Business Growth in the Portland Metro Region
Sheila Martin, Emily Picha
Institute for Metropolitan Studies, PSU
May 15, 2009

Figure 4: Venture Capital Investment for Portland and Comparator MSAs, 2008

Figure 4

Source: The MoneyTree Report by PwC and NVCA based on data from Thomson Reuters.

Figure 5: Venture Capital Investment for the Portland MSA, 1998-2008

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Source: The MoneyTree Report by PwC and NVCA based on data from Thomson Reuters.

Figure 6: Patents per 10,000 employees, Portland and Comparator MSAs, 2006

Figure 6

Source: Prof. Michael E. Porter, Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business School; Richard Bryden, Project Director.

Figure 7: Highest Level of Educational Attainment of the Population 25 years or Older in the Portland Metropolitan Area and Comparator Metropolitan Areas, 2007

Figure 7

Source: U.S. Census Bureau, 2007 American Community Survey.

2. Innovation

Regardless of economic sector, new products, new production methods, and new markets are essential to achieving and maintaining a competitive position in global markets. Innovation improves our productivity, enhances our quality of life, and creates opportunity for small and large companies. A company that is not developing and testing new ideas in the market cannot survive because its competitors are innovating.

Recognizing the importance of innovation, the Oregon Economic and Community Development Department recently published the Oregon 2007 Innovation Index. This article presents some of the same information contained in that index, but we attempt wherever possible to present information about the Portland Vancouver metropolitan area, rather than for the state of Oregon. We encourage you to peruse the Oregon Innovation Index.[1]

This section looks at a series of indicators to see how the Portland region compares with its comparator metropolitan regions in terms of innovation. The indicators include venture capital investment and patent applications per 10,000 workers.

2.1 Venture Capital

Venture capitalists invest private equity in firms that have a high potential for growth but are not prepared for an initial public offering of stock. These investments usually have both high risk and high return. Venture capital activity can be used to measure the number of potentially high-growth firms that are forming, which can include innovative high-tech firms, such as biotechnology firms.[2]

Regional Comparisons

Figure 4 shows the level of total venture capital investment and deals for the Portland region and its comparator metropolitan areas for the year 2008. Among the comparator metropolitan areas, the San Jose MSA had the highest level of both deals and investment at $4.4 billion. San Diego and Seattle were a distant second and third with $1.2 billion and $750 million respectively. The Portland MSA scored 8th out of the 11 regions with $153 million in investment and 32 deals, and had a similar level of investment and deals as the Salt Lake City and Phoenix MSAs.

Table 2: Venture Capital Investment for Portland and Comparator MSAs, 2008
MSA Deals Investment (Millions of Dollars)
Phoenix-Mesa-Scottsdale, AZ 17 202.8
Seattle-Tacoma-Bellevue, WA 145 828.9
Minneapolis-St. Paul-Bloomington, MN-WI 40 453.7
San Diego-Carlsbad-San Marcos, CA 126 1,216.6
Denver-Aurora, CO 43 377.9
Portland-Vancouver-Beaverton, OR-WA 32 152.5
Las Vegas-Paradise, NV 4 7.0
San Jose-Sunnyvale-Santa Clara, CA 464 4,404.4
Charlotte-Gastonia-Concord, NC-SC 4 28.5
Austin-Round Rock, TX 64 340.2
Salt Lake City, UT 22 175.1

Source: The MoneyTree Report by PwC and NVCA based on data from Thomson Reuters.

Figure 5 shows the overall levels of investment and deals for the Portland MSA between 1998 and 2008. The Portland MSA saw a boom in venture capital investment around 2000 during the dot com boom. Total investment and deals fell throughout the early part of the 2000s but rose in 2007.

2.2 Patents

Obtaining a patent is part of the process of securing the intellectual property rights associated with an idea. Though many ideas that get patented are never used, patent activity is a useful indicator of the overall quality of the innovation environment. In regions where institutions, firms, and individuals are innovating, more patent activity will be recorded. Research has shown that concentrations of patents reflect the localized process of knowledge creation.

Our patent data are drawn from tabulations by the U.S. Patent and Trademark Office, compiled by Harvard University’s Institute for Strategy and Competitiveness. The data shown in Figure 6 represent the number of patents issued to inventors in the Portland MSA and its comparator MSAs in 2006 per 10,000 employees.

Regional Comparisons

San Jose has the highest number of patents per worker, reflecting a high level of research and innovation. At 15.1 patents per 10,000 employees, Portland’s patent activity in 2006 was third among the 11 comparator MSAs, trailing San Jose and Austin but leading both San Diego and Seattle.

2.3 Educational Attainment

The evidence that skills and education drive economic growth is overwhelming. Communities with better-educated populations have higher incomes, on average, than those with lower levels of education. Much of this is driven by their ability to generate new ideas that lead to higher productivity.[3] Educational attainment, especially in the young working-age population, is an imperfect but available measure of the quality of the labor force available to regional companies.[4]

Regional Comparisons

Figure 7 shows educational attainment levels for the Portland MSA and its comparator metropolitan areas. Among adults living in the Portland MSA, 33 percent have earned a Bachelor’s degree or a graduate or professional degree. This ranks Portland even with San Diego and Charlotte, but below San Jose, Austin, Denver, and Seattle. San Jose has the highest level of educational attainment—44 percent of the population over the age of 25 has a bachelor’s degree. Las Vegas and Phoenix have the lowest levels of educational attainment with 21 percent and 27 percent of the population holding a bachelor’s degree, respectively.

Footnotes

  1. Oregon 2007 Innovation Index. Oregon Economic and Community Development Department. Retrieved on 2009-02-15. (↩)
  2. “Venture Capital (Total).” Arizona Indicators Project. Retrieved on 2009-01-29. (↩)
  3. Gottlieb, P. D. and M. Fogarty (2003). “Educational Attainment and Metropolitan Growth.” Economic Development Quarterly 17(4): 325-336. (↩)
  4. “Innovation: Educational Attainment by Age.” Arizona Indicators Project. Retrieved on 2009-02-05. (↩)