Vermonts Entrepreneurial Economy

1
Vermonts Entrepreneurial Economy

• Ted Noon
• Lee Bouyea
• Fresh Tracks Capital
• Fall 2005

2
Vermonts Entrepreneurial Economy

• Economic Growth Indicators
• Innovation Indicators
• Human Capacity
• Financial Capacity
• Research Development Funding
• SBA Loans
• Private Equity
• Conditions Created for Growth
• Connectivity
• Cost of Doing Business
• Industry Clusters
• Incubators
• Entrepreneurial Community Development

3
Vermonts Entrepreneurial Economy

• Economic Growth Indicators
• Innovation Indicators
• Human Capacity
• Financial Capacity
• Research Development Funding
• SBA Loans
• Private Equity
• Conditions Created for Growth
• Connectivity
• Cost of Doing Business
• Industry Clusters
• Incubators
• Entrepreneurial Community Development

4
I. Economic Growth Indicators

• According to the American Electronic Association,
  in 2003 there were 907 high-tech firms in Vermont
  employing 15,488 people and paying 928 million
  in wages annually.
• 63 out of every 1000 private sector workers in
  Vermont are employed by high-tech firms making
  Vermont the 11th most concentrated technology
  state in the nation.
• In 2005, Vermonts high-tech industry workers
  earned an average of 29,000 more per year than
  other private sector workers, a 105 difference.
• Vermont has the highest concentration of
  technology exports in the nation, with 80 of its
  exports being high-tech products.

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Growth in Gross State Product

• Vermonts absolute GSP in 2004 was 22.1 Billion,
  ranking it the 4th fastest growing economy in the
  U.S. from 2000-2004
• The growth in Vermonts 2003 GSP is up 25 over
  2002, and has returned to levels seen in 2001.
• Annual growth rates seen in Vermont have
  significantly outpaced growth seen in New England
  or U.S. from 2001 through 2003.

6
2002 Unemployment Rate State Comparison

• In 2002, Vermont had the fourth lowest
  unemployment rate of any state in the country.
• At 3.7, Vermonts 2002 unemployment rate was the
  best in New England and far lower than the
  national average of 5.5.
• The Burlington Metropolitan Area registered the
  12th lowest unemployment level in the nation at
  3.1 in 2002

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Vermont vs. U.S. Unemployment Rates

• Vermont unemployment rates remain significantly
  lower than the U.S. average
• Vermonts 2005 year-to-date unemployment rate
  averages 3.6, down slightly from 2004

8
Vermont Housing Market Snapshot

• The Vermont housing market is experiencing an
  explosion in prices, while the number of sales of
  existing homes, and the number of permits issued
  to build new homes is projected to see a leveling
  off in 2005
• Average prices paid per home in 2005 are up 35
  from 2002

9
VT Job Growth High-tech Job vs. Total

• High-tech job growth slowed since its peak in
  1999, with losses suffered in 2001 and 2002,
  largely due to IBM layoffs

10
New Vermont Business Start-ups
New VT Corporations Formed

• Over the past five years Vermont has given birth
  to 12,000 new corporations.

New VT Corporations Per 1000 Workers

• An average of 8 firms are started each year in
  Vermont for every 1000 people employed in the
  workforce.

11
Vermont Wages vs. U.S. Wages

• Vermont wages have steadily gained ground on the
  U.S. average from 1998 to 2003.
• The difference between the average Vermont wage
  and the average U.S. wage has narrowed over that
  period from 2200 to 600, or from a 9.2
  difference to a 1.9 difference.

12
VT Wages vs. VT High-Tech Wages

• Between 1998 and 2003, the average high-tech wage
  was more than double the average Vermont wage.
• Average salaries for Vermonts high-tech workers
  increased 8 over this 5 year period

13
High-Tech Employment and Payroll
Number of High-Tech Jobs in VT

• The number of Vermont jobs in the high-tech
  sector has tapered since its peak in 2001.

Total High Tech Payroll in VT (Millions)

• In terms of absolute dollars, high-tech payroll
  hit a peak in 2001, then tapered close to 1998
  levels by 2003.

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Concentration of Hi-Tech Workers per 1000 Private
Sector Workers, 2003

• In 2003, Vermont ranked 11th in the nation in
  terms of concentration of high-tech workers,
  represented by 63 high-tech employees for every
  1000 private sector workers in Vermont.
• The national average is 52 high-tech workers per
  1000 private sector workers.

