Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.
TechCrunch is taking a closer look at a few markets as the world changes. Following our dive into Boston late last week, we’re widening our scope and taking a peek at the state of Utah.
Utah’s startup scene has been in the news lately, with one of its better-known successes Podium raising $125 million, for example. The round valued Podium at around $1.5 billion, a healthy valuation for the company which recently reached $100 million ARR.
To get a handle on what’s going on in Utah, TechCrunch spoke with Qualtrics’ CEO and co-founder Ryan Smith about his home state. We’ve also snagged some recent news and venture data and taken a look at what the tech companies of Silicon Slopes are doing as a group. Let’s explore.
In the first quarter of 2020, Crunchbase data reports 26 known venture rounds in the state of Utah, worth a little over $210 million. To better understand if that figure is good or not, we pulled data from the same timeframe from 2019. Crunchbase reported 35 Utah rounds in the time period worth $556.2 million.
Venture capital data is infamously laggy, so more Q1 2020 data will fill in over time. But while Utah’s Q1 2020 may pull close to its year-ago comp in terms of round volume, it does appear that in terms of money raised the state’s start to the year was slow compared to Q1 2019.
Podium’s $125 million round, announced in early April, is counted as Q2 round by normal reporting methods for the industry. Also in early Q2 was the sale of Utah-based Galileo by SoFi for $1.2 billion.
To get a feel for how the slowdown is impacting Utah’s now well-known startup scene (Silicon Slopes, to its denizens), TechCrunch parsed a public layoff tracker’s data. Of its three best-known startup cities (Salt Lake City, Ogden, and Provo), only Salt Lake City had startup staffing cuts. The state has seen reported cuts from Domo (now a public firm), AdRoll, Peek, EasyPost and six other, smaller companies.
For context, 28 Boston-based companies have layoffs reported in the Layoffs.fyi tracker, 55 in San Francisco Bay Area, and seventeen in Los Angeles. Chicago had a few less, with eight reported cuts. Utah’s tech scene, therefore, saw a reasonable number of deals in Q1, if fewer dollars, and while it is enduring staffing cuts at venture-backed companies, it isn’t seeing an outsized number compared to its present scale.
Silicon Slopes is known for high-growth SaaS companies, a startup cohort that may transition well into a less healthy economy; SaaS revenues are generally expected to prove durable in less winsome times, even if churn rises some. That durability will be tested, but it could help Utah’s tech ecosystem stay afloat more than other markets that are more heavily invested in consumer-facing startups, for example.
That Utah might do alright in the downturn is a thought that Utah-based Qualtrics’ CEO Ryan Smith shares. In an interview with TechCrunch, Smith said that “Utah does have a little bit of an advantage” during the current economic shift, citing the state’s lower costs of living and employment than other states. Smith also said that “Utah’s got as good of a chance as anyone to survive” because local startups are “reasonably funded” today.
That said, Smith wasn’t sure when things might get back to normal. After saying that TechCrunch’s guess on a recovery timeline is as good as his, the executive noted that some industry players are expecting a Q3 or Q4 2020 recovery timeline. “It was a full eighteen months to 24 months to get back to normal in 2008,” he said.
There are green shoots in Utah if you look for them. Just last week, traffic-detection focused Wavetronix announced that it is building a startup accelerator called AlphaHive in the state (Utah’s state symbol is the beehive). Per the new group, it wants to build a “collaborative, supportive environment for startups and entrepreneurs.” There’s precious little more to find out about the project so far, but when it crossed our eyes last week, it did seem unseasonably optimistic and therefore notable. A few yet-embargoed funding rounds have also landed on our desks from the state in the past few days.
The picture that emerges from Utah, then, when trying to parse data, news, layoffs and sentiment is one that doesn’t show the state’s tech industry drying up and blowing away, as some secondary startup markets have after prior booms and busts.
A number of Utah-based companies are making their products free to help during the COVID-19 pandemic and working together on local solutions to health problems.
On the free product front, Podium announced last week that it would release a free version of its service, Podium Starter, that may give some small businesses an assist in reaching customers as the economy falters. Qualtrics, based in Provo, Utah, and worth around $8 billion when it sold to SAP, did something similar in March, making a survey tool free to help companies with instantly-remote workforces keep tabs on how employees were handling the change.
Pronto, a Lehi, Utah-based startup also made parts of its product free. The communications product told TechCrunch in an email before it extended its free service program it had seen downloads of its product more than double.
And then there’s Silicon Slopes, which doubles as slang for the state’s tech ecosystem and is the name a tech-led nonprofit in the state. According to Smith, thousands of folks tune into its regular Zoom calls, which can include current Utah Senator Mitt Romney, other government officials, and a “group of [local] companies all the way down through from a little startup […] to the next wave of unicorns.”
The goal when we spoke? To rapidly boost testing rates in Utah. Today, per data as of this morning, Utah has the 8th highest testing rate for COVID-19 in the union.
With this short look at Utah and our peek at Boston, I’m torn between being glad we took the time and worrying that we dropped in a little too early; the changes that COVID-19 is bringing to the domestic economy are still new and likely nascent. Perhaps we’ll check back in a few more weeks and see what’s changed.