The occupancy permit for the XI Venture Center — Exponential Impact’s new “home base” — came through just hours before its second accelerator cohort kicked off.
The impact of the 9,000-square-foot collaborative space, built in the same North Nevada Avenue facility occupied by the National Cybersecurity Center, has already been “huge,” XI CEO Hannah Parsons said.
“People know where to find us now,” she said. “We weren’t having to move from place to place, and the teams had their workstations where they could always be.”
The nonprofit tech accelerator, which focuses on blockchain, artificial intelligence and cybersecurity, counts the quality and accessibility of its mentors as “a big differentiator” — and at the XI Venture Center, they encouraged them to settle right in.
“We just told all the mentors, ‘You can come work here anytime,’” Parsons said. “So because of that, they would set their meetings [with the startups], but they also came in when they didn’t have a scheduled meeting and then people could just bounce ideas off of them.”
It’s not the only change. XI extended the accelerator program, which provides seed funding and holistic leadership development for startups, from 11 to 14 weeks, and added an entrepreneur-in-residence.
Colorado Springs is making “huge strides” in building a solid ecosystem of support for startups, Parsons said, and XI is set to push that further.
“We’re getting ready to raise a larger fund to provide equity investments — or even creative investments — for companies that are a little later stage,” she said.
“It’ll be an Opportunity Zone fund,” she added. “… Most opportunity funds have been invested in real estate, and I think there are a lot of people who want to see those investments go into companies — they just haven’t seen a fund that was doing it. So I think we will potentially be able to leverage other investors that way.”
According to the Colorado Springs Chamber & EDC, Opportunity Zones use tax incentives to draw long-term investment to communities with high unemployment and poverty rates. Eight Opportunity Zones have been designated by the U.S. Department of Treasury in the Pikes Peak Region.
Parsons said XI is “getting ready to hit ‘Go’” on its opportunity fund this month.
At the heart of all these startup-centered efforts, she said, is the need to boost not only growth and employment, but to build prosperity.
“The thing I still want to get across to people is why we’re doing this,” she said. “We really celebrate Colorado Springs’ growth, and we should — there’s a huge amount of investment and construction. However, a lot of these things we celebrate … they’re all still primarily recruiting and paying wages that are seasonal or lower wage.
“There’s this Brookings Institute article that used a metric I really liked: It’s called a ‘prosperity index.’ And a prosperity index includes things like standard of living, wage growth, inclusivity, equity.
“I think some of those are the things, as a community, we’re not paying enough attention to.
“Between 2007 and 2017, the standard of living in Colorado Springs went down 4.7 percent because wages are not keeping up with the increases in cost of living. And that’s why we want to grow these companies that will create higher wage jobs, and technologies that hopefully will employ people at all levels but be more of a pathway to knowledge working. [We need] to not lose sight of why this is really important for our region.”
Attracting startups to Colorado Springs and retaining those already here is a central aim for XI.
A startup in the latest cohort, Spark Mindset, was on the verge of moving its operations to New Orleans where they’d spent three months running a pilot program with high school students. But during the accelerator they changed course, deciding to stay in the Springs.
Spark Mindset creates technology and training to tackle the national shortage of qualified professionals for technology careers, and looks to close gaps in gender, race and sexual orientation in tech companies. The goal is to have high school students ready for tech careers after graduation.
CEO Lawrence Wagner said Spark Mindset’s business model also changed during the accelerator.
“We noticed that there was no one teaching cybersecurity at the middle school level, so we created a middle school camp as a way to get kids interested earlier,” he said. “So then you can have a more diverse pipeline, because you introduced it to them earlier. That middle school camp was in four phases so when kids finish our camp, they will be ready for our program. That was a big change.
“Another change was the way the community came around to assist me. I got partnerships with the National Cybersecurity Center and McGraw Hill during the accelerator. We’re still working in New Orleans; but I’m staying here,” he said. “The main reason that we decided to stay was we are going to apply for the next program of XI — the Amplify program. We’re excited and hopeful that we will get into the next program.”
