of your capitalization decisions and
assessments. Best of luck!
Brent Hawkins, a partner at Salt Lake City-based
Bennett Tueller Johnson & Deere P.C., regularly works
with emerging and mid-size companies on issues
relating to forming, financing, governance, strategic
transactions, and mergers and acquisitions. Mr.
Hawkins can be reached at bhawkins@btjd.com.
funding <<

Who and what will make a
for these startups can be long and challenging. Venture
Bench services, such as business plan development,
market assessment, networking, accounting and
insurance, help startups in their pre-revenue stages.
Many companies fail in this stage — commonly called
the “Valley of Death” — because they lack the funding to
make it to market. Helping university startup companies
climb out of the valley and into industry helps the
university continue to be a strong economic engine for
the state.
KickStart Seed Fund
KickStart, a newly formed seed fund, officially
launched in April 2008. KickStart’s unique fund
structure helps form proprietary relationships with both
Venture Bench
Venture Bench is a University of Utah accelerator
that provides a suite of services for its technology-based
companies. Just last year, the U of U was ranked second
in the country for generating new startup companies
from its research-based inventions. The path to success
Utah’s Entrepreneurial
The future of Utah’s entrepreneurial landscape will
be significantly shaped by these organizations and
their initiatives. From creating and supporting to
funding and managing, these groups will directly
impact the success of Utah startups.

• Increase awareness for the great things going on in Utah.
• Recruit talent to come or remain in the state.
• Increase investments in Utah’s technologies
and companies.
SiliconSlopes.com provides a platform where
companies and entrepreneurs can gain valuable
exposure to recruiters, investors, partners and
customers. The site allows companies to add or edit
detailed company information, post press releases, job
openings, events, blogs and report deal flow.
University of Utah –
Tech Venture Development
Tech Venture Development is an organization focused
on the business of commercializing technologies,
servicing its faculty and business constituents and
emphasizing the critical role the U of U can play
in driving economic growth in Utah. Some of the
new programs include an entrepreneur-in-residence
program, a student law clinic, the Lassonde New
Venture development program, Technology Titans
(science idea competition), two business plan
competitions, and a host of new funding and startup
support initiatives. The ingredients and foundation
are here to make the U of U a hotbed of business
development, technology commercialization and a
leader among other U.S. universities.
UtahPulse.com
UtahPulse.com is a multi-media resource for
business news, information and services. It is produced
in partnership with Zions Bank and designed to
help busy business people stay apprised of all the
information they need to prosper in a rapidly changing
world. Each day, Utah Pulse aggregates all the local
business news from newspapers, magazines, blogs and
Web sites, and also features links to the major national
and international business articles.
Utah Pulse also features original content from
reporters and partners like Zions Bank, World Trade
Center Utah, The Salt Lake Chamber, Economic
Development Corporation of Utah (EDCUtah), the Utah
Science and Technology Research Initiative (USTAR),
and Grow Utah Ventures.

Davis Business Alliance/SEED Weber-
Davis-Morgan
Housed on the Davis Applied Technology College
campus, the Davis Business Alliance (DBA) serves as
the entrepreneurial community and sources of deal flow
to become a catalyst for high-quality deal flow at the
earliest stages of the capital cycle. KickStart anticipates
funding 15-20 companies with an average investment
of $250,000. The fund is well-positioned to engage
with quality technologies/companies early and enjoys a
robust pipeline of opportunities in clean technology, life
sciences and software/internet.
Silicon Slopes
Silicon Slopes is an online community for those
associated with Utah-based technology and life science
companies (5,200 and growing). It’s a place where
these businesses come together for information and
other resources. The goals of Silicon Slopes are simple:
difference?
Future