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Volume of High-Tech Firms in VT
Number of High-Tech Firms by Year

• The number of high-tech firms in Vermont grew
  dramatically from 1998 to 2001, and by 2003 was
  slightly off its peak in 2001-2002.
• In the past 5 years, 175 new firms were created,
  representing a 24 increase.

16
Technology Exports as a Percentage of Total
Exports

• In 2004, 80 of Vermonts exports were high-tech,
  placing Vermont first in the nation as a
  percentage of GSP
• Technology exports accounted for 2.6 billion of
  Vermonts 3.3 billion in annual exports

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High-Tech Industry Segments

• Vermont high-tech firms employ over 33,000
  people, or 5.3 of the workforce, in the
  production of electronic components.
• Between 1995 and 2003, the percentage of Vermont
  workers employed by these high-tech sectors rose
  from 4.4 to 5.3

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Industry Segment Job Growth by Volume
Number of Jobs by Industry

• The majority of high-tech job growth from
  1995-2003 came from software and miscellaneous
  sources.
• The growth of Communications and High-Tech
  Manufacturing jobs leveled off in 2003

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Vermonts Entrepreneurial Economy

• Economic Growth Indicators
• Innovation Indicators
• Human Capacity
• Financial Capacity
• Research Development Funding
• SBA Loans
• Private Equity
• Conditions Created for Growth
• Connectivity
• Cost of Doing Business
• Industry Clusters
• Incubators
• Entrepreneurial Community Development

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II. Innovation Indicators

• Between 1997-2001, the number of patents issued
  annually in Vermont grew 6.
• Vermont ranks 2nd in the nation for the number of
  patents issued per 1 million inhabitants, with
  644.
• From 1999 to 2005 UVM received a total of 1.8
  million in income from licensed intellectual
  property.
• From 1999-2004 Vermont firms received 17.4
  million in Small Business Innovation Research
  (SBIR) awards.
• From 1999-2004, companies located in 6 Vermont
  cities and towns received 81 of the total
  Vermont SBIR grants.

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Vermont Patents Issued

• Between 2000 and 2004, the number of patents
  issued annually in Vermont grew 6.
• Over that period, Vermont businesses and citizens
  received a total of 2145 patents.

22
Patent Density
Most State patents issued per 1 million of
population, 2004

• Vermont ranks second in the nation for the number
  of patents issued per million inhabitants

23
University of Vermont Patents Issued

• Vermont's major research institution, UVM, has
  received 71 patents since 1979
• UVM averaged 6 patents per year over the past
  five years

24
UVM Disclosures and Income
UVM Invention Disclosures per 1M of Federal
Research Funding

• The ratio of invention disclosures per 1M of
  federal research funding saw its lowest point in
  2002, and has since recovered to levels seen in
  2000.

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UVM License Income

• UVM License Income (Thousands)

• Over the past 7 years, UVM has averaged 256,000
  in license income per year.
• 2005 is the strongest year UVM has seen for
  license income since its peak in 2001.

26
Vermont Small Business Innovation Research (SBIR)
Grants
Vermont SBIR Grants (Millions)

• From 1999-2004 Vermont firms received over 17.4
  million in SBIR awards.
• 69, or 12.1 million of those SBIR awards went
  to Phase II grants.

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SBIR Awards by Agency 1999-2004
SBIR Grants by Agency

• Between 1999 and 2004, 8 Million of the 16.7
  Million in SBIR grants awarded to Vermont
  businesses were from Health and Human Services.
• Over that time period, there were a total of 83
  awards granted by all of these agencies to
  Vermont businesses

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Top Municipalities Receiving SBIR Grants
Top VT SBIR Municipalities (Millions)

• Businesses in six municipalities received 81 of
  the SBIR grants from 1999-2004.
• These awards went to VT companies including
  Yellow Wood Associates, Concepts NREC, Ascension
  Technology and Seldon Laboratories

29
UVM Experimental Program to Stimulate Competitive
Research (EPSCoR) Grants

• UVM EpSCOR Grants 2001-2005

• VT EPSCoR has made 58 awards to 41 companies
  between 2001-2005 for a total of 580,000 over
  that time period

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Vermonts Entrepreneurial Economy

• Economic Growth Indicators
• Innovation Indicators
• Human Capacity
• Financial Capacity
• Research Development Funding
• SBA Loans
• Private Equity
• Conditions Created for Growth
• Connectivity
• Cost of Doing Business
• Industry Clusters
• Incubators
• Entrepreneurial Community Development

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III. Human Capacity

• Within the New England states, Vermont ranks 2nd
  in the percentage of its citizens holding a PhD.
• Vermont placed 5th in eighth grade national math
  and science exams in 2000.
• With 90 of Vermonts total citizenry graduating
  from high-school, the State ranks 7th in the
  Nation.
• At 29, Vermont ranked 10th in percentage of
  adults with a college degree or higher.

