By Christina Henderson and Katy Spence
Last February, Alliance executives met in Bozeman at a Montana High Tech Business Alliance CEO Roundtable hosted by Foundant Technologies. They foresaw four challenges Montana businesses would face in 2019, and while Montana has made a lot of progress in these directions, we have some predictions for how they will continue to shape the coming year.
1. Challenge: Increasing Access to Capital Investment
“Ten years ago, attracting investors in tech businesses based in Montana was a difficult endeavor for a variety of reasons, including distance from major tech hubs (compounded by lack of airport infrastructure) and a relatively small community of entrepreneurs and businesses in the tech sector.”
Despite the challenges, work and growth from funders like Next Frontier Capital, Frontier Angels, and Goodworks Ventures have nearly doubled per capita venture capital funding in Montana since 2015. In 2019, Montana surpassed a milestone of more than $100 million in total annual venture capital dollars invested in the state.
While investments in Montana have grown dramatically in the last five years, one of the biggest developments in tech in 2019 was the formation of the Whitefish-based venture capital firm Two Bear Capital. Led by Michael Goguen, a Montana philanthropist who spent 20 years as a partner at Silicon Valley VC firm Sequoia Capital, the firm aims to “accelerate advancements for good” with an emphasis on biotech and AI.
According to Goguen, Two Bear Capital plans to raise an initial fund in the range of $100 million to $150 million to invest in Montana and the western U.S., which would be approximately three times the largest fund raised in Montana, previously raised by Next Frontier Capital. Goguen is also one of the largest limited partners in Next Frontier Capital.
In addition to the increased availability of capital from Montana-based firms, Montana tech startups continue to attract investors from outside the state. In April 2019, tech-enabled childcare platform MyVillage in Bozeman closed a $5.95 million seed round, the largest ever closed by a Montana company. In May 2019, Bozeman photonics company Blackmore Sensors and Analytics was acquired by Aurora Innovation in Silicon Valley after raising an $18 million Series B round in 2018. And in August 2019, Quiq received a $12.5 million Series B led by Foundry Group.
Our 2020 prediction: Investments will continue to steadily increase, and money invested in Montana firms will grow exponentially.
2. Challenge: Increasing Demand for Montana Tech Workforce
“Rapid growth of a company usually implies that the business needs to hire more personnel, but Montana’s hiring needs have actually outpaced the size of the tech workforce.”
Year after year, Montana tech company leaders report that access to a skilled workforce is their top barrier to growth. While companies have reported prior difficulties attracting senior-level talent to the Alliance, a new study from the Montana Chamber indicates that businesses across all industries are now struggling to attract entry and mid-level talent, as well.
In addition, Galen Hollenbaugh, Commissioner of the Montana Department of Labor and Industry, said 100,000 Montanans are set to retire from the workforce in the next 10 years but only 90,000 will enter it to replace them. He added that existing workers may need continual skill training to help them adapt to an evolving workscape.
In 2019, employers ramped up how they addressed attracting workers. Some are establishing novel benefits to attract employees, like innovative childcare programs and unconventional workspaces. Others are working with educational institutions to refine programs, while others are partnering with state and federal agencies to establish apprenticeship programs.
With the ubiquitous workforce struggles that Montana faces, the Bureau of Business and Economic Research will be focusing on workforce during their 2020 Economic Outlook Seminar series, and the Montana Chamber aims to continue to gather employer feedback on how to address workforce shortages as part of their Envision 2026 program.
Our 2020 prediction: As more companies establish and locate offices in Montana, the demand for workforce will continue to rise. Competition from out-of-state companies for remote workers in Montana will challenge employers to engage and maintain current employees and attract new ones. Retiring baby boomers will leave a gap in senior leadership positions that companies may struggle to fill.
3. Challenge: Education Initiatives Needed for Long-Term Workforce Growth
“As companies look for long-term solutions to increase the size of the tech workforce in Montana, many companies want to improve the accessibility of tech education in public schools, two- and four-year institutions. Additionally, many companies are looking to alternative education programs like apprenticeships and code schools to expand the tech workforce to non-traditional students.”