the regional resource center for SEED Weber/Davis/
Morgan initiatives that foster business creation across
the region.
SEED Weber-Davis-Morgan links the various
resources available through private industry, academia
and government to serve as the catalyst and support
for entrepreneurial and economic growth. Through a
combination of training, mentoring, funding, evaluation
and follow-up the DBA staff, and SEED Weber-Davis-
Morgan Entrepreneurial Council drive economic growth
with new and existing business expansion, high paying
job creation, and an expanding tax base.
SEED Uintah Basin
Utah State University, the Uintah Basin Applied
Technology College, USTAR, and the Uintah Impact
Mitigation Special Service District have joined forces
with Grow Utah Ventures and Zions Bank to create
entrepreneurial engagement, workforce development
and technology outreach opportunities. Beginning this
fall, the SEED Uintah Basin initiative will be designing
strategies to leverage higher education expertise
and initiatives to create economic diversity through
entrepreneurial development. Major projects already
underway include the construction of new facilities:
The UBATC/USU Vernal Classroom Building, the
Anadarko Petroleum Industrial Technology Building and
the Bingham Entrepreneurship and Energy Research
Center. These facilities, representing a total investment
of more than $80 million, will serve as dynamic
attractors for new business, industry, workforce
training, entrepreneurship, and research in natural
resources, environmental studies, geology and water
remediation.
Utah State University Economic and
Entrepreneurial Development Programs
In an effort to improve the economic development and
entrepreneurial environment at Utah State University
(USU) and its surrounding communities, USU has
centralized the Innovation Campus (IC), the Technology
Commercialization Office (TCO) and the management
of the USTAR initiative. USTAR brings in new research
programs and talent aimed at commercial development
and spin-offs, which will occupy more of the Innovation
Campus. The new Jon M. Huntsman School of Business
Entrepreneur Center will educate and assist students in
creating successful startup businesses.
Utah Fund of Funds
The Utah Fund of Funds, a major Utah economic
development program, was created by the Utah
Legislature to maximize the amount, quality and
diversity of capital funding available to early-stage
and growth-stage companies in Utah — to help them
grow, prosper and mature in the state. The program
began with an initial charter of $100 million, but the
Legislature augmented it with an additional $200
million in the 2008 session.
Rather than investing directly in specific companies,
the Fund of Funds is structured to influence high-
quality professional venture capital and private equity
firms within and outside the state to focus more of
their investment efforts on Utah entrepreneurs and
entrepreneurial ventures. The Fund of Funds invests
in these carefully chosen venture firms which then
commit to work closely with Utah companies and
entrepreneurs. There are 21 firms in the Fund of Funds
portfolio with a combined total of more than $5 billion
in raised capital.

FundingUniverse
FundingUniverse connects qualified entrepreneurs
with active angels, venture capitalists and lenders
across the U.S. Its services, such as Funding
Bootcamp, lender ScoreCard and Venture Consulting
Services, prepare companies for investor scrutiny.
Once prepared, these entrepreneurs are introduced to
the appropriate financing source: a network of active
investors and lenders who rely on FundingUniverse to
save them time by bringing them qualified business
deals. Through FundingUniverse, investors have access
to pre-screened deal flow organized to their personal
investment preferences and can request a pitch from an
entrepreneur virtually or in person.
FundingUniverse also hosts monthly events to
help entrepreneurs through the fundraising process.
Whether it be learning how to pitch to an investor
These initiatives are bringing
business, university and government
entities together to make Utah the
worldwide leader in successful
high-growth business creation.

(LivePitch event) or getting in front of dozens of
angels and venture capitalists (SpeedPitching event),
FundingUniverse has provided hundreds of Utah
companies the opportunity to obtain early-stage
financing. A few of the companies that have been
connected to investors and/or lenders include: Acceptx
Financial Services, Zinch, Klymit, AlphaSpine,
InfoSquire, BlackLedger, Kahuna Creations,
UnderTease, Renasis and Endless Enterprises LLC.