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Educational Attainment
High School Degrees Completed Among Population

• Vermont ranks 7th in the nation in the percentage
  of the population with a high school degree or
  more
• Vermont ranks 10th for the percentage of the
  population with at least a college degree.

College Degrees Completed Among Population
33
New England Educational Attainment Levels

• Vermont has the highest rate of high school
  completion in New England, and ranks 4th in
  college degree completion.

34
Vermonts PhD Labor Force
Science Engineering Doctorates per 1000
Inhabitants, 2001

• With 3.3 Science and Engineering doctorates per
  1000 inhabitants, Vermont is the second most
  densely doctorate-populated state in New England,
  and well above the national average of 2.2.

35
Engineering Degrees Awarded
Engineering Degrees Awarded in VT

• After three years of growth, Vermont saw a sharp
  decline in the number of Engineering degrees
  awarded in 2001, then a leveling off.

36
VT Distribution of Engineering Degrees
Type of Degree Awarded
Granting Institution

• Vermonts engineering degrees are conferred by
  three institutions with two of those schools
  granting 93 of all engineering degrees.

• 93 of Vermonts engineering degrees are
  Associate or Bachelor level with Doctorates
  representing 0.4 of degrees conferred in 2003.

37
Vermonts Entrepreneurial Economy

• Economic Growth Indicators
• Innovation Indicators
• Human Capacity
• Financial Capacity
• Research Development Funding
• SBA Loans
• Private Equity
• Conditions Created for Growth
• Connectivity
• Cost of Doing Business
• Industry Clusters
• Incubators
• Entrepreneurial Community Development

38
IV. Financial Capacity

• Federal government funding to Vermont colleges
  increased 69 from 1999-2003, but has seen a
  slight drop-off from 2002 to 2003.
• From 2000 to 2005, over 165 million dollars of
  private equity capital (venture capital, angel
  investment, and friends and family equity
  investment) was invested in Vermont businesses.
• From 2000 to 2005, the largest private equity
  investments were in the software, internet/media
  and consumer sectors

39
Vermonts Entrepreneurial Economy

• Economic Growth Indicators
• Innovation Indicators
• Human Capacity
• Financial Capacity
• Research Development Funding
• SBA Loans
• Private Equity
• Conditions Created for Growth
• Connectivity
• Cost of Doing Business
• Industry Clusters
• Incubators
• Entrepreneurial Community Development

40
2003 Research and Development
University Spending on RD as a of Gross State
Product

• In terms of gross state product, Vermont is well
  above the national average and ranks second in
  New England in university and college budgetary
  expenditures on RD.

41
2002 RD Investment in Vermont Learning
Institutions

• Total RD investment in Vermont Learning
  institutions totaled 88.6 million in 2002.
• Federal sources weigh in at 49 Million, or 66
  of all RD funding at Vermont institutions, with
  Institutional ranking second at 16.

42
Total RD Committed to State Learning Institutions

• Total RD Committed to UVM and VT Colleges

• Vermont institutions have seen a 53 increase in
  RD funding from all sources from 1998-2002

43
Industry Financed RD
2003 Per Capita Industry Financed RD at
Doctorate Institutions

• Vermont places second in New England in
  per-capita industry-financed research through the
  States colleges and university
• Vermont maintains a level 64 higher than the
  national average.

44
Federal Government Committed RD

• Fed Govt. RD Committed to UVM and VT Colleges

• The Federal government provides the majority of
  funding to Vermonts educational institutions
• These commitments increased 69 from 1999-2003,
  but have seen a slight dropoff from 2002 to 2003.

