Idaho Deal Flow Report: Dollars are up, numbers are down

The value of reported investment deals in Idaho last year leapt to $2.04 billion in 2017, up $1.06 billion from last year, but that was primarily due to a single transaction, according to the Deal Flow Report released April 18 at the Idaho Technology Council’s Capital Connect Conference. Overall, the number of deals was down, at 147 from 166 in 2016.

The Deal Flow Report, now in its fourth year, is an annual report commissioned by the Idaho Technology Council, or ITC. It highlights private placement investments and merger and acquisition activity for Idaho companies.

As with previous years, technology and software companies continued to be a leading contributor to the deals, at 60 percent in 2017. “The beautiful thing about the report is it continues to show how capital is flowing into Idaho,” said Jay Larsen, president and CEO of the ITC. “The dollars invested in startups show that we’re growing a cognitive and complex ecosystem around a knowledge-based economy.” That’s as opposed to an economy made up of simple and repetitive tasks, which are vulnerable to automation. “You either go one way or the other, and the report shows that Idaho is growing toward a knowledge-based economy,” he said.

Results as a whole were dwarfed by a single Micron public transaction of $1.2 billion. “The report is still very influenced by larger deals, but that’s not unique,” said Blake Hansen, managing partner for Alturas Capital, the Eagle company that helped compile the report. “Every state that has this type of reporting is heavily influenced by the larger deals.” He cited Utah as an example.

In addition, PetIQ, an Eagle pet prescription company, went public, raising $115 million, according to the report. “It’s a pretty big win for Eagle, Idaho to have a company raise $115 million,” Hansen said. (Eagle timesheet company TSheets was acquired by Intuit in December for $340 million.)

Startups, which Hansen defined as companies founded since 2010, provided a number of the deals. On a per-count basis, 62 of the 147 deals, or 42 percent, were Idaho companies that were founded after 2010, he said. “What we’ve been seeing recently is more and more startup activity, and more companies that are younger in their lifecycle that are out raising capital,” he said. “It’s a healthy thing for the state and it bodes well for the future success of Idaho companies.”

Idaho companies actually raised even more capital than was included in the report. Many companies wouldn’t reveal their deal information, Hansen said. “We know it’s incomplete, because we live in a state where self-reporting is not the norm,” he said. “We look forward to that changing in the future.”

For now, the report collects information on deals by working with venture capital databases, examining transactions considered under Regulation D by the Securities and Exchange Commission, and reaching out to providers such as the Boise Angel Alliance to get information on their transactions, Hansen said. Alturas then validates these data points through company executives.

Idaho is also starting to get more attention from venture capital investors outside the state. “I’ve probably gotten calls from six VC funds, from Los Angeles to Washington, D.C., that want to know more about Idaho and what’s going on here,” Larsen said. The Los Angeles VC, which he did not name, is looking at Idaho particularly hard, he said. “They want to get hot markets that are outside the traditional markets, and they are looking at Idaho and Boise as a very strong community to do that in.”

To further help the Idaho entrepreneurial community, the ITC is working on another report, due in September, that Larsen called a “knowledge report.” “It will help us figure out what our strengths are, measure what we need to continue to do, and the prescriptive opportunities to act on building this knowledge-based economy,” he said. “You can’t sit there and watch it – you have to drive these prescriptive opportunities in our state.”