New England’s Tiny City Raking Up Millions in Startup Dough
WHY YOU SHOULD CARE
Because small cities can pack a powerful entrepreneurial punch.
Maine is known for its lumber, its lobster, its wild blueberries. For farmers, it’s a place where organic, direct-to-consumer operations can thrive. And as far as its business community, it has a reputation for small companies catering to a population remote enough from the rest of the nation that Britain once considered claiming it as a “New Ireland.”
Slowly though, the Pine Tree State is shedding its aloof nature. More companies are looking to expand their borders, to become not just regional players, but contenders in global markets. Nowhere is that growth more evident than in Portland. With just less than 70,000 people, the Forest City is emerging nationally as a surprisingly attractive destination for businesses to park their investment efforts:
Four Portland companies have been acquired for a reported $575 million from 2016 to 2017.
Last year, Putney Inc., a decade-old pet-medicine producer, was acquired by a subsidiary of U.K.-based Dechra Pharmaceuticals PLC for $200 million. Meanwhile, for $100 million, global software company PTC acquired Kepware, a Portland-based firm that enhances automated communications — i.e., the “internet of things.” This year, financial services companies Certify and CashStar were acquired for $100 million and $175 million, respectively, continuing Portland’s hot streak.
Portland now boasts a dozen financial services companies, as well as medical diagnostic innovators.
Punching above its weight, Portland now boasts a dozen financial services companies, as well as medical diagnostic innovators such as SmartSharps, which uses microsensors to help nurses find veins more easily, and MedRhythms, a company that specializes in music therapy for people with neurological injuries or diseases. The community is experiencing a “snowball effect,” says MedRhythms President Owen McCarthy, as startup elders teach the next generation. For example, after adding Putney founder Jean Hoffman to his board of directors, “her influence has accelerated our development five times, 10 times,” McCarthy raves.
In the past, the Pine Tree State has reveled in its distance. That has sometimes limited its business community, says Jess Knox, president of Venture Hall, which runs a startup accelerator based in Maine. “We’re all part of New England, but there’s this militant individualism that occasionally holds back our aspirations.” That regionalism issue “bleeds over into talent,” Knox says, which is stark in a state with only 1.3 million people. En masse, many medium-size cities are struggling, despite headlines that tout Silicon Valley’s sprawling influence, adds Ross Baird, president of Village Capital in Washington, D.C. “If you look outside the top 20 cities by population, entrepreneurship is on the decline. It’s never been better to be a startup in Silicon Valley, but if you’re in Albuquerque or Burlington it’s a lot tougher.”
Which makes Portland’s startup culture all the more intriguing. For instance, MedRhythms began in 2015 as a therapy business in the Boston area. But when it decided to shift focus, McCarthy decided to move away from one of the nation’s hottest startup scenes. Part of the attraction: Maine has provided support to growing companies through the Maine Technology Institute, Maine Venture Fund and the Seed Capital Tax Credit, which incentivize early investing.
Quality of life remains key, though — especially when it feels like Maine businesses can now stay local and attract big market appeal, says McCarthy. “If you can build a health care business only two hours from Boston, why not move to Portland?”