Despite a national trend in the reduction of business starts, local leaders insist this is a good time for startup companies in Colorado Springs.
A handful of industry leaders say the local landscape is primed for startup success, thanks to a variety of factors.
“We have a perfect storm of opportunity for startups in Colorado Springs,” Hannah Parsons, CEO of accelerator Exponential Impact, said in an email. “Those factors include a relatively low cost of living, destination for Millennials, supportive ecosystem, [and the] addition of funding and accelerators to the ecosystem.”
Nationally, that is not the case, according to a New York Times story last week, which said the “rate of company formation is half what it was four decades ago.”
“I definitely see those numbers being valid,” said Jacob Eichengreen, executive director at QUAD Innovation Partnership, and a Peak Startup board member. “But in Colorado Springs, I think it’s increasing.”
Parsons and Eichengreen weren’t alone in their denial of a startup slump in the Pikes Peak region. They were joined by Peak Startup Executive Director Michelle Parvinrouh, Wavelength Ventures Managing Director Chris Franz and Pikes Peak Small Business Development Center Executive Director Aikta Marcoulier.
“The [startup] ecosystem has grown and strengthened in the last few years,” Parvinrouh said in an email. “It’s grown momentum in a few ways: There is more startup activity, there are more startup founders, and there are more auxiliary services and resources than ever before.”
Among those are the SBDC, QUAD Innovation Partnership and Catalyst Accelerator.
“All of these organizations have large networks they leverage to attract and extend resources from around the region and state,” Parvinrouh said. “They also engage our city’s leaders and economic development drivers to help strengthen the environment for startup success.”
Quite simply, Franz said, “Peak Startup and the SBDC provide the framework for education and networking in our communities. Entrepreneurs can build their ideas into companies on those frameworks.”
Parsons, formerly chief economic development officer for the Colorado Springs Chamber & EDC, indicated that local businesses could receive support from many organizations.
“Peak Startup is like the air traffic control for entrepreneurs in Colorado Springs,” she said. “They organize and support a wide variety of events; they connect and educate. SBDC provides tremendous resources for growing businesses. The Chamber & EDC assists greatly in connecting startups with larger companies. They also assist in getting entrepreneurs exposure in media and with state entities.
“Catalyst Campus is another tremendous resource, especially for startups in defense industries. Their partnerships with military assets are truly unique and deliver tremendous value. The Catalyst Accelerator is really the first accelerator program in Southern Colorado and is an exciting program.”
Eichengreen said funding for startups is improving in the Springs.
“We’re starting to see new levels of momentum in that sector,” he said. “There is an increasing awareness of the value startups bring to a community.”
Parsons agrees, and said the Springs community “has turned a corner.”
“People are becoming more interested in investing,” she said. “There are more conversations and initiatives being driven by job creation. We have become a destination for the Millennial workforce. All of these things are indicators that we’re ready.”
Eichengreen, who is on the Peak Startup board, said that the aforementioned local groups aid entrepreneurs in several ways.
“Education, networking, and — I think most importantly — cultivating and promoting the narrative of opportunity and success available via entrepreneurship,” he said.
Colorado entrepreneurs recognize opportunity, as the state ranks No. 5 in startup activity among the 25 “large” states, according to the Kauffman Index of Entrepreneurship series, an umbrella of annual reports that measures U.S. entrepreneurship.
Parsons hopes the national trend of fewer business starts is changing.
“There has been stagnation that is hopefully cyclical,” she said. “New technologies are emerging that could really spur activity in the startup ecosystem. However, large companies are smart; they operate on the front lines of innovation. Promising startups tend to get acquired early.”
Franz, also a Peak Startup board member, said many people in the Springs have worked hard since the recession began to avoid that national trend.
“For about eight years we have been working hard to create an open, supportive startup community,” he said. “This includes many events each year but also includes building founder and mentor networks to provide advice and expertise. Startups are really difficult and you need a support network around you.”
The SBDC provides education for startups and existing small business owners, in an attempt to help them grow and succeed.
“We are still seeing quite a high number of individuals in our Startup track that we hold each month,” Marcoulier said in an email. “Anywhere from 40 to 60 individuals are in the classes. For the SBDC, the startup community has not slowed.”
She said “lifestyle businesses” are not considered fast growing and scalable, while a tech company may grow from no employees to 25 in six months. But Marcoulier said the SBDC has seen a growing number of business starts and a similar number of high-growth startup businesses in the last year.
“Our area is booming, in our perspective,” she said.
As older business owners retire, there is actually a need for new businesses, fresh ideas, and a new generation of entrepreneurs.
The New York Times story noted that the decline in companies entering the market since 1980 has trimmed productivity growth by about 3.1 percent.
Parvinrouh said new businesses must make sure that they contribute to the community’s economy.
“Some of the accountability needs to be put on the founders to build something of actual value, communicate that value and deliver it in a valuable way,” she said. “These founders must leverage and expand on their resources and those available to them to execute effectively. Most startup founders are 40-plus because they have the financial resources, experience and extensive network to successfully launch a startup.”
She also argues that schools must help create entrepreneurs.
“If our youth are cultivated for entrepreneurship, the perceived risk associated with starting one’s own business, creating a disruptive technology, or challenging status quo may become more normalized and seemingly less risky,” she said.
Risk is lower in the Springs than in other areas, Franz said, and promoting new businesses and encouraging startup companies will benefit the economy.
“Colorado Springs has fairly inexpensive resources in office space, housing, employees and it is a place people want to live,” he said. “We as a community need to embrace startups as one of the core elements of economic development. Creating local growing headquarters companies provides stability for our workforce. Our ability to diversify our economy and build a dynamic workforce is what will keep us ahead of other communities in the next downturn.”