2020 Deal Flow shows flat growth, drop in deal numbers

Despite COVID-19, deal flow in Idaho’s startup industry was essentially flat compared with last year, though the number of deals is down by a third.

Overall, investment deals were $4.4 billion in 2020, compared with $4.42 billion the previous year, but showed a 5% drop in the number, according to the Deal Flow Data report released Feb. 26 by Alturas. Overall, the number of deals was 102 compared with 154 in 2019.

Until last year, this data was produced by Alturas and released in a Deal Flow Report by the Idaho Technology Council, typically in May. Neither Alturas nor the ITC has thus far released the sort of deeper analysis and listings the Deal Flow Report typically included.

The ITC also held its develop.idaho conference, typically held in September, virtually last week, with industry speakers including Vivek Sankaran, CEO of Albertsons Companies and Amy Gile, CEO of Silverdraft. In-between were two breakout sessions in each of three tracks: operational, technical and social, covering topics such as diversity and inclusion, cybersecurity and adapting project management.

While Idaho’s startup community has been getting increasing interest the past few years — especially as COVID-19 has made it easier for employees to work remotely — how the state ranks as a startup mecca depends on what’s being measured.

For example, the American Council of Engineering Companies Research Institute recently released the 2020 Engineering Industry Profile, its first state-by-state comparison of architectural and engineering services. There, Idaho came in for commendation, along with the Mountain West region. “In the last five years, the Mountain Census Division has experienced rapid compound average annual growth rates in A/E employment with states like Colorado, Idaho and New Mexico achieving growth rates well above the U.S. average of 2%,” the organization noted.

But it added a caveat. “Annual growth rates in Idaho, Nebraska and New Hampshire have averaged over 5% over the last five years but these states have fewer establishments and relatively small labor forces (below the average per state of 30,000).” Those small figures meant Idaho ranked in the bottom 20 of states by total engineering and architectural-supported jobs, in its companion report, 2020 Engineering Industry Economic Contribution.

Similarly, parts of Idaho did well in the recent annual Milken Institute report, Best-Performing Cities 2021, with Boise, Coeur d’Alene and Idaho Falls particularly coming in for comment.

“Idaho Falls rises to first in the 2021 Best-Performing Small Cities,” climbing six ranks, Milken noted. The city experienced short-term job growth of 4.7% and includes the ninth-best high-tech GDP concentration among all small cities, the report continued.

Similarly, Boise gained one rank from 2020 to sixth, which Milken attributed to an improvement driven by high rankings in job and wage growth, both in one- and five-year indicators. At the same time, Milken noted that Boise is held back by low rankings in high-tech GDP growth and few specializations in high-tech industries (110th). Plus, Boise has the double whammy of both lower salaries and increasing housing costs, the report noted.

Growth also hurt Coeur d’Alene, which dropped one spot from last year, to sixth, as housing affordability has dropped. In addition, large sections of industrial employment are exposed to downturns in consumer spending, especially leisure and hospitality.

“Pressing into fields adjacent to current specializations — computer equipment, semiconductor, and navigational and electromedical instrument manufacturing — would increase high-tech GDP concentration and promote economic dynamism in the region,” Milken advised.

Even Idaho Falls had some areas of concern. “Only 29% of the population over 25 have a bachelor’s degree or higher, which is lower than the U.S. average of 31%,” the report said. “The region also has comparatively low industrial diversification, which may hamper stable growth in the future.”

Cache Valley, which straddles the border between Utah and Idaho and includes Idaho cities like Preston, came in after Idaho Falls at second. However, that was primarily due to the strength of Logan, Utah, the report said.