The Spokane region is well poised for a dramatic increase in the number of new startups and emerging companies over the next five to 10 years. My view is supported by the several work/life attributes the region offers, the shift to remote or hybrid work, and the current economic cycle. Yet, it is predicated on the assumption regional leaders collaborate and prioritize a vibrant entrepreneurial ecosystem and that Spokane is able to address homelessness in its community successfully.
I define the Spokane region to include Spokane, Coeur d’ Alene, Sandpoint, and all cities in between. The attractiveness of the region, particularly as it pertains to the multitude of outdoor recreational alternatives and our outstanding universities and colleges, is well known to everyone who lives here and to those who are evaluating a move away from large urban areas.
Prior to the pandemic, a constraint in starting or relocating an emerging company to the Spokane region was finding qualified employees. That’s a sentiment I heard regularly from both serial entrepreneurs and leading venture capitalists prior to 2020. Conversely, talented individuals seeking to relocate were hesitant to move to the region because of the limited number of employment opportunities for themselves or significant others.
The pandemic, the resulting embracement of remote/hybrid work and the development of effective virtual meeting tools has changed all of this, and the region’s entrepreneurial ecosystem has benefited significantly.
A regional startup can now draw talent from anywhere around the world. Spokane-based Gestalt Diagnostics, a developer of proprietary workflow solutions for digital pathology, has over 50% of its team working outside of Spokane. In another instance, the CEO and co-founder of a well-funded company incubated in Seattle, SecureSave, recently moved to Spokane and the company’s entire workforce is remote. These are just two of many examples.
Others with exceptional backgrounds from large tech or other companies have moved to the Spokane region, kept their jobs, and are working remotely. These talented individuals are often contributing as mentors, advisers, or angel investors with new startups and emerging companies in the region.
Venture capital firms also are observing these trends and are increasingly focused on identifying investment opportunities away from traditional emerging growth hubs. I consistently hear from institutional investors from outside the region that previous concerns about the inability to hire key talent are no longer an issue, and they now view the region as a more compelling place to fund an explosively growing business. For example, Album Ventures, a leading Salt-Lake City-based venture capital fund, recently led an equity financing for Liberty Lake-based Vega Cloud Inc.
While challenges surrounding remote/hybrid work exist, I expect it is here to stay, which will benefit the Spokane region. The primary concerns pertain to missed opportunities or solutions to problems identified by co-workers serendipitously mingling around “the water cooler,” and how to measure productivity. I believe the ongoing evolution of Zoom or Slack-like solutions eventually will mitigate these obstacles.
Another factor in projecting forward is the current economic cycle. Although no one has a perfect crystal ball, most will agree we are in the midst of a correction with lower equity valuations and belt tightening resulting in layoffs. While perhaps counterintuitive, similar periods of economic downturn historically have proven to be advantageous times to start a new company.
For those laid off from an Amazon, Google, or Meta, for example, the opportunity cost of starting a new business is lower, and the labor and other costs of creating a product and building a team are also lower. Famed venture capitalist Bill Gurley, from Benchmark Capital, recently said, “If you are going to build something from scratch, this may be as good a time as you’ve had in a decade.”
There will be no shortage of capital to fund regional startups. Angel investors and venture funds have record amounts of cash on the sidelines. This year, over 10 companies in the Spokane region secured over $25 million in investment from angel and institutional investors. One Spokane company, SquareKeg, also scored funding on Shark Tank. Access to early-stage capital will become even easier in the future as new channels of direct access to investors are established.
Although the region has some industry concentration, such as in cybersecurity and health care services, we will continue to see a broad array of startup and emerging companies. This diversification is reflected in the latest cohort of new companies including Game Plan Apps (mobile apps), Historik (digital history), Treasury4 (fintech), Vega (cloud computing), Slate Dental (dental device) and Tokki (reusable gift bags).
Securing my view of the future assumes coordination among the economic development leaders of Spokane, Coeur d’ Alene, and Sandpoint. The narrative and messaging ought to be unified and not siloed. The geographic area is not that large, and we should strive to attract startups and emerging companies to it. Let the individual entrepreneurs and companies decide for themselves which particular city is ideally suited for them. A successful new startup in Liberty Lake, for example, is a win for Spokane and vice versa.
I am also assuming regional leaders prioritize attracting and nurturing entrepreneurs, startups, and emerging companies over recruiting established businesses. Historical data illustrates that startups create new jobs at a higher rate than older, mature companies.With the migration to remote and hybrid work, fewer companies are contemplating physical moves to new cities. They are instead optimizing to accommodate a dispersed work force.
Lastly, my vision assumes our elected and other leaders successfully address the homelessness issues in Spokane.
I am a passionate advocate for Spokane and may be prone to overlooking certain blind spots, but I can’t ignore the blight on our community by a small segment of the population that make working, living, shopping, and dining in Spokane unsafe.
Not only do I observe it daily from my downtown office, but also I hear about it regularly from out-of-town visitors considering Spokane as a place to start, grow, or fund a new company.
Onward and upward.
Tom Simpson is president and CEO of Spokane-based Ignite Northwest.
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