It’s a common thread among these entrepreneurs: They want to stay where they’re seen, valued and surrounded by support.
The leaders of Xenesis, one of the startups in the most recent cohort at Catalyst Space Accelerator, were so impressed with the outcomes and support, they decided to move their headquarters from Chicago to Colorado Springs.
Xenesis is working to “solve the New Space satellite communications problem by offering low cost and high bandwidth Space-to-Ground optical data transport.”
Xenesis chairman and CEO Mark LaPenna said the defense and national security industry accelerator consolidated a two- to three-year learning curve into three months.
“There’s just so much to learn,” LaPenna said. “They had a very systematic and … stepped approach to bringing us up to speed on the important things — the levers and pulleys and the dials and the buttons that we had to push, pull, turn and yank, to ramp up quickly.
“We came out of that and did our demo day, and we have multiple [Department of Defense] stakeholders that are interested in our offering, and a clear path to hundreds of millions of dollars in government contracting because of it. It’s an entirely unplanned and previously unrealized profitable division for our business. …
“The accelerator … opened the door for us; it was the seed that has germinated an entire redwood forest for us.”
LaPenna said Xenesis “found a family” in Catalyst.
“We were a cohort member this year and my president and I are going back to teach a class in November — and from this involvement, I’m now a guest lecturer at United States Air Force Academy,” he said.
“This is an entire family of people. It really is. I hate to make it sound so sweet and gushing kindness, but it’s true. … We stay in touch, we talk frequently, and we believe in the mission of Catalyst. It’s opened an entirely new world for us.”
Along with Xenesis, Catalyst’s most recent cohort attracted Omnispace from Virginia, Analytical Space Technologies from Massachusetts, Atlas Space Operations from Michigan, Skyloom from California, and Speqtral Quantum Technologies from Denver.
At XI, Spark Mindset Inc., joined Brainitz, Carbos, Cannacist, Megacity, RootLo and SafeTalpa in presenting their ventures Sept. 18 at XI’s Demo Day.
“People were just wowed by their pitches, and several of the companies left demo day with investor and/or potential client-type contacts,” Parsons said. “I really think that these companies have progressed incredibly well, and are all going to continue.”
Wagner said he sees the Springs’ startup ecosystem as being “in its infancy,” and said he’s encouraged by the synergy within the startup community, and between XI and Peak Startup.
“XI has been great. It’s one of the few accelerators or organizations that’s helping startups become real, scalable companies,” he said. “What’s lacking here is more programs like XI — and then funding. There’s not a lot of investors or people who fund.”
“In terms of investment, I think there is still a lot of work around educating and coordinating the process of investmenting in startups,” Peak Startup Executive Director Natasha Main said via email. “Part of it is building a tolerance for and mitigating risk when it comes to startup companies and learning the benefits and opportunities associated with investing in ventures.
“That being said, I am seeing a growing interest from the investor side in coordinating angel groups and investing in local ventures and I’m optimistic about realizing this potential in our community.”
Main said the effort to grow the local network of startup resources in Colorado Springs is ever-evolving, and that community building is just as vital as investment.
What’s important is for the city to develop a growth mindset, including continued support for entrepreneur-focused organizations and community-building events, and hiring local startups.
“So [that’s] greater interaction and collectively making it so everyone feels they have a role to play within this ecosystem,” she said.
“We are already seeing how the first step is not starting businesses, but rather learning tools and mindsets to innovate and work together that can translate and develop into launching businesses,” she added. “That’s why the community building and onramps are all just as important as investments. I think we can all continue to work together and fill the gaps to ensure there is an inclusive trajectory for entrepreneurs to start, scale and stay here successfully.”
Main said Colorado Springs already has the vast majority of the elements of a successful startup ecosystem in place.
“My hope is that Colorado Springs continues to engage our talent in meaningful ways,” she said, “to create jobs and add vibrancy to our community and economy.”