09 Apr High-tech directory shows growth in slow economy
Madison, Wis. Despite a slowing national economy in the last quarter of 2007, Dane County’s technology industries continued to add to their ranks at a steady pace and combined to generate nine percent more revenue in 2007, according to the 2008 Greater Madison Area Directory of High-Tech Companies published by Madison Gas & Electric Co.
The Dane County technology community, comprised of 12 industry clusters, saw its ranks grow to more than 525 businesses, up three percent from the 510 listed in the 2007 directory.
The 22nd annual publication, which will be released this week, said these companies reported $6 billion in combined revenue and research grants, up nine percent from the $5.5 billion reported last year, and employed 29,000 people in 2007, a 1,000 job increase over the previous year. The employment figure represents eight percent of metropolitan service area employment in Dane County.
While Dane County, home to state and local governments and the University of Wisconsin-Madison, is considered “recession proof,” economic downturns elsewhere can impact the level of business local companies conduct beyond county borders.
“Considering the economic conditions, I would say that [growth] is quite good,” said Jim Morhbacher, business development manager for MG&E. “It’s not as fast as it used to be in the old days, but we still have growth rates in employment and in the number of firms.”
The “old days” included the later half of the 1990s, a period of robust economic growth nationally and in Dane County. From 1995 to 2005, the average annual growth rate in employment was 7.7 percent, a rate that cooled to 3.5 percent from 2000 to 2007. The growth rate in number of businesses last year (2.9 percent) is consistent with the average annual growth rate from 2000 to 2007 – three percent.
Regarding the 2007 figures, the nine percent revenue growth is what stood out to Tom Still, president of the Wisconsin Technology Council. “It counters the image that companies here are smaller and not producing much product,” Still said. “Nine percent revenue growth is something a lot of sectors would like to see today.”
Last year, an employment and revenue surge largely was attributable to acceleration at a handful of companies, including Epic Systems, CDW Berbee, Promega Corp., and TomoTherapy, which last year netted $180 million in an initial public offering of stock.
That level of detail isn’t available for this year’s directory, but Mohrbacher would not be surprised of the same companies led the way in creating the 1,000 new jobs.
Of the more than 525 technology firms listed, about one-third operate in manufacturing and the rest are service companies. The biotech/life science/medical device sector is the fastest growing part of the manufacturing group.
Jim Leonhart, executive vice president of the Wisconsin Biotechnology and Medical Device Association, cited news that Madison would hold a global Stem Cell Summit this fall as proof that Dane County and Wisconsin have a strong reputation as a technology community. “It’s clear that we continue to establish a good foundation in the state,” he said. “Even though we’re in tougher economic times, we’re holding our own, which I think is a very good sign.”
New blood
Overall, 416 of the 525 high-tech organizations are profiled in the 2007 directory. Of the 17 new firms added to the directory, half are new start-ups or expansions.
One of the new listings is Inviragen, a company that develops vaccines for emerging infectious diseases. The company is based in Fort Collins, Colo., but has established an office in Mount Horeb and made news earlier this year when it received a $250,000 Technology Venture Fund loan from the Wisconsin Department of Commerce. Inviragen will use the loan to lease a 4,000-square-foot laboratory and office space in Madison and create up to 10 new research positions.
Seventy-one of the companies listed have corporate affiliations with outside firms, the same number as last year. That compares to 80 in 2005 and 90 in 2004.
A total of 23 firms either did not want to be listed, or were dropped from last year’s list due to business failures, relocation, or consolidations.
Historically, an 11-year snapshot indicates how far the industry, driven by research at UW-Madison, has come. In 1996, there were 350 companies employing 16,500 people, whereas 2007 saw more than 525 companies employing 29,000. The combined revenue of technology firms has risen from $2.25 billion in 1996 to $6 billion in 2007.
The industry’s growth in jobs and revenue continue to be stimulated by UW-Madison’s status as the second-ranked public university in annual research and development spending. The university spends $905 million annually on R&D, but it would like to perform even better in terms of transferring that technology to the private sector.
Last week, the university hosted Sherwin Greenblatt, the founder of Bose Corp. who now directs the Venture Mentor Service at the Massachusetts Institute of Technology. The mentor service provides business services to start-ups so that more MIT technology is commercialized, and UW-Madison is interested in establishing a similar service.
The VMS, which has 100 business mentors from MIT and Greater Boston, has helped 25 businesses launch products and start generating revenue. Greenblatt said the service was established in 2000 in response to a new trend in which large corporations gave up basic research functions in favor of applied research. They are waiting for technology developed by university spin-offs to become more mature before investing in it, and as a result it’s more difficult for universities to find businesses interested in licensing their technology.
The Venture Mentor Service was established to help entrepreneurs reach the point where their technology interests larger players, and that means building their business skills. “There are people with great ideas and lot of energy, but they are not always well organized,” Greenblatt said. “Without professional help, they are lost.”
Dan Olszewski, director of the UW-Madison’s Weinert Center for Entrepreneurship, said the university has mentoring programs, but would like to take entrepreneurial education to another level. “Sometimes, that would involve UW researchers and faculty, but other times it would be outside the campus, so both flavors,” he said.
Good direction
In addition to 12 industry clusters, the directory contains brief company profiles, including employee counts, revenue, business descriptions, chief executives, and contact information. In addition to business listings, the directory provides information about business assistance organizations, employee training programs, networking organizations, and venture capital firms, among other resources. For the second consecutive year, the directory also includes a large fold-up map of Dane County.
The High-Tech Directory is available for $40 in both print and PDF formats.
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