USTAR
The Utah Science Technology and Research initiative
(USTAR) is a long-term, state-funded investment to
strengthen Utah’s “knowledge economy” and generate
high-paying jobs. Funded in March 2006 by the
State Legislature, USTAR is based on three program
areas. The first area involves funding for strategic
investments at the U of U and USU to recruit world-
class researchers. The second area is to build state-of-
the-art interdisciplinary facilities at these institutions
for the innovation teams. The third area, Technology
Outreach Innovation Program (TOIP), involves teams that
work with companies and entrepreneurs across Utah
to promote science, innovation and commercialization
activities. TOIP teams are driving a number of strategic
initiatives around the state to build Utah’s entrepreneurial
infrastructure. Initiatives include the SBIR/STTR
Assistance Program, which assists technology companies
statewide in matching their technology products to
possible SBIR/STTR grants, and the BioInnovation
Gateway Project, which is a model for the next
generation of non-profit business incubators.
In addition, USTAR’s Central Utah Technology
Outreach Program is facilitating the creation of a new
digital media initiative in Utah. The initiative is bringing
business, university and government entities together
to make Utah the worldwide industry leader in digital
media to create hundreds, if not thousands of new jobs.
SEED Box Elder
SEED Box Elder is an economic development
initiative of Brigham City, Tremonton, Box Elder County
and USU in partnership with Grow Utah Ventures.
With the recent announcement of a Procter and
Gamble plant, ATK Launch Systems, Autoliv ASP, three
Nucor facilities and many others, Box Elder County
is well known as an important manufacturing area in
Utah. The future potential for entrepreneurial growth
and development is great in Box Elder County. SEED
Box Elder has completed its first phase of work with
guidance from a very active group of community
and business leaders. The SEED Box Elder partners
envision their work meshing with a community
Innovation Center to be housed at USU’s Brigham City
Campus. This innovation center will combine business
incubation space with a business resource center, and
will incorporate the results and initiatives of SEED Box
Elder in an entrepreneurial development engine for Box
Elder County.
SEED Cache Valley
In northern Utah this year, a SEED Cache Valley
strategy was designed by some 70 community leaders
— all focused on expanding and supporting the
creation of growth businesses in Cache Valley. A key
emphasis of SEED Cache Valley is to develop a “no
wrong door” approach so that budding entrepreneurs
will get pointed to the most appropriate local resources
to ensure their success.
The regional abundance of talented entrepreneurs
coupled with their extensive inventiveness will serve
as the anchor on which to expand aggressive business
and job creation.
SEED Dixie
Launched over two years ago, SEED Dixie now
partners with USTAR in sponsoring the Dixie Angels
and the Dixie Technology Association (Dixie Techs).
The Dixie Angels see 10 pitch presentations each year,
which are carefully screened from dozens applying
at www.dixieangels.com. This new angel group has
funded two businesses in 2008.
Dixie Techs was established to nurture and provide
resources to the technology sector, a seedbed of
entrepreneurially minded businesses and individuals.
Guided by an eight-member steering committee, the Dixie
Techs group meets every month in Tech Friday gatherings
to network, hear speakers and share information.
Currently the SEED Dixie/USTAR partners engage
with clients for initial consulting for an assessment.
If the concept or business has the potential to reach
national markets and create high paying jobs, it
proceeds to more advanced counseling and additional
USTAR resources.

Entrepreneurial
Dynamism in Utah
By T. Craig Bott and Curt Roberts

While Utah has earned numerous accolades for its
“Entrepreneurial Dynamism,” many regions across the
state have yet to cash in on the prosperity. Community
leaders are taking the initiative to drive startup success
beyond Utah’s major cities and bring economic growth
to regions throughout the state.
Spreading
StartupSuccess
Spreading
StartupSuccess
By T. Craig Bott and Curt Roberts

