For tech companies and venture capitalists, the pandemic has been a major boon. With much of Utah’s startup scene comprising software companies, the period has led to a significant increase in the valuation of companies in the region, according to investors. And those who sold during this period made the most of this advantage.

Once 2022 hit, the situation changed. Inflation brought the economy to a halt, and for investors like Ted McAlerco-founder and board member of Park City Angels, this means that company valuations have returned to normal. “There’s too much money in Utah chasing the businesses that are here, and as a result contractors have been asking for ridiculous appraisals,” he says of the past two years. “We are starting to see ridiculous valuations plummet. This is mainly due to the slowdown in global markets. »

The economic stress test marked a key moment in Utah’s tech scene: a chance for investors to see how their estimate of the region would hold up under what McAleer described as a bursting bubble, similar to the dot-com breakout of the late 1990s. “It reverberates like a multi-layered cake,” says Gavin Christensenone of the first venture capitalists on the Utah scene, which launched Throw in 2008. “Everyone looks at their investments and thinks, ‘Okay, if everything goes well, what will the price be in two years?'”

Now people are moving more slowly, he says, “because they just live with the risk of a public company all day…Deals are still in the works, but we’re not in 2021 anymore.”

Diogo Myrrhapartner of VC of the album in Provo, has worked in venture capital in the region for about a decade and says he has seen technology and venture capital explode during that time. He attributes it to a “lag” growth process for Utah businesses, which often have to do more with less money. “A lot of the work was really putting Utah on the map,” says Myrrha. “Now we’ve become kind of a secret weapon, if you will, for the companies we’re friends with who view this ecosystem as one they pay very close attention to. [We went] from a fringe market to a thriving and thriving environment that coastal businesses are definitely paying attention to. Not only do they pay attention, but they vote with their money. »

McAleer echoed this development. He pointed out that when angel investors began their work in Utah, it was one of the smallest markets in the country. Now, he says, Park City Angels are sought out and invested in businesses in other states because they are more competitive than VCs in those markets. All of this growth stems from the particular period, VCs say, when Novell and WordPerfect boomed.

Novell, the company that created the document composition software, was founded in 1980 in Provo, and its early success helped spur a culture of innovation in the state. It’s created the next generation of entrepreneurs, says McAleer, which has spawned 18 unicorn businesses since 2014. “We’ve had a lot of unicorns, but I can’t necessarily say we’ve had a PayPal,” says -he.

McAleer talks about PayPal Mafia, when 20 former PayPal employees, loaded with cash after the company’s IPO, went on to found Tesla, YouTube, LinkedIn, Kiva, Yelp and several others. Utah’s closest major hit has been Qualtrics.

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