Innovation roundtable: NoCo startups look for resources, labor, slow growth

FORT COLLINS  — A group of startup executives in Northern Colorado believe breaking startup resources out of industry silos is key to expanding the area’s innovation footprint.

The executives were gathered at BizWest’s Innovation Roundtable at the Community Foundation of Northern Colorado.

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LaunchNo.CO executive director Jana Sanchez said there are local business resources in the Fort Collins area, including Innosphere and the Larimer County Small Business Development Center. However, she said the existing startup accelerators either focus narrowly on specific industries such as clean technology or life sciences, or they cater to retail and service shops that don’t quite fit into the startup mold. 

That leaves a gap in support for startups outside of those silos.

“One of the things that I’m trying to help figure out is how do we create a collaborative set of structures for people that include both government resources and private community,” Sanchez said.

LaunchNo.CO is planning to launch a “concierge” service to guide companies to specific resources in the area depending on their industry and revenue stage.

One segment that Lisa Gumerman believes Fort Collins can occupy is supporting women founders. The co-founder and CEO of cloud optimization company Sunshower.io said the difference in funding given to male-led ventures compared to female-led companies shows there’s a gap in support overall for female leaders.

“So let’s maybe look for Fort Collins to be a place where entrepreneurs really could thrive. How cool would that be, like really focused on supporting women-led businesses,” she asked.

But building the support infrastructure outside of those silos could prove difficult, as some of the executives have been discouraged from running their business outside of Fort Collins.

Jennifer Henderson, founder and CEO of Fort Collins-based parental leave planning company Career Allies Inc., said she was told by a prominent Boulder-area venture capitalist that being in Fort Collins is a negative because she isn’t as close to large funders or customer bases in Boulder or Denver. That funder even suggested some houses for sale in Boulder, Henderson said.

“When you’re small and scrappy, you’ll jump when they say jump to an extent, but I’ll talk out of the other side of my mouth and say that this is home,” she said. “This is where my family is, it’s where my extended family is, so I’ll go down fighting if it comes to that.”

Microbusinesses driving new ideas

CSU Ventures president Todd Headley said the volume and diversity of new startups and patents in the university portfolio has at least doubled over the past decade, as almost every large-scale university in the country races to help students build their own startups.

“There’s a lot more support organizations and there’s a lot more capital, and the barriers, I think, are lower to particularly young and middle-aged people hopping out of the safety of a company and starting something of their own,” he said.

Scott Sampl, chief operating officer of the Fort Collins-based incubator Innosphere, said many founders don’t have to rely on the safety of a major company at all anymore. While Hewlett Packard, Intel and AMD still have large operations in the city, he said startup founders like the executives in the room with him have shown they don’t need backing from big industry players to get into software and business development for themselves.

“It sort of begs the question, do you really need an anchor,” he asked.

Skills gap on both ends of the age spectrum

Red Mountain Scientific CEO Mike Moses praised CSU for launching its data science program last year. For him, artificial intelligence is poised to upend entire industries, and he praised Innosphere’s AI program and other local institutions for investing in companies building on that technology.

“That expertise is going to be a real genesis of growth in Northern Colorado,” he said.

Andrea Bazoin, founder and CEO of Fort Collins-based EverHuman LLC, said there’s a labor group to tap into among people in their 40s and older. Her company works on teaching digital skills to people who didn’t grow up using computers extensively.

“When we’re talking about this huge skills gap, is there really or are we just not being patient enough to mine it,” she said.

Jan Harrison, a co-founder of the Compass Community Collaborate School, said the community also has to invest in education, especially at the K-12 level, if it wants to prepare students to enter the startup workforce or start their own ventures in the future.

“We can’t miraculously create college students who are capable if you haven’t prepared them ahead of time,” she said. “So I would just love to see us talking as a community about how we’re investing in our young people, not just college, but people younger than that.”

Finding workers

Many of the founders said they struggle to attract talent at the market rate. Mike Murray, co-founder and director of business development for Ageto Energy LLC, said there’s talent available on the Front Range, but the distance poses an issue.

“You go to Boulder and there’s thousands of software engineers just sitting around looking for work,” he said. “They’re qualified, probably with different [programming languages].”

Andrew Hendrickson, vice president of operations at surgery training company SurgiReal Inc., said it’s difficult to offer competitive pay, especially for a company in the middle of scaling up production.

“We’re looking to be able to pay manufacturers something they can afford to do,” he said.

But location wasn’t an issue for everyone in the group searching for employees. Joe Mitchell, CEO of UQM Technologies Inc., said the company’s location at the intersection of Weld, Larimer and Boulder counties can draw employees across multiple regional labor basins. It also taps into amenities in the surrounding area.

“We have people commuting from Littleton, Boulder, Fort Collins, so they’re willing to make the drive,” he said. “We’re half an hour from the airport, 25 minutes to Boulder, you can be in downtown Denver in 35 minutes. It really is a nice location.”

UQM was acquired by Danish power manufacturing company Danfoss A/S last week.

Remote work also came up as an option to fill needed jobs. Chris Donner, vice president at medical device maker SI-TECHNOLOGY LLC, said his company doesn’t have any employees or manufacturing in Colorado except for the executive team. His staff is spread out between Memphis, Atlanta and Mississippi, and the company manufactures in Arizona. 

However, Donner and his team plan to sell SI to a larger company early in its life cycle.

“I haven’t had an issue with talent because I can happily work with anyone, anywhere in the world at this point,” he said. “…We haven’t been looking at the perspective of trying to scale this organization up. Our mission was to get the project so far that a strategic would take it there, and so far it’s been working pretty well,” he said.

Many of the executives said their employees are making from 20 to 25 percent less than the market rate in exchange for possible stock options, and for working in a company they believe in.

Growing slow

Sanchez said the region’s startup founders have a less aggressive approach to rapid scaling and selling their companies compared to funders or investors, making for a less stressful business model on the founders than pushing for growth at any cost.

Blake Craig, co-founder of Laborjack LLC, believes the current loose climate around venture capital pushes startups to aim for big fundraising rounds and high-class office space in lieu of protecting their full ownership stake in the company.

“It’s this interesting thing, like is this a unique time where there’s going to be so much venture [capital] available?,” he said. “Is that sustainable? Is that the better business model instead of something where you keep it and grow?”

BizWest’s CEO Roundtables in Northern Colorado are sponsored by EKS&H now part of Plante Moran, Elevations Credit Union, and Flood and Peterson.

Update: This story previously described Compass Community Collaborative School as soon to open. The school is actually preparing for its second year of operation.