High Growth, Higher Wages, More Capital - Montana Tech Execs Talk with President of Federal Reserve Bank of Minneapolis in Bozeman
Bozeman's emergence as a high-tech hub was well-represented on Wednesday, September 5, as a dozen executives from some of Montana's fastest-growing tech companies met with Neel Kashkari, President of the Federal Reserve Bank of Minneapolis.
Companies in attendance included Advanced Electronic Designs, Ascent Vision and Bridger Aerospace, AdvicePay, Figure, Montana Instruments, onX, PFL, SoFi, and Zinovo.
Here are 3 key takeaways from the meeting:
1) The labor market is tight, and Montana's wages in high tech are rising faster than the national average.
A number of tech leaders noted their challenges hiring in a labor market with such low unemployment. Montana employees are top-notch and known for loyalty and high retention, but companies are struggling to recruit enough talent to keep pace with growth without poaching from neighboring firms. Recruiting from outside Montana, opening offices in other states, touting Montana's high quality of life, and hiring new college grads help fill the void, but the problem persists. Access to talent is still a major constraint for growing businesses. President Kashkari cited U.S. wage growth of just 2.7 percent and asked whether local wages might be low for such a tight job market. The consensus around the table was a resounding "no" as multiple executives told of paying yearly raises of 10 percent or higher in order to keep highly-skilled employees. The wage pressure was most acute for in-demand roles like experienced programmers but extended down to blue-collar jobs and childcare workers. One leader noted making a 10-20 percent bump in pay across their entire Montana workforce to keep employees in the state. Another said entry-level employees at his firm will double or triple their salary in one to two years.
2) Access to capital in Montana has improved dramatically in the last two years, but the terms are not always favorable.
Executives noted the dramatic improvement in access to capital in the last few years. In 2017, Montana attracted $83 million in venture capital – 10 times the amount from two years ago - thanks in large part to the work of Next Frontier Capital in Bozeman. A number of firms at the table have also received significant investment from outside Montana so far in 2018:
PFL (Livingston and Bozeman) secured a $25 million growth equity investment from Goldman Sachs.
onX (Missoula and Bozeman) closed a $20.3 million funding round led by Summit Partners, an international growth equity firm located in Menlo Park, California.
Figure (Helena and Bozeman) has raised $57 million and is rapidly scaling its Montana workforce to meet its vision of applying FinTech to the blockchain.
While interest from VCs in Montana companies is on the rise, firms like Ascent Vision and Bridger Aerospace that hope to grow without taking on equity investment have struggled to find banks who understand their business, can move at the needed pace and are willing to step into tech fields that some view as risky.
3) Real estate in Bozeman is a challenge, but not always in the ways one might expect.
Bozeman's tight housing market was not seen to be a huge problem in attracting a workforce, and CEOs noted that some of the headaches of housing are self-induced when employees are not willing to make concessions about their ideal lifestyle. Many insist on living in downtown Bozeman, close to restaurants and other amenities. But a number of companies are encouraging new hires to consider living in communities like Belgrade, Manhattan, or Livingston that are within a 30-minute commute of Bozeman and offer more housing options, more space, lower housing costs, and a great Montana lifestyle. A bigger challenge for tech companies is commercial real estate. Many businesses at the roundtable, including PFL, Ascent Vision, and Advanced Electronic Designs, are in the process of building new facilities or expansions and have faced a lack of available land to build, huge increases in steel costs, and a dire shortage of skilled tradespeople as labor is siphoned off to the Yellowstone Club and other large building projects. Financing for real estate expansion has also been an issue.
For those who have been watching our ongoing efforts to bring more female leaders to the table, I'm thrilled to report there were two other women at the roundtable besides me - Abby Schlatter, CEO of commonFont, and Katherine Krause, Director of Marketing for Advice Pay.
A special word of thanks goes out to the many women and men in the Montana high-tech community who reached out to make referrals of female leaders and suggested other names when they were unable to attend themselves.
About the publisher: Launched in 2014, the Montana High Tech Business Alliance is an association of 350 high tech and manufacturing companies and affiliates creating high-paying jobs in Montana. For more information visit MTHighTech.org.