Although Utah looks great from a national perspective,
our rankings are fueled by the entrepreneurial energy
that comes primarily from Salt Lake and Utah Counties
alone. Business creation and growth that occurs in these
two regions accounts for most of the entrepreneurial
success we take pride in as a state.
But should that be the case? Should we be satisfied
with just two regions doing well in business creation?
The fact is that across the nation, and in Utah,
entrepreneurism remains a local phenomenon. What
works so successfully in one region, such as a Salt
Lake or a Utah Valley, doesn’t seem to have much
positive effect on cranking up the entrepreneurial
engine of even a neighboring region.
The regional focus of entrepreneurism is even
more emphasized when one considers the necessary
ingredients to entrepreneurial success and how
regionally based these ingredients must be to make a
difference. Take angel money for an example, a pretty
vital ingredient to grow successful entrepreneurs.
National statistics indicate that angel investors usually
invest in business deals that are within a 45-minute
drive of their location. Anything further away only gets
marginal, if any, attention at all.
Simply stated, the capabilities and entrepreneurial
ingredients that fuel the success of one region don’t
transfer well to another. Anyone who has tried knows its
pretty hard to get investors, professional service providers,
mentors and senior advisors — all essential components
to fostering successful start up businesses — to travel the
50 minutes from Salt Lake to Davis and Weber Counties,
or certainly the 90 minutes to Cache Valley.
Over the past 18 months, we have engaged key
business and community leaders from many of the
outlying regions of the state in an initiative that brings
focus on what they can do to promote and foster
business creation within their regions. Under the title of
SEED Utah (Stimulating the Expansion of Entrepreneurial
Development), we have analyzed with these leaders their
potential to grow companies and to see those companies
succeed. This analysis has led to some very interesting
strategies about how to expand Utah’s entrepreneurial
dynamism beyond Salt Lake and Utah Counties.
Requirements for Regional Success
For any region to be entrepreneurially dynamic, four
key elements must be in place.
>>Talent>> Within each region, there must be a
strong and steady supply of talented individuals
who are ready to step forward and begin the
entrepreneurial ride. This talent base must
be cultivated and encouraged to take the risks
of entrepreneurship by seeing and having access to
successful entrepreneurial role models.
>>Idea Generation>> There must be a specific
degree of effort within the region that goes into
generating viable business ideas. Many of
these efforts include the research and development
work undertaken at a local university or applied
technology college. Even more are fostered by
independent inventors and local corporations.
Whatever the source, these ideas must flourish and
be promoted within the region.
>>Funding>> Investment capital is essential to fund
the early stage entrepreneurs. Access to local
capital invested by regional angel investors is vital.
>>Support>> Within the region, there must be a
wide array of support programs and resources that
the entrepreneur can access when needed.
So, how are we doing across the regions of the state
and where can we make improvements? Although
not meant to be a comprehensive assessment, here
are a few data points that compare regions across the
Wasatch Front. As you will see, there is a strong base
of talent and ideas in all regions, but a general lack
of funding and effective support efforts outside of Salt
Lake and Utah Counties.
Utah has long been recognized for its entrepreneurial energy.
Consistently receiving high ranks by nearly every business poll and
ranking, Utah is considered one of the national leaders in what might
be coined “Entrepreneurial Dynamism” — the capability to conceive,
establish and support entrepreneurial businesses.
Weber Entrepreneurs Association

