WTC’s 2005 Index of Innovation & Technology shows that strengths in new company formation and private equity could mean the North Central region is poised for growth.
Seattle, Wash. – May 24, 2005 – In business, good connections are everything. Just ask small technology companies in Wenatchee, Washington. According to the Washington Technology Center’s 2005 Index of Innovation & Technology, the North Central region of the state has the potential to cultivate a local technology economy because it’s a small, but well-connected community.
The Index, published annually as a benchmark report on Washington’s performance, includes detailed data on 12 regions in the state, evaluating them against critical drivers necessary to support a technology-driven economy.
In the 2005 report, Wenatchee showed the strongest percentage of start-up companies in relation to existing technology companies (14 percent). Technology companies make up only a small fraction of the North Central region’s total employment (3 percent), and the pure number of start-ups is far behind that of larger communities like Seattle. However, data shows that idea-sharing and spin-off technology is strong among the companies that do call Wenatchee home. North Central also fared well in private placements. The region ranked sixth in the state; however, this is positive considering the size of the community.
Wenatchee shows favorable activity with respect to private equity market and new company creation. These are good indicators of technology economy potential.
In order to realize the potential offered by these start-up companies, Wenatchee will need to ensure these businesses have the resources they need to grow and mature. According to the Index, North Central experienced a 7 percent drop in technology employment in 2003* and only one of the region’s dominant industries saw growth. The other two major sectors saw either a loss or remained unchanged.
The North Central region is on the cusp of what could develop into a regional cluster of growth technologies. The technology companies are young or just getting started so they have yet to become major drivers of jobs and wealth. Encouraging research and providing business development support and resources to these industries will help them become mature entities and contribute to the region’s economic growth. Wenatchee is already charting a course in this direction. The region has good infrastructure and economic development organizations in place and recently added a new Confluence Technology Center. In addition, the region has existing industry presence in aerospace, energy and value-add agriculture that offer growth potential through technology.
Making sure that these types of support services continue to be available, encouraging an influx of technology into more traditional industries, and helping their young companies get the financial support and available skilled workforce they need to grow will be critical if Wenatchee wants to build its local technology economy. Wenatchee companies failed to capture a share of federal R&D grants coming into Washington State. The North Central region also lost footing in measures for human potential and skilled workforce. Wenatchee slipped from sixth to ninth in high school graduation rates and the regions scores for match and science proficiency among students also declined.
According to WTC, federal Small Business Innovative Research (SBIR) grant money is an untapped resource for Wenatchee and could become a source of funding to help the region’s smaller companies get the foothold they need to grow into more dominant industries. The Washington Technology Center hosts programs throughout the state to help entrepreneurs understand how government grants boost technology commercialization and helps companies be more successful in applying for and securing awards.
WTC’s Index of Innovation & Technology also includes a profile of Washington’s strengths comparing to other U.S. states. Washington has traditionally scored well on a number of indicators which points to the state’s ability to sustain a technology economy. For the fifth year consecutive year, Washington claimed the top spot for new company creation. Patent activity remained strong. Over 1,400 technology patents were generated, an increase of 8 percent from the previous year. This number has continued to climb since the Index was first published in 2000. Other significant trends for Washington include: One in ten jobs today is within a technology industry; 11 out of the 12 regions showed growth in at least one of their core technology industries; Software saw the highest increase in employment and national dominance since 1998; Venture Investment in Biotechnology nearly doubled, increasing from 8 to 15 percent.
A summary report is available on the WTC website at http://www.watechcenter.org/.
*Statistical data in the 2005 Index is from 2003, the most recent available at the time of publication.