Montana’s Entrepreneurial Zeal

aug bigskyAccording to the 2015 Kauffman Index, Montana ranks as the state with the highest level of startup activity—the third straight year it has topped the rankings. However, how sustainable is its recent entrepreneurial success?

The Treasure State—its official nickname, although lesser known than Big Sky Country—is not new to tech startups. It is home to Schedulicity, an app for finding and booking local services; Wisetail, a social media e-learning platform; and TechRanch, an advisory organization that helps tech startups get off the ground. It has enjoyed high rates of economic growth and a development frenzy that has driven real estate prices up. Most impressive was the fact that in the 2015 Kauffman Index, Montana’s rate of new entrepreneurs was 0.54 percent – meaning 540 entrepreneurs per month for every 100,000 adults – nearly twice the national average. A further look at the other facts the Index took into account reveals the following:

  • Opportunity share: Montana had a 74 percent opportunity share of new entrepreneurs, which means that approximately three in 10 new Montana entrepreneurs came directly from unemployment. On the high end, nearby Idaho had a 90.3 percent opportunity share, or just one in 10 new entrepreneurs starting their businesses when they were unemployed.
  • Density: Montana’ startup density range was 195.7 startups per 100,000 people—topping the 184.7 from the previous year.

But how sustainable is this performance? In other top ranked states like Wyoming and North Dakota, the high level of startup activity is likely related to recent oil-driven, high real GDP growth. If plunging oil prices force the state’s oil rush to decelerate, will this take the wind out of the sails of the startup boom in the State?

I suggest Montana considers three factors:

Is there a critical mass?

When new businesses gain traction, they not only enrich their owners and investors, but the ecosystem at large through employees now exposed to startup dynamics and founders who have amassed valuable experience and capital to reinvest.

The collaborative mindset and do-it-yourself, creative spirit of the local people, which many successful entrepreneurs from Montana heed, has been a key element in the ecosystem. Now exposed to the current dynamics of startup creation, they could be the ones sustaining the state’s entrepreneurial zeal.

A case in point is the “spill-over” effects of Montana’s best-known high-tech startup, CRM software provider RightNow Technologies, which Oracle acquired for $1.5 billion in 2011. Its founder opted to locate in Bozeman, Montana, instead of Silicon Valley in 1997. The company’s success proved to other locals that it was possible to do world-class business from Montana without needing to be on a plane every week. At least that is what former RightNow employee, Andrew Hull, saw when he left RightNow to found Elixiter, a Montana firm that specializes in the marketing automation.

Are there opportunities for connectivity?

It will be key to change the ‘Big Sky’ image of Montana as state of vast distances, at least when it comes to connections between entrepreneurs. Entrepreneurial hotbeds are considered so because of the connectivity within the ecosystem. While many rightly see Montana as barely a blip on the map in this regard compared to other places cranking out tech startups, state authorities have a chances to build on Montana’s collaborative culture to create opportunities for connectivity.

How diverse are its economy and workforce?

The New York Times has reported that while “oil­ and gas related startups are piling into the region, but so are restaurants, day care centers, breweries, equipment makers, clothing retailers, transportation businesses and an array of other ventures.” This economic diversity beyond energy bodes well for the state’s entrepreneurial prospects. While it makes complete sense to play on local strengths, the best entrepreneurship ecosystems are those that are diverse in terms of economic activity and in terms of its talent base.

Montana has not been widely known widely as a leading hotbed in the United States for entrepreneurial fertility, but recent achievements have presented the state with an important opportunity. With such a wide range of policy experimentation happening at the local level in the U.S. and oil prices likely to remain low for the foreseeable future, state and municipal leaders would be wise to take a deep look at which policies will help accelerate the scaling of their very strong base of startup activity. 

Photo Credit: Flickr

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