PROVO — For almost two decades now, Jeff Burningham has been on a streak, hitting home runs with whatever endeavor he puts his mind to.
He started a successful tech startup while still a BYU undergrad and, at 25, sold it to a NASDAQ-listed company (long before it was cool). He then parlayed his earnings from that deal into real estate when the market was booming in the early oughts.
He was among a very few people who foresaw growth in that market as unsustainable and liquidated his holdings before the bubble burst and the Great Recession began. Then, he recruited partners and rebuilt a real estate portfolio, buying distressed properties as the market bottomed out, leading to his current holdings, now valued at $2 billion.
And when you have $2 billion in assets, you can start doing the things you really enjoy. For Burningham, that was launching a venture capital firm dedicated to finding interesting people with great ideas and helping them get their businesses off the ground.
His firm is part of a growing trend that brought nearly a billion dollars into Utah in 2016, according to a national association, and is helping fuel an expanding high-tech sector in the Beehive State.
Peak Ventures joined the Utah venture capital realm about three years ago with a fund of $23 million dedicated to finding the next big thing in the state's burgeoning tech sector. While a great idea or innovation with a viable market is the stuff successful businesses are made of, Burningham said the human element is the linchpin to a deal with Peak Ventures.
"Number 1, we back people," Burningham said. "Whatever race, creed, gender is totally irrelevant. We want the best people we can find."
Peak Ventures founder Jeff Burningham poses for a portrait at his office in Provo on Monday, April 24, 2017. | Alex Goodlett, Deseret News
Burningham explained that Peak's relationships with companies it's invested in can last for years and, since he and his partners have entered the venture capital realm out of love, and not necessity, they have the latitude to be picky.
"We're doing this work because we like it, not because we have to," Burningham said. "So, working with people we like is a big deal."
And when Burningham uses the term "big deal," it comes with a definition that may be unique to the world he's built around himself. After finding the right people, the next piece of critical criteria for choosing in whom to invest is the size of the opportunity. While many amateur investors may be excited by seeing, for example, double-digit interest returns on their index fund, Burningham, true to his history, is looking to clear the bases.
"Instead of a win being 2x (doubling an investment) we're looking for wins that are 20x or 200x," Burningham said. "Having several billion in real estate assets allows us to step up to the plate and take big swings."
Peak Venture's mix of high selectivity and high expectations appears to be keeping Burningham's streak alive. The firm just announced a second seed investment fund, and this new round, at $50 million, more than doubles its first.
While these numbers are large, they're reflective of the growth that's been occurring in venture capital investment in Utah companies. According to the National Venture Capital Association, total venture capital investment in Utah has shot up from $337 million in 2012 to $912 million in 2016. The state even topped the $1 billion barrier in 2014 thanks to a slew of $100 million-plus deals with Utah companies, including Qualtrics, Pluralsight, Domo and InsideSales.com. The growth has also elevated the state's national rankings out of scale for its population and overall economy, with Utah coming in 15th for total number of companies financed and 10th for the total dollars invested in 2016.
National Venture Capital Association. | Heather Tuttle
It's also important to note that the venture capital market is just a portion of the pipeline that helps get innovators from great idea to product to functioning business. Incubators, mentorship programs, grant money and smaller investors all play critical roles in the entirety of Utah's tech ecosystem.
Brad Dickson is the board chairman for Park City's PandoLabs, an innovation center that provides a variety of services for entrepreneurs, including mentorship, connections to capital sources and access to expertise in a wide range of fields. Dickson said most new entrepreneurs need assistance getting to the point where their ideas become attractive to venture capital investors.
"I would say most startups not only need pre-seed and seed financial help, but are typically also in need of mentoring and guidance to get where they want to go," Dickson said. "Besides our big venture capital firms, there's a whole system of angel investors who can help get these companies ready for the next level."
Natalie Gochnour, associate dean at the University of Utah's David Eccles School of Business, said the growth in venture capital flowing in Utah likely just reflects the opportunity created by the state's rapidly growing technology and advanced industry economy.
"We've always had a strong tech presence, but the growth that's been occurring in that sector is extraordinary," Gochnour said.
Gochnour said the state's innovation economy is growing at more than 8 percent per year and represents the single biggest generator of new Utah jobs, creating over 75,000 positions since 2010. She also believes Utah to be much nearer the beginning of the trend than the end.
"I think that as the tech sector continues to mature in Utah, it will create additional opportunities," Gochnour said. "Our homegrown talent, and their successes, are drawing outside talent into the state.
"This deepens our bench, leads to more innovation, more new entrepreneurial efforts and more growth."
Gochnour also noted that while the Utah venture capital market is comprised mostly of outside money coming into the state, that will likely skew the other direction as our local tech economy continues to expand.
"I would venture to say that huge portions of the money is coming from outside investors," Gochnour said. "But we're on the side of the curve where more and more is likely to stay."
While parsing venture capital data for sources of the funding is difficult, Burningham said he believed the Utah-based investor pool was certainly growing, but even in-state firms may not be focusing on Utah companies. As for Peak Ventures, about 70 percent of its investment portfolio has been Beehive State-centric, and Burningham expects to see more Utah money to Utah startups as the sector continues to grow.
"I think, at the heart of what's going on here, is a culture of entrepreneurship and self-reliance that's really been bred into Utahns," Burningham said. "That's always been here, but what's new is the talent and the capital.
"As talent and capital is layered on those inherent characteristics, our ecosystem is growing, creating more local talent and attracting additional outside talent, which in turn will draw even more capital in."
Burningham and his partners have put their investment dollars where their confidence lies, and their portfolio includes a veritable who's who of up-and-coming Utah tech startups. Homie (peer-to-peer real estate); Podium (online reputation platform); Lendio (small-business loan facilitator); ObservePoint (marketing analytics); Owlet (wireless infant monitor); and MX (online banking platforms) are just a few of the names that the world is destined to hear much more of.
Owlet CEO and co-founder Kurt Workman had nothing but high praise for Burningham and his Peak partners, who were early investors in the Lehi-based company that's developed a novel sock with built-in wireless technology that monitors an infant's vital signs during sleep.
"Peak Ventures is awesome," Workman said. "They really do go above and beyond.
"I've been to several events where Peak is working to connect the younger startup generation with the veterans out there like Domo and Pluralsight and trying to cross-pollinate the experience and information."
Workman said that while Owlet has earned funding from numerous out-of-state sources, the investment and support of a local, like Burningham, has been a particular confidence booster.3 comments on this story
"For Jeff to spend his time and money on venture capital is awesome for Owlet and this whole area," Workman said. "It gives more opportunities for Utah companies and is helping build our whole ecosystem."
For Burningham and his partners, their venture capital game is still very much in the early innings, and Utah companies are going to continue to be at the heart of their investment strike zone.
"I launched Peak Ventures because I truly believe this is just the beginning," Burningham said. "We’re long-term holders in our real estate assets, we’re long-term holders of our investments and we’re betting on Utah for the long term."