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UTAH VALLEY HIGH TECH NEEDS FUNDING, REPORT SAYS

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The future of Utah Valley's high-tech industry is promising, but lack of funds for expansion and a shortage of management and marketing skills could stifle that growth, a Brigham Young University study says.

The report, commissioned by the Utah Technology Finance Corporation, found that there are more than 100 high-tech-related businesses employing more than 8,000 people and enjoying more than $1 billion annually in sales.Of the 127 high-tech companies, 60 percent are software companies. Nearly 60 percent have fewer than 25 employees. High-tech industry accounts for almost 9 percent of the total employment in the valley, the studysays.

Nearly 90 percent of all the high-tech companies in the valley are also either directly or indirectly influenced by the presence of BYU through technology or people.

While some may relish the news, the study - compiled by professors in the BYU Marriott School of Management - points out where improvement is needed and the various steps that could be taken to get there.

From surveys and interviews, the professors found that venture capital, banks and government sources have generally not been sources of funding for businesses.

"The lack of outside funding for Utah Valley high-tech firms in their current operations is disturbing," the report says. "Almost all firms require outside funding at some point to finance growth. It could be surmised that growth has been stifled by inadequate external financing."

Survey results indicate companies need additional information about funding sources and the characteristics of successful funding applications, the report says.

Utah Valley has a highly educated work force with a large pool of highly skilled labor coming from BYU and Utah Valley Community College - people with the technology skills needed to start high-tech companies.

But it says there are shortages of other critical business skills - training in law, management and marketing. Many companies go outside Utah Valley to find these skills, the report says.

If Utah Valley is going to grow into a large haven for high-tech industry, it will also have to diversify its technological skills and develop other types of markets in areas such as biotechnology and supercomputing, it says.

With 90 percent of the valley's high-tech company sales coming from out of state, it's apparent that the local market has not caused the companies to spring up, the report says.

"A good marketing strategy and outside connections become essential components of a successful business; an absence of these seems to be one of the major factors contributing to slow growth and, in some cases, failure."

The survey found that high-tech companies in the area rely more heavily on social networks instead of professional networks with technical associations.

"Beyond the technological strengths of Utah Valley networks, they seem to be neither rich enough in terms of bringing skilled business people in contact with technology people, nor broad enough to bring in outsiders who might fill the missing ingredients in the networks."

"Although Utah has limitations . . . the high-tech industry is having a large economic impact on the valley and many high-tech companies are proving to be very successful," the report says.

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(Additional information)

High-tech hints

The study recommends that Utah Technology Finance Corporation:

-Stimulate the development of high-tech business networks by promoting opportunities for interaction between Utah Valley entrepreneurs and groups such as the high-tech community in Salt Lake City, industry experts and venture capitalists.

-Encourage in-state banks to develop high-tech investment departments.

-Establish a high-tech business information brokerage organization to collect, organize and make available information about such things as other high-tech markets, real estate costs and sources of funding.

-Establish a manufacturer's representative marketing firm to assist in marketing and selling of new high-tech products.

-Establish a high-tech business research park or incubator to assist in the development of new ideas into viable businesses.