March 12, 2003 — When it comes to sheer volume of small tech companies, California towers over the rest of the nation. The state is home to three times the number businesses that deal in MEMS and microsystems than second-ranked Massachusetts, and twice as many in nanotechnology, according to a Small Times analysis.
But if you forget volume and measure density, or the number of small tech companies compared to the state’s total number of private businesses, then the Atlantic Coast commonwealth trumps its Pacific Coast competition. Massachusetts ranked first for business concentration in both micro- and nanoscale enterprises, with New Mexico second. California came in fourth and seventh, respectively.
The analysis comes from Small Times magazine’s annual ranking of U.S. regions, which appears in its March/April issue. California earned top billing in the business category but Massachusetts was not far behind.
 |
The rankings don’t include a breakdown by scale (micro vs. nano). But by dividing its list of about 800 small tech businesses by scale, Small Times found:
- For MEMS and microsystems, the top 10 states based on the number of companies were: California (1); Massachusetts (2); Michigan, New Jersey and Texas (tied for 3); Illinois and Pennsylvania (tied for 6); North Carolina (8); New York (9); and Minnesota (10).
- For MEMS and microsystems, the top 10 states based on business density were: Massachusetts (1); New Mexico (2); New Hampshire (3); California (4); Minnesota (5); New Jersey (6); North Carolina (7); Arizona (8); Connecticut (9); and Vermont (10).
- For nanotechnology, the top 10 states based on the number of companies were: California (1); Massachusetts (2); Texas (3); New Jersey (4); New York (5); Michigan (6); Ohio (7); Colorado (8); Illinois (9); and Connecticut and Virginia (tied for 10).
- For nanotechnology, the top 10 states based on business density were: Massachusetts (1); New Mexico (2); Rhode Island (3); Connecticut (4); New Hampshire (5); Colorado (6); California (7); New Jersey (8); Michigan (9); and Arizona (10).
“From the pure asset perspective, California blows everyone away,” said Mark Modzelewski, executive director of the NanoBusiness Alliance. “They have the brain power, the capital, the entrepreneurial base. They’ve been through the entrepreneurial game.”
California’s small tech scene is filled with a range of sizes, from large corporations to small startups, most of which tap into the state’s deep intellectual pool. It is home to Intel Corp., which is collaborating with the University of California, Berkeley, to develop pervasive computing capabilities based on miniaturized sensors and other devices, and Hewlett-Packard Co., which partnered with researchers at the University of California, Los Angeles, to design molecular electronic devices that function like integrated circuits.
It also has lured foreign interests such as Japan’s Hitachi Chemical Research Center Inc., based in Irvine, which lists nanotechnology among it programs.
Many of California’s small tech companies are the offspring of the state’s universities, national laboratories or NASA research centers. They include startups like Nanomix Inc. (with ties to UCLA, UC Berkeley and Lawrence Berkeley National Laboratory) and Crossbow Technology Inc. (from UC Berkeley).
As small tech’s big gorilla, California also may witness more carnage as the industry tries to ramp up in a tough economy. For instance, OMM Inc., a MEMS-based photonics company in San Diego, became small tech’s most recent casualty when it closed shop March 7.
California and other states with large populations, industrial bases and state economies tend to dwarf less populated or smaller states by their strength of numbers, according to economist Rob Koepp of the Milken Institute, an economic think tank in California. He co-authored a recent report gauging high-tech activity state by state that relied on 73 different measures.
In an effort to understand the contributions of technologically strong but less populated states like New Mexico, economists calculate in denominators such as gross state product or, in the case of Small Times’ analysis, the U.S. Census Bureau’s state figures for private, nonfarm enterprises. The results help illuminate activities in smaller states but, taken on their own, can appear exaggerated.
“We (California) have this vast swath of land that is similar to a developing world economy,” Koepp said, referring to the state’s rural sectors. “When you blend that into the mix, California does poorly. It dilutes things.”
Looking at various measures together compensates for the distortions of each, he said, and helps illuminate hidden treasures like New Mexico. The state’s two national labs, Sandia and Los Alamos, are renown for their small tech expertise and encourage commercialization of their technologies.
Massachusetts’ prominence in micro- and nanoscale industries coincides with its strong and deep research capabilities and entrepreneurship. Those are among the catalysts for business formation, which builds into a tech cluster, according to economists.
Besides nameplate schools like Harvard University and the Massachusetts Institute of Technology, the state contains resources like the University of Massachusetts campuses, Northeastern University, numerous research medical schools and the Army’s Institute for Soldier Nanotechnologies based at MIT.
Those institutions have sprouted businesses as varied as R&D facility Charles Stark Draper Laboratory Inc., bioMEMS company MicroCHIPS Inc. and nanotech startup Nantero Inc.
“We have the tools,” said Jeff Lockwood, a program director with the Massachusetts Technology Collaborative and the point person for the state’s newly formed nanotechnology initiative. “We have the research presence, federal support and a core of entrepreneurs.”
Lockwood predicts that mix will help Massachusetts build up its small tech base as California has. “The diversity is there to grow upon. What comes out at the end is entrepreneurship” that fosters healthy business growth.
For a list of all the states and their rankings, click here.