Throughout virtually all regions of the
state, we have a very highly educated
workforce. Not surprising are the high
percentage of workers in all regions that
have a bachelor’s degree. This percentage
increases the farther we head north.
Talent
Throughout virtually all regions of the state, we
have a very highly educated workforce. Not surprising
are the high percentage of workers in all regions that
have a bachelor’s degree. This percentage increases
the farther we head north. Utah County comes in at
approximately 28 percent of their population having
bachelor’s degrees with Box Elder County at 20 percent
and Morgan County at 25 percent.
From such an educated workforce, all regions should
have a sustainable supply of high-potential entrepreneurs.
Idea Generation
One indicator of the degree of regional idea
generation is the overall inventiveness of the people
of the region as indicated by patents issued to those
inventors. There is a direct correlation between patent
activity and business creation, which gives insight to
the entrepreneurial dynamism of the region.
When adjusted for population, Cache and Box Elder
Counties are the most prolific inventors in the state.
Davis County exceeds that of Salt Lake County and, as
expected, Utah County continues to remain strong.
The regional strength in idea generation coupled with
such a strong talent base is indicative of the untapped
potential for business creation and business growth
throughout these regions.
Utah Ventures, a number of new angel groups have
recently formed in such areas as Salt Lake County, Park
City, Davis/Weber County and the southern Utah area.
An angel group is forming in Cache Valley, as well.
As these groups mature, they will make more funds
available to their local entrepreneurs.
But what about venture capital? Will it extend its
reach as well into these other regions? Clearly that
depends a lot on the quality of investment opportunities
that can be found in these regions. But it also depends
in part on outreach efforts undertaken by the regions
to cultivate a relationship with venture firms to expose
them to these opportunities.
Innovative programs such as Utah’s Fund of
Funds are enticing venture capital to the state so the
availability of venture capital in Utah is definitely
improving. That said, historical data show that venture
money is concentrated primarily in the Salt Lake
region with some invested in Utah County businesses.
Virtually no venture investments are made in
businesses outside of this region.
0.0
0.5
1.0
1.5
2.0
0.0
0.3
0.6
0.9
1.2
1.5
0.0
0.5
1.0
1.5
2.0
0.0
0.5
1.0
1.5
2.0
Utah
2003 2004 2005 2006
Davis
SLC
Weber
Cache
Box Elder
Patents per 1,000 Employeed Population
Source: U.S. Patent and Trademark Office, ie360, USTAR analysis
Funding
So what about the essential ingredient of funding?
Is capital equally available across these regions? The
strength of the angel community in both Salt Lake
and Utah County simply won’t transfer to the other
regions. It is up to local investors in each region,
therefore, to take the lead and financially support
their local entrepreneurs.
Much has been done to improve the angel capital
landscape locally. Led primarily by Alan Hall of Grow
BoxElder,
Morgan,Weber
Utah
Cache
Davis
SaltLake
2004
BoxElder,
Morgan,Weber
Utah
Cache
Davis
SaltLake
2005
BoxElder,
Morgan,Weber
Utah
Cache
Davis
SaltLake
2006
$0
$50
$100
$150
$200
$250
$300
$350 $324
$61
$6.1$6
$276
$120
$18.7
$.5
None
reported
None
reported
$224
$45
$.5
None
reported
None
reported
*Includes angel, venture capital and private equity
Source: Mountain West Capital Network, USTAR analysis
Early Stage Company Financing Transactions*
Dollars in millions by county
Throughout virtually all regions of the
state, we have a very highly educated
workforce. Not surprising are the high
percentage of workers in all regions that
have a bachelor’s degree. This percentage
increases the farther we head north.