45
Vermonts Entrepreneurial Economy

• Economic Growth Indicators
• Innovation Indicators
• Human Capacity
• Financial Capacity
• Research Development Funding
• SBA Loans
• Private Equity
• Conditions Created for Growth
• Connectivity
• Cost of Doing Business
• Industry Clusters
• Incubators
• Entrepreneurial Community Development

46
VT SBA Loans Granted
Number of VT SBA Loans Granted by Year

• The number of VT SBA loans granted grew 30 from
  2004 to 2005
• The Northwest quadrant of the state received 46
  of the loans issued in 2005

47
VT Small Business Association Loan Dollar Amounts
VT SBA Loan Dollar Amounts by Year (Millions)

• The dollar amounts committed to small businesses
  grew 129 from 2001-2005.

48
Vermonts Entrepreneurial Economy

• Economic Growth Indicators
• Innovation Indicators
• Human Capacity
• Financial Capacity
• Research Development Funding
• SBA Loans
• Private Equity
• Conditions Created for Growth
• Connectivity
• Cost of Doing Business
• Industry Clusters
• Incubators
• Entrepreneurial Community Development

49
Private Equity in Vermont

• From 2000 to 2005, over 165 million dollars of
  private equity capital (venture capital, angel
  investment, and friends and family equity
  investment) was invested in Vermont businesses.
• The 63 million level of investment seen in 2000
  was largely inflated by IDXs deal with
  ChannelHealth, valued at 33M, or over 50 of the
  private equity capital invested that year

50
Sector Breakdown of Private Equity 2000-2005
Private Equity Investments by Sector from
2000-2005 (Millions)

• From 2000 to 2005, the largest private equity
  investments were in the software, internet/media
  and consumer sectors

51
Geographic Breakdown of Private Equity 2000-2005
Private Equity Investments by Geography from
2000-2005 (Millions)

• From 2000 to 2005, 94 of private equity
  investments were made in the Northwest quadrant
  of the state

52
Vermonts Entrepreneurial Economy

• Economic Growth Indicators
• Innovation Indicators
• Human Capacity
• Financial Capacity
• Research Development Funding
• SBA Loans
• Private Equity
• Conditions Created for Growth
• Connectivity
• Cost of Doing Business
• Industry Clusters
• Incubators
• Entrepreneurial Community Development

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V. Conditions Created for Growth

• Connectivity Vermont was one of only three
  states in the country to have 100 of its schools
  wired to the Internet by 2000.
• Industry Clusters A series of industry clusters
  have developed in Vermont, producing vibrant
  communities, human capital, and support systems
  in the following industries Food Beverage,
  Sporting Goods, Direct-to-Consumer, Optical
  Technologies, Software, Green Environmental
  Technologies
• Incubators Incubators are increasingly providing
  support to nascent businesses throughout the
  state, with the Vermont Center for Emerging
  Technologies in Burlington leading the charge
  among these institutions
• Entrepreneurial Community Development VIF, VVN
  and the North Country Angels are all institutions
  that continue to effectively develop and hone
  entrepreneurial ventures throughout the state of
  Vermont

54
Vermonts Entrepreneurial Economy

• Economic Growth Indicators
• Innovation Indicators
• Human Capacity
• Financial Capacity
• Research Development Funding
• SBA Loans
• Private Equity
• Conditions Created for Growth
• Connectivity
• Cost of Doing Business
• Industry Clusters
• Incubators
• Entrepreneurial Community Development

55
Connectivity New England Comparison

• In terms of the percentage of households
  connected to the Internet, Vermont ranks fourth
  in New England and fifteenth in the nation.
• In terms of household computer access, Vermont
  places third in New England and fourteenth in the
  nation.

56
Vermont School Connectivity
Students Per Instructional Computer

• Vermont was one of only three states in the
  country to have every one of its schools
  connected to the Internet by 2000, but that
  number fell off slightly in 2001 and 2002.
• 88 of Vermonts school classrooms were connected
  to the Internet in 2002, right on par with the US
  average.

57
Vermonts Entrepreneurial Economy

• Economic Growth Indicators
• Innovation Indicators
• Human Capacity
• Financial Capacity
• Research Development Funding
• SBA Loans
• Private Equity
• Conditions Created for Growth
• Connectivity
• Cost of Doing Business
• Industry Clusters
• Incubators
• Entrepreneurial Community Development

58
Cost of Doing Business in Vermont

• According to the Milken Institutes 2005 report,
  Vermonts overall cost of doing business indexes
  6 higher than the national average
• Vermont ranks
• Below the national average for Wages, Industrial
  Rent and Office Rent costs
• Above the national average for Tax Burden and
  Electricity costs
• The cost of doing business in VT is not
  prohibitively high as it is in states such as New
  York and Massachusetts, where the cost of doing
  business is 31 and 26 above the national
  average respectively.