2019 saw a lot of progress in connecting private companies with educational institutions. ATG, a Cognizant company, launched its first All-In Missoula (AIM) training cohort, a joint program between Cognizant, ATG, and Missoula College. The paid training program equips enrollees with business essentials, consulting skills, systems analysis and design, data analytics and more that will prepare them to interview for a job with ATG or Cognizant. Since the launch of the partnership, more than 60 new jobs have been created and more cohorts are already underway in 2020.
In October 2019, the University of Montana announced the launch of Tech Skills for Tomorrow, an initiative aimed to bolster UM’s education and training opportunities that sprang out of a 2018 Alliance meeting between Missoula tech companies and UM administration. A few days later, UM President Seth Bodnar had a candid conversation with Alliance members about better ways to address the needs of the business community. Bodnar agreed that different approaches could help upskill an existing workforce, such as stronger internship and certificate programs.
But partnerships are happening all around the state, including the Montana Youth Apprenticeship Program (MYAP), a multi-organizational effort utilizing the federal Partnership to Advance Youth Apprenticeship Grant (PAYA) Initiative to establish and strengthen technology apprenticeship programs in Montana with pilot projects in Billings and Helena.
Our 2020 prediction: The momentum from work in 2019 will continue to push for public/private partnerships to foster new talent to enter the workforce, both from traditional post-high school institutes and non-traditional programs. Support and input from the private sector will be needed to support a diversity of programs.
4. Challenge: Networking and Mentorship Help Leaders and Employees Grow
“Education and continued training is not only important for individuals who may wish to enter the tech industry, but also for those who already work within the sector. One way to facilitate continuing education in Montana is to host events where employees from a variety of companies can discuss best practices about specialized topics, like software development or engineering.”
Networking is continually cited by Alliance members as being a top benefit of membership, as events give folks a place to make business connections, meet mentors, and find resources to grow. With 650 attendees at Alliance events in 2019, it’s safe to say connecting with like-minded leaders and entrepreneurs is a priority for Montana businesses.
The end of 2019 saw three new board members elected to the Alliance Board of Directors, as well as the establishment of subcommittees for Events, Marketing, and Workforce Development to further focus on strengthening existing networks and building new ones. The Alliance also added 53 new member companies in 2019, including seven new Platinum members.
Outside the Alliance, mentorship and networking opportunities continue to grow. Early Stage MT held two HyperAccelerator programs and hosted its second annual Statewide Showcase for tech startups. Local organizations like 1 Million Cups, Hellgate Venture Network, Yellowstone Tech Alliance, Bunker Labs, and more connect support entrepreneurial communities across the state. And the formation of Accelerate Montana’s Rural Innovation Initiative (AMRII) aims to bring these same opportunities to the most rural parts of Montana.
Upcoming annual events like Women Techmakers, Big Sky Dev Con, Big Sky: Big Ideas, Quote2Cast, and others bring speakers and attendees from all over the country and are great ways to connect with larger networks in your industry.
Our 2020 prediction: New events and increased support will jumpstart innovation for entrepreneurs in smaller and more rural communities. More opportunities will spring up for local and regional tech meet-ups, and companies will band together to create affinity groups and support networks. The Montana tech community will devote more time and attention to issues like diversity and philanthropy that are increasingly important to the next generation of tech leaders.
If you’re interested in getting more involved, send us a message at director[at]mthightech.org
About the Authors: Christina Quick Henderson is Executive Director of the Montana High Tech Business Alliance and adjunct professor of entrepreneurship, management and organizational behavior in the College of Business at the University of Montana.
Katy Spence is the Communications Director for the Montana High Tech Business Alliance. She worked previously with the Missoula Current and Treesource, and has an Environmental Journalism Master’s Degree from the University of Montana.
About the Publisher: Launched in 2014, the Montana High Tech Business Alliance is an nonpartisan nonprofit association of highly-engaged high tech and manufacturing companies and affiliates creating high-paying jobs in Montana. For more information, visit MTHighTech.org or subscribe to our biweekly newsletter.