Support
If you want to succeed as an entrepreneur, history
suggests your chances of doing so are much greater in
Salt Lake and Utah Counties. A key hallmark of these
two regions is a wide array of support services that
positively impact an entrepreneur and lead to his or
her success. Support initiatives that help entrepreneurs
access mentors, incubation space, sales and marketing
assistance, technology commercialization and the like,
do in fact increase the odds of success.
This is the area where the other regions of the state
need to make dramatic improvements. And this is the
area where the programs and initiatives that work in one
region can easily be adapted and implemented in another.
The difference is measurable. By comparing the
business survival rate — a measure that takes into
account both the number of business startups and
business failures — one can see across the regions
the distinct impact more supportive regions have on
business success.
Conclusions
Utah is successful in its entrepreneurial dynamism,
but clearly more can be done. Our base of talent and
the quality of ideas extends across many regions and,
if cultivated, can yield business growth well beyond our
most populous counties.
Funding from local sources is required and must
be made available with a regional mindset that “we
take care of our own” first and foremost. Venture and
institutional money will follow as the quality of regional
businesses improves. And each region can adopt
policies and implement programs that build on the
successes seen in other counties and are tailored to
help their businesses survive and grow.
As this all comes into place, the impact of Utah’s
entrepreneurial engine across all regions will significantly
drive forward the state’s overall economy.
9%
11%
8% 8%
7% 7%
5%5%
State Total Utah Salt Lake Davis Weber Morgan Box Elder Cache
Start-up Survivors as Percent of Total Companies*
by County 2006
Source: Department of Workforce Services, USTAR analysis
An entrepreneur starting a business in Utah County
has more than double the chance of success than one
starting in Cache County. Although more analysis is
needed to fully understand all of the reasons, these
numbers indicate the significant opportunity across
the regions of the state to increase success rate of
entrepreneur-led businesses.
Rankings in 2008
No. 2 - “2008 Best States for Business”
(Forbes)
No. 3 - “Top States for Business” (CNBC)
Rankings in 2007
No. 1 - “Most Dynamic Economy in
the Nation” (Kauffman)
No. 1 - “Best Managed State” (USA Today)
No. 1 - Salt Lake City “Best City for
Job Seekers” (Forbes)
No. 2 - “Best State for Business” (Forbes)
No. 3 - “Best State for Business” (CNBC)
No. 5 - “Top 10 Pro-business States”
(Pollina Corporate)
T. Craig Bott, president and CEO Grow Utah Ventures, can be
reached at craig@growutahventures.com. Curt Roberts, vice
provost of innovation and economic development at Weber
State University, can be reached at curtroberts@weber.edu.
High-Profile StateHigh-Profile State

launch
fall 2007
Grow Utah Ventures
+ CapTables
e2e Interview and Podcast
Jim Holland & Chris Grover
Entrepreneur Spotlight
Vaughn North - Utahinventors.org
Look Before You Leap
Why Does Utah Have a High Business Turnover Rate?
launch
spring 2008
Grow Utah Ventures
+ SEED Utah
Blue Ocean Strategy
Jack Sunderlage & Jerry Ropelato
launch
march/april 2007
Grow Utah Ventures
+Seed Capital
Gov. Huntsman & Ragula Bhaskar
Entrepreneur Spotlight
Rick Alden - Skullcandy
ENTREPRENEURS,
GET MORE
(Note: Grow Utah will not sell, solicit, or spam your email address.
It will be used solely for Launch magazine- that’s it.)
As you may have noticed, this is not the first issue of Launch- nor is
it the last. So why haven’t you heard of Launch before? Well, the
answer is simple- Launch is a digital magazine delivered on the web.
Aside from this special printed edition, Launch is delivered in a
digital “flip-book” format which looks and reads just like the printed
version- only it’s on your computer.
So if you like what you see, then subscribe at www.LaunchUtah.com.
Launch is an entirely free quarterly magazine dedicated solely to the
interests of Utah entrepreneurs- written by those that know what it
takes to start a business in Utah and by entrepreneurs themselves.
Just another way we at Grow Utah Ventures are helping you
to realize your entrepreneurial dream.
Subscribe at www.launchutah.com and pass it along.
launch
It’s
Free

For the second consecutive year, Utah
ranked No. 2 in Forbes Magazine’s “Best
States for Business” annual ranking.
“Utah [has] tremendous innovation and
growth in our robust business community,”
Gov. Jon Huntsman said when the ranking
was announced. “Utah will look to eliminate
the razor thin margin between us and Virginia
[No. 1] considering this solid recognition of
Utah’s unmatched quality of life, competitive
economy and job growth opportunities.”
Experts Praise Utah’s
Business Climate
and Offer Insight for
Improvements

