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

The Rise & Fall of Startups
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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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.

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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.

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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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