Burlington metro area ranks high in new report on high-tech start-ups

A newly released report ranks Burlington and South Burlington 40th among 386 U.S. metro areas in density of high-tech start-up companies.

The report, released by the Kauffman Foundation and Engine last month, shows that the region’s density of high-tech companies surpassed some of the more prominent clusters such as San Jose and Seattle.

Based on 2010 data, the top-ranking metro areas include Fort Collins, Colo., Cheyenne, Wyo., and Salt Lake City, Utah.

In the 2010 data, the Burlington area ranks 40th for high-tech and 56th for the Information Communication Technology (ICT) subset of high-tech, out the 386 metros, said Ian Hathaway, author of the report.

“That’s pretty good,” he said. “It means that the ranking is driven more by the miscellaneous component of high-tech, which includes aerospace, pharmaceuticals, scientific R&D services, and engineering services.”

Hathaway bases the density research on a location quotient, where 1.0 is the average density for the entire country. The data was taken from the National Establishment Time Series at the University of North Carolina. The report shows that 78 metro areas have a density quota higher than 1, which means the intensity is greater than the United States as a whole.

Vermont’s high-tech start-up density for 1990 was 0.9 compared to 1.3 in 2010, and the ICT start-up density for 1990 was 0.4 in 1990 compared to 1.1 in 2010, according to the report.

Technology entrepreneurs tend to spring from larger companies where they worked and the entrepreneurship in Vermont is likely a result of that, Hathaway said.

“It’s not the 25-year-old tech geek that is commonly portrayed in the press,” he said. “It’s the 40-something who’s put in his/her time for a big company and wants to go out on his/her own or to put forward a way of doing things better.”

There has been a lot more entrepreneurial activity in the state over the past 15 years, and many startups have relied on creative sources of capital, according Eli Moulton, a partner with Merritt Merritt and Moulton, a law firm in Burlington that provides legal and business advice for new companies.

Moulton says the mid-career start-up theory accurately explains the development in the state in the past couple of years.

“Vermont has few very big employers, and one of the ways to stay in the region if you have been laid off is to start your own business,” Moulton said.

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