As the nation’s business community more frequently
seeks the day-to-day intangibles, it is especially notable
that Utah improved from No. 12 last year to No. 8 in
the 2008 Quality of Life rankings.
Forbes isn’t the only one to take notice. When
discussing their recent move to Utah, Chairman
and President of Pennsylvania-based Allegheny
Technologies Inc. Patrick Hassey pointed out
that the quality of life was a major factor in his
decision-making process. “We selected Utah for this
significant investment because it is an ideal place
to do business,” Hassey said. “The state provides a
wonderfully innovative environment, a fantastic place
to live and a supportive government.”
Jason Perry, executive director of the Governor’s
Office of Economic Development, touted Utah’s job
growth when the Forbes ranking was announced.
“Combined with its young labor force — among the
largest in the country — businesses can expect to
find a highly educated and hard working workforce for
decades to come … businesses everywhere should be
looking to relocate or expand in Utah,” Perry said.
Launch magazine conducted interviews with leading
entrepreneurial experts across Utah. They share their
vision for the state and why Utah is the best place to
launch and build a business.
The People
“The best thing about doing business in Utah is
being in an environment where people want to help
each other to succeed. We have a highly educated
workforce … I think the landscape is on the rise
and will continue to be so. Utah, like no other state,
recognizes the tremendous contribution entrepreneurs
can have on economy. If you look forward in five or 10
years, we’ll have nothing but success to talk about.”
Curt Roberts — Vice provost, Innovation and Economic
Development, Weber State University
“The workforce in Utah includes first-class innovators
and visionaries. For a state as small as we are, we’re
fortunate to have the educational system we do. The
state support is outstanding and people have high
energy and passion for what they do.
I think the No. 1 challenge is that we’re a state
of 2.5 million people. We’re trying to get people to
recognize us. We’ve had low unemployment rate, but
we are running out of people. We need more science
and tech workers. Not only do we face a shortage of
people, but specifically skilled workers.
For my company, we’re confident we have
something magic. In five years we’ll be entering our
platform strategy and blossoming of our product. In
the animation space, people say you’ve got Adobe
and Pixar behind you … everyone expects us to be
successful. The legacy of Utah is a great enabler.”
Greg Jones — CEO, VisTrails Inc.
Funding Opportunities
When Alan Hall sold his company, MarketStar, he
used his newfound wealth to help other entrepreneurs.
“We’ve been able to take the funds from the sale of
the company and use some of that wealth to stimulate
entrepreneurism in Utah through Grow Utah Ventures.
We’re constantly trying to find a way to fund the gap
between angel money and venture capital. That said,
though, I think the future of the state of entrepreneurism
in Utah is very bright. Five or 10 years from now, we’ll
see hundreds of companies employing thousands of
people. The economic impact will be significant. They’ll
stay here and continue to grow. Utah will be known as
one of the best place on earth to grow a company.”
Alan Hall — Founder & chairman, MarketStar
“There’s a lot of support from local mentors and
university professors. For those who get involved in
entrepreneurism it becomes an addiction — whether you
launch your own business or help fund someone else’s.
I definitely see Klymit staying in Utah permanently.
It’s a great fit here. It’s an outdoor insulation technology.
Here we have the best snow on earth and we have lots
of local clients invested in licensing the technology.”
Nate Alder — Founder & CEO, Klymit
There’s a lot of support from
local mentors and business
leaders. For those who get
involved in entrepreneurism
it becomes an addiction —
whether you launch your
own business or help fund
someone else’s.

