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The New Pioneers

by Gary Daughters

With a population just a whisker above 1 million, remote Montana has built a well-earned reputation for self-reliance. The saying goes that when a tractor breaks in Montana, you don’t pay someone to fix it; you fix it yourself. So maybe it’s not a surprise that Big Sky Country is breeding entrepreneurs. Confirmation comes from three respected national rankings.

ValuePenguin, the finance research website, released a report in July that identified Montana as the nation’s top state for small business. Montana was No. 1 for employees working in small businesses (66 percent of the total employed population) and for exports owned by small businesses (71 percent of all exports from Montana originate from small businesses), No. 4 for small business survival rate (71 percent of small businesses stay open for more than two years), and No. 24 for small business "birth rate" (eight percent more businesses opened than closed).

A September study by WalletHub, the personal finance website, named Montana the fourth-best state in which to launch a small business. WalletHub compared the 50 states across 25 key indicators and ranked Montana No. 8 for both business environment and business costs, and No. 14 for access to resources.

Montana

Laboratory specialists at Inimmune in Missoula: “There’s no other place they’d want to go.”

Photo courtesy of Inimmune

A Model for ‘Entrepreneurial Systems’

Perhaps most impressively, the Ewing Marion Kauffman Foundation, from 2013 through 2016, ranked Montana as the No. 1 small state for entrepreneurship. The Foundation was so intrigued by the four-year streak that it funded a separate study to ascertain the causes for Montana’s resounding success. Focused on "entrepreneurial systems" in Bozeman and Missoula, the study was based on 42 interviews with Montana entrepreneurs and support organizations. Some of the findings:

  • Montana’s high level of entrepreneurship is leveraged by dense networks of active local support organizations (non-profits, university-related, government, and individuals), which were well perceived and utilized by entrepreneurs.
  • With the exception of a few companies specifically working in the local environment, Montana companies target national and international markets and procure their inputs globally.
  • Montana companies enjoy a high level of local workforce, with a high retention rate built upon the quality of life offered in the region.
  • Entrepreneurs in Montana seek out resources, participate in events and meet mentors beyond their hometowns, often 200 to 300 miles away. Entrepreneurs in Montana have diverse backgrounds, coming from all over the country, with Silicon Valley or international experiences.

State officials say that Montana’s fertile entrepreneurial landscape has been nurtured by a low tax environment (as evidenced by its No. 5 ranking from the Tax Foundation for several years running) and a long-term strategy to energize the state’s economy from the ground up.

"For a long time we have focused on the ecosystem that we have in the state rather than providing a high level of incentives to move companies here," says Ken Fichtler, chief business development officer at the Montana Governor’s Office of Economic Development. "That’s really starting to pay dividends for us. We’ve been good at creating an organic business community."

Connection Trumps Competition

In Montana, the word "community" isn’t taken lightly. The Kauffman study found that some of the state’s most successful tech entrepreneurs — including Tom Stergios of Advanced Technology Group, Andrew Hull of Elixiter and Greg Gianforte of RightNow Technologies (who now represents Montana’s at-large congressional district in Washington) — have mentored successive generations of startups.

"At the bottom line, Montanans knew each other well and felt comfortable giving referrals, and those connections were built out of open relationships with small degrees of separation," the Kauffman report concluded.

One entrepreneur noted: "These are people that have been willing to meet for lunch, spend time on a phone call, etc., to help me process issues or opportunities … I feel confident I could call just about any business leader in Montana and they would jump to help if they could."


“We’ve been good at creating an organic business community.”

— Ken Fichtler, Chief Business Development Officer, Montana Governor’s Office of Economic Development

The Montana lifestyle, also mentioned in the Kauffman report, includes a moderate cost of living, vibrant small towns and access to unparalleled natural scenery. It was a key component in the 2016 launch of Inimmune, a Missoula biotechnology company that focuses on the discovery and development of new therapeutics for allergy, autoimmunity, infectious disease and cancer. Inimmune founder Jay Evans tells Site Selection that he and his team of 15 opted to stay behind in Montana when their previous employer, GlaxoSmithKline, moved its Montana operations to Maryland.

"Being able to do work like this in Montana," says Evans, "is peoples’ dream job. There’s no other place they’d want to go."

As part of a public-private partnership with the University of Montana, Inimmune helped establish the Center for Translational Medicine on UM’s Missoula campus. This summer, the center pulled in some $20 million in research grants, chiefly from the National Institutes of Health.

"In Montana," Evans says, "if you want a job in biotech you’ve got to create it yourself. Unlike some other places, you can’t just walk across the street and work for another company. That’s why the entrepreneurial community here is so strong. And it all comes back to lifestyle. People start companies here because it allows them to stay."