How this tiny east coast city is churning out fast-growing startups

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The Rise & Fall of Startups


Portland, a city with less than one-tenth of San Francisco's population, is home to multiple companies that have raised tens of millions of dollars in funding.

When it comes to the fastest-growing startup hubs, it's fairly easy for big cities like New York and San Francisco to dominate.

Smaller cities like Portland, Maine, however, have increasingly showed they have the resources needed for entrepreneurs to thrive -- without having to spend an arm and a leg on a shoebox-sized apartment.

Portland was ranked No. 9 as the best city in the U.S. for female entrepreneurs, and the No. 5 for the best city overall to start a business this year by NerdWallet. In the first quarter of 2015 alone, the amount of venture capital funds received by Maine companies reached levels last seen in 1998, according to Portland Press Herald.

Take a look around Portland, Maine:

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How this tiny east coast city is churning out fast-growing startups
North America, United States of America, Maine, Portland
FILE- In a Tuesday, Jan 27, 2015 file photo, a man battles fierce headwinds as he walks on Congress Street in Portland, Maine, during a blizzard. The editors of the Maine-based Farmers' Almanac have dubbed their latest forecast a âwinter deja vu,â hearkening to last winterâs misery across the Northeast (AP Photo/Robert F. Bukaty)
PORTLAND, ME - NOVEMBER 13: Certain trees and plants are blooming in mid-November. Flowers in bloom at the entrance to One Monument Square on Friday, Nov. 13, 2015. (Photo by Derek Davis/Portland Press Herald via Getty Images).
The rectory and St. Andre's Catholic Church is seen in Biddeford, Maine, Thursday, July 24, 2014. Parishes in the diocese have more than 20 churches, convents, rectories and schools on the market. Church leaders say a dozen properties in the diocese have sold for a total of more than $2.4 million since the beginning of 2013. (AP Photo/Robert F. Bukaty)
A lobster boat heads out to sea at dawn, Friday, Dec. 7, 2012, of South Portland, Maine. A red sky in the morning often indicates a storm system is moving east. Weathermen are calling for showers by the afternoon. (AP Photo/Robert F. Bukaty)
A man shields his eyes from the sun as he views the arctic sea smoke rising from Casco Bay, Thursday, Jan. 8, 2015, in Portland, Maine. Dangerously cold air has sent temperatures plummeting around the U.S. (AP Photo/Robert F. Bukaty)
In this Tuesday, Nov. 11, 2014 photo, the trawler Isabella and Ava arrives at dawn to unload its catch at the Portland Fish Exchange in Portland, Maine. New England's fishery is hoping recent investment from the state in the Portland Fish Exchange - the largest fish auction in Maine - can help sustain the facility, which is vitally important to the region's flagging groundfishing industry. (AP Photo/Robert F. Bukaty)
A rainbow is seen behind Air Force One as it sits on the tarmac at the Portland International Jetport, Thursday, Oct. 30, 2014 in Portland, Maine. President Obama is in town for a rally for Rep. Mike Michaud's gubernatorial campaign. (AP Photo/Joel Page)
Daryl Santos, 27, of Los Angeles, Calif., walks through a park while experiencing a snowstorm, Thursday, Jan. 2, 2014, inPortland, Maine. White-out conditions and a temperature of 0 degrees F greeted Santos on his first trip to the East Coast. Compared to southern California, 'it's an intense change," he said. (AP Photo/Robert F. Bukaty)
Fiery skies greet a fishing trawler returning to harbor 30 minutes before sunrise, Thursday, Nov. 21, 2013, in Portland, Maine. (AP Photo/Robert F. Bukaty)
PORTLAND, ME - NOVEMBER 6: A school bus makes travels along Congress St. in Portland Monday, November 9, 2015. (Photo by Shawn Patrick Ouellette/Portland Press Herald via Getty Images)
SACO, ME - NOVEMBER 3: Jim Barr watches for election results at Rosie's Restaurant & Pub in Portland Tuesday, November 3, 2015. Barr is a twenty-year-member of the green party who supports an increase in the minimum wage. 'We need to help the young people, there's a war on youth.' said Barr. (Photo by Shawn Patrick Ouellette/Portland Press Herald via Getty Images)
PORTLAND, ME - NOVEMBER 2: Nova Star ferry is anchored off-shore in Portland Harbor on Monday morning. (Photo by Derek Davis/Portland Press Herald via Getty Images)
A barge motors through arctic sea-smoke on its way out of Portland Harbor, where the temperatures at sunrise was about minus 5 degrees Fahrenheit, Thursday, Jan. 24, 2013, in Portland, Maine. A stubborn cold front continues to grip the region. (AP Photo/Robert F. Bukaty)
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Here's why the mid-sized city coastal city of just under 70,000 people is attracting a large amount of entrepreneurial interest:

State institutions that have supported entrepreneurs for years.

Spurred in part by a history of underemployment in Maine, the state has set up a number of institutions to support entrepreneurial endeavors.

Established in 1995, the Maine Venture Fund has received a total of $13 million to invest in startups. The Finance Authority of Maine provides business assistance programs (i.e., loan insurance, investment tax credits) to small and large businesses. There's also the Maine Technology Institute, which offers early-stage capital, grants, and loans to technological ventures.

"Entrepreneurs in Portland don't find themselves running into the typical regulatory roadblocks that keep them from being successful," says Bob Neveu, co-founder and CEO of Certify, a software company that creates automatic expense reports.

Growing success in a niche industry.

While Portland isn't home to any companies that have had billion-dollar exits in the past five years, the city's has seen a trend of successes in animal-oriented biotech.

Founded in 1976, Ventrex Laboratories is one of the first. The biotech firm was doing about $14.9 million in sales in 1991 before sold to Hycor Biomedical in exchange for 2.4 million Hycor shares. Though Ventrex moved to the West Coast after the acquisition, the firm left a significant impact on Portland, through the offshoot companies that were founded during Ventrex's time in the city. IDEXX Laboratories Inc., for instance, now does nearly $1.5 billion in annual revenue.

Former Ventrex employees are either now involved in other Portland-based startups, or have gone off to start their own companies. Benjamin Shaw is the CEO and co-founder of Vets First Choice, a Portland-based veterinary prescription management company that has raised $62.8 million in funding over the past three years--who happens to be the son of David Shaw, the founder of IDEXX.

A creative culture that is highly supportive of independent endeavors.

Over the past few years, Portland has become something of a haven for creative types -- a group that includes many aspiring entrepreneurs.

The city is home to numerous organizations for creative businesses, freelancers, and professionals. In 2010, the non-profit organization Creative Portland made it a goal to "attract 10,000 creative-minded people" in 10 years.

There's also Factory Portland, which provides business and marketing support for local bands and musicians, and Lift360, which offers consulting services to non-profits. This creative culture helps diversify Portland's business community, says Nat Henshaw, the managing director at CEI Ventures, a socially responsible venture capital fund based in the city.

"People here are interested in green jobs, future jobs, high tech jobs, and the like. These small businesses bring a rich, fun culture to the city," he said.

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