The Culture
“We have a great culture that values and
respects entrepreneurship … With that esteem for
entrepreneurism, however, comes a different cultural
dynamic of our great Western heritage. The bootstrap
mentality tends to make entrepreneurs averse to the
help that can make them successful. That irony is
the greatest challenge and they must overcome that
tendency. Those attitudes become hurdles for us and
must be cleared.”
Devin Thorpe — Managing director, USTAR
President, Mountain West Capital Network
Akers’ Logan-based technology company spun off
from Utah State University one year ago. “I grew up in
Chicago and one of the things I enjoy about the West
is the rugged individualism and hard working spirit
that’s here. That’s an incredible advantage to starting
and growing a company. Our biggest challenge right
now is the national economy. It’s not at its highest
point. Setting prices for products requires doing
research and development.”
Adrienne Akers — President & CEO, Dynamic Screening
Solutions Inc.
Entrepreneurial Excitement
“The best thing Utah has going for it is a workforce
that’s excited about entrepreneurism and willing to start
companies. People are very willing to buckle down and
take the risk of entrepreneurship. Our biggest need for
improvement, however, is raising capital. My angel
group, Salt Lake Life Science Angels, was founded two
years ago to help close that gap.”
Andrew Laver — Managing director, Salt Lake Life Science
Angels Principal, APL Capital Advisors
The Location
After a short stint at IBM and seven startups,
Brad Walter decided he wanted to spend the rest of
his life helping other entrepreneurs succeed. Walter
now specializes in investing in technologies and
consulting startups.
“Utah’s biggest challenge is the same as its greatest
strength: the location. We don’t have the connections
of the East or West Coasts. Entrepreneurs here can’t go
to lunch with half a dozen venture capitalists like folks
do in Silicon Valley. Also, there are misconceptions
about Utah culture. People consider Utah, and most
intermountain states, as the backwoods.”
Brad Walter — Founder & CEO, Early Fun Investments
Great Support, but Don’t Forget
to Focus on Sales
“Utah is the best place to launch a business. Thanks
to Utah angels such as Alan Hall, startup capital is
really improving here. Larger, successful companies
like Omniture give a great deal back to the community.
CEO Josh James took the company to an IPO, and
gave back. He’s put a lot of sponsorship dollars in
worthwhile events. He’s an example that it is possible
to build a large, successful business in Utah.
The state’s greatest entrepreneurial need is more
emphasis on sales in both public and private sectors, in
universities, etc. When it comes down to it, you need to
learn how to sell your product or service. Those types
of resources on a university level would go a long way
in the state.”
Brock Blake — CEO, Funding Universe
Perceptions of Utah
“Our local government has been very supportive
in our entrepreneurial efforts. I like to watch the
government roundtable discussions and inquiries
on how to work better together. My hat goes off to
the business, education and government leaders for
fostering a greater entrepreneurial spirit.
The state’s greatest challenge is the lingering
perception of what Utah is like. It’s ironic that many of
the things we would view as strengths — our values,
wholesome family environment, etc. — are often
viewed as drawbacks. Personally, I think it’s a great
place to build a career and raise a family.”
Jack Sunderlage — President & CEO, ContentWatch
The best thing Utah has going
for it is a workforce that’s
excited about entrepreneurism
and willing to start companies.
People are very willing to
buckle down and take the risk
of entrepreneurship.

5,200 Utah technology ﬁrms can’t be wrong: Come to Snapp Conner PR, Business Connect’s
2008 PR Agency of the Year, and see what the excitement’s about.
147 Election Road :: Ste. 212 :: Draper, UT 84020 :: 801.944.9625
Contacts:
Cheryl Snapp Conner
Managing Partner
cheryl@snappconner.com
Jeremy Kartchner
Partner
jeremy@snappconner.com
Mark Meservy :: m creative
Creative Services
mark@mcreative.biz
801.423.3443
LMhalfpageSnappConner.indd 1 9/12/08 12:23:16 PM

My moment.
“I won a 2 million dollar account for my company. And guess what I got for it? A 2-for-1 dinner
coupon. That was the moment I knew I’d be happier being my own boss. I went to the Zions
Business Resource Center where they assisted me with my business plan, financial
projections and counseling. And it was absolutely free, thanks to Zions Bank. You know,
I got all the resources I needed to go new places—and park new places, too.”
Zions Business Resource Center. Growing your business is our business.
Call 801-594-8363 to set up an appointment.
resources.zionsbank.com

Launch-FallWinter2008

Recommended

Recommended

More Related Content

Viewers also liked

Viewers also liked (7)

Similar to Launch-FallWinter2008

Similar to Launch-FallWinter2008 (20)

Launch-FallWinter2008