59
Vermonts Entrepreneurial Economy

• Economic Growth Indicators
• Innovation Indicators
• Human Capacity
• Financial Capacity
• Research Development Funding
• SBA Loans
• Private Equity
• Conditions Created for Growth
• Connectivity
• Cost of Doing Business
• Industry Clusters
• Incubators
• Entrepreneurial Community Development

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Vermont Sporting Goods Cluster
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Vermont Food Beverage Cluster
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Vermont Direct-to-Consumer Cluster
63
Vermont Software Cluster
64
Vermont Optical Technology Cluster
65
Vermont Green Valley Cluster
66
Vermonts Entrepreneurial Economy

• Economic Growth Indicators
• Innovation Indicators
• Human Capacity
• Financial Capacity
• Research Development Funding
• SBA Loans
• Private Equity
• Conditions Created for Growth
• Connectivity
• Cost of Doing Business
• Industry Clusters
• Incubators
• Entrepreneurial Community Development

67
Vermont Incubators

• The state is home to at least 6 established
  incubators dedicated to growing small business
  and establishing quality jobs in Vermont
• The geographical locations of these incubators
  span the whole state, providing support to
  numerous communities throughout Vermont

68
Vermont Incubator Highlights

• VCET in Burlington
• Closely aligned with UVMs College of Medicine,
  VCET is positioned to take advantage of the 120M
  in sponsored research funneled to UVM last year
• VCETs plans for growth include a partnerships
  with IBM and Norwich University, establishing a
  second location in the greater Burlington area in
  2006, and growing entrepreneurialism within UVMs
  underfunded engineering school
• BCIC in Bennington
• Housing 36 small business tenants and 100 jobs,
  BCIC is tightly interconnected with the
  Troy/Albany, NY area and RPI
• Diamond Edge in Windsor
• Founded in conjunction with anchor tenant Seldon
  Laboratories, Diamond Edge is located in the
  Upper Valley across the Connecticut River from
  Dartmouth College

69
Vermonts Entrepreneurial Economy

• Economic Growth Indicators
• Innovation Indicators
• Human Capacity
• Financial Capacity
• Research Development Funding
• SBA Loans
• Private Equity
• Conditions Created for Growth
• Connectivity
• Cost of Doing Business
• Industry Clusters
• Incubators
• Entrepreneurial Community Development

70
Entrepreneurial Community Development

• Vermont Investors Forum
• Founded to encourage exchanges between Vermont's
  business community and private sources of small
  investment capital, VIF has held 12 annual forums
  allowing over 120 startups to present their ideas
  to private investors.
• Vermont Venture Network
• A monthly forum created to enhance the
  interaction and exchange of ideas among Vermonts
  entrepreneurs which has included presentations
  from Vermont Tubbs, RPI, Vermont Coffee Co. and
  Chroma Technology.
• North Country Angels
• The NCA is comprised of 25 members that meet
  monthly to review business plans, share due
  diligence and provide a forum for new and growing
  businesses seeking Angel investment
• Primarily based in VT, NCA members have been
  founders, board members or investors in
  successful startup companies including Eating
  Well, Jetboil, Vermont Teddy Bear, Madhouse
  Munchies and Brunswick Technologies.

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Appendix
72
Sources

• American Electronics Association, Cyberstates
  2001
• American Electronics Association, CyberEducation
  2002
• College Board
• Corporation for Enterprise Development,
  "Development Report Card for the States 2001"
• National Science Foundation
• United States Bankruptcy Court, Rutland
• United States Bureau of Economic Analysis
• United States Bureau of Labor Statistics
• United States Census, Statistical Abstract of the
  United States
• United States Department of Education - Office of
  Educational Research and Improvement
• United States Department of Commerce
• United States Patent and Trademark Office
• University of California Berkeley, Department of
  City and Regional Planning
• University of Vermont
• Vermont Institute for Science, Math, and
  Technology
• Vermont Department of Commerce and Community
  Development
• Vermont Department of Education and Training
• Vermont Secretary of State