Entrepreneurs / Small Business  November 21, 2016

Startups ponder future amid Galvanize’s Fort Collins closure

FORT COLLINS – Turbo Tenant, a growing startup that makes software that helps landlords manage their properties, had just moved into a larger suite at Galvanize’s Fort Collins campus Friday when it got the news that Galvanize would be closing up shop there by the end of the year.

Turbo Tenant is now one of the 57 companies and some 120 members who work out of the local campus that are all waiting to see what happens next with the building at 242 Linden St. For many, the hope is that someone else – perhaps even building owner Blue Ocean Enterprises – picks up where Galvanize is leaving off and continues to operate a coworking space in the 15,000-square-foot facility.

Denver-based Galvanize runs multiple campuses in Colorado and elsewhere where it offers not only coworking space but also web development classes. Just more than a year after opening in Fort Collins, the company announced in letters to employees and tenants on Friday its plan to close the local campus to the public Dec. 31.

“We love being in the heart of Fort Collins, and we’d love to continue growing our business from the same location,” Turbo Tenant’s CEO Sarnen Steinbarth said Monday, noting that he wasn’t concerned about Galvanize’s closure affecting his business operations since the nature of his company lends itself to being run virtually if necessary.

Steinbarth’s sentiments about staying at 242 Linden were echoed by multiple startup CEOs.

Ashley Colpaart, CEO and cofounder of The Food Corridor, launched her company out of Galvanize the same month that it opened the Fort Collins campus last year. The access to other startup founders and educational resources and guest speakers at Galvanize, she said, has been invaluable as she’s grown her company.

“I don’t know if I would actually have a company if not for that ecosystem and community,” Colpaart said.

When Galvanize opened in Fort Collins last year in its newly renovated space, the move was seen as a major boost for the city’s entrepreneurial scene. Galvanize’s CEO Jim Deters said in an emailed statement to BizWest on Monday that the hope then was to help connect Fort Collins to the Denver and Boulder startup communities through Galvanize’s campuses in those cities.

But while Deters said enrollment in Galvanize’s gSchool was “within the margins for a new campus,” business apparently wasn’t growing as planned.

“We hold ourselves to high standards,” he said. “Based on an algebra of unit economics, we determined that Fort Collins was not economically sustainable to provide the caliber of Galvanize experience on that campus that both our students and members deserve and expect from us.”

Galvanize graduated gSchool cohorts from the Fort Collins campus in April and October that totaled 31 students. What would have been the third group to go through the six-month curriculum in Fort Collins has been transferred to Galvanize’s 30,000-square-foot campus in Boulder. Galvanize officials wrote in a letter to tenants on Friday that the company would also help them move to the Boulder campus if those startups and members so desired.

But Galvanize’s tenants in Fort Collins said Monday that they’re hearing that multiple parties in town are exploring taking over Galvanize’s lease, meaning many of those tenants and entrepreneurs might be able to stay in place.

“It seems as though it’s going the route of being a coworking space, just with someone else running it,” said McCabe Callahan, CEO of crowdfunding startup Community Funded.

Blue Ocean Enterprises has owned the building at 242 Linden for about three years. Founded in 2011 by OtterBox founder Curt Richardson and his wife, Nancy, Blue Ocean has been a champion of Fort Collins’ entrepreneurial community from its beginning, investing in companies and providing a wide array of services and business mentoring.

Phil Hodgkinson, general manager for Blue Ocean’s real estate management arm, on Monday declined to say exactly how long Galvanize’s lease term runs, characterizing the deal as having “quite a few years left.” Because of that, he said it’s likely that whatever happens next with the building will involve some sort of sublease.

Galvanize officials acknowledged Monday that they’ve been approached by multiple parties interested in taking over their lease and that they’re evaluating their options for the property.

“They’re going to have to drive that whole aspect of it,” Hodgkinson said of Galvanize.

Hodgkinson didn’t say whether Blue Ocean might have intentions at this point of operating a coworking space itself at the building. He said Blue Ocean officials were caught off-guard by Galvanize’s announcement.

“From our standpoint, we absolutely want to encourage job growth in Fort Collins,” Hodgkinson said. “That’s a hard pill to swallow when it goes away.”

Galvanize has grown rapidly in recent years. In addition to Denver and Boulder, the company operates campuses in places like San Francisco, Austin and Seattle. Campuses in New York and Phoenix are on the way.

The Food Corridor’s Colpaart said it will be nice if 242 Linden remains a coworking space. But she said it will be unfortunate for entrepreneurs there nonetheless to no longer have access to the Galvanize network. She said one of the perks of being a Galvanize member is being able to conduct meetings or other business at any of Galvanize’s campuses around the country.

Callahan said he felt some frustration that Galvanize was leaving Fort Collins after such a short run, saying that doing so runs counter to the entrepreneurial mindset Galvanize encourages.

“There’s lots of startups that aren’t profitable in the first three years,” Callahan said. “You’d think that they would plan on three to five years of working hard to make it work.”

Regardless, Colpaart said she’s confident the Fort Collins startup community is plenty strong and resilient enough to fill the void.

“It will be interesting to see what happens next,” Colpaart said. “I don’t doubt that Fort Collins will pivot and something great will come of this because it’s just the kind of community we are.”

FORT COLLINS – Turbo Tenant, a growing startup that makes software that helps landlords manage their properties, had just moved into a larger suite at Galvanize’s Fort Collins campus Friday when it got the news that Galvanize would be closing up shop there by the end of the year.

Turbo Tenant is now one of the 57 companies and some 120 members who work out of the local campus that are all waiting to see what happens next with the building at 242 Linden St. For many, the hope is that someone else – perhaps even building…

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