Front Range business leaders join the startups they’re helping

Seven business leaders are looking to grow the success rate of later-stage startups by taking an entirely new approach to the accelerator concept.

Growth Sherpas is a new accelerator with partners in Boulder, Longmont, Denver and Castle Rock.

Rather than the traditional accelerator, where several (usually early-stage) startups join and graduate a program during a certain amount of time and get advice and guidance from mentors, Growth Sherpas is taking a more embedded approach.

The seven “sherpas” — one for strategy and operations, two for finance, one for marketing, one for revenue, one for legal and one for people — effectively join the startup, which must be later-stage (also known as seed-stage), as the company’s new chief marketing officer, general counsel, etc. The Growth Sherpas establish milestones that are to be hit within two years. The sherpas, who are all business owners on the Front Range and bring the expertise of their employees as well as themselves, don’t get paid and don’t get equity until the milestones are hit.

“There are tons of organizations here that help companies go from an idea to their first few customers,” said Matt Wenger, CEO of Growth Sherpas and the person who came up with the new accelerator concept. “There is some great support for companies going to the final ascent. But we went to help companies in between those stages for what we’re calling the seed-stage traverse.”

While most accelerators target early-stage startups (what Growth Sherpas call the process of getting from sea-level to base camp as the accelerator uses mountain climbing imagery in its branding), Growth Sherpas is interested only in bringing on companies that have already been operating for some time and that have successful sales and customers.

“There are hundreds of companies that graduate from early incubators that get lost in the zone of $10,000 to $200,000 in monthly revenue and they get stuck there,” Wenger said. “They’ll grow and scale their team, then they’ll cut employees. There’s no institutional seed funds for them or venture capital. So what happens is a huge percentage of these companies are zombies; they die on the vine and disappear. A very few get lucky enough or good enough to make the traverse across.”

Wenger wanted to solve the problem of companies with good ideas and good business models dying because they struggle with getting capital and getting the right talent, especially as companies leave Colorado to go to the coasts where they think they can get more capital.

His accelerator, which only brings on one new startup per quarter, features successful business leaders who invest their time and talent into the client startups by becoming embedded into them and essentially joining the startup. Success — and payment — occurs when the startup achieves milestones it sets within a two-year time period, whether those milestones be a certain amount of financing raised or a certain number of impressions or whatever the goal may be. Once those milestones are hit, the Growth Sherpas are paid back their services by taking 5 percent of monthly revenue in the company and 3 percent equity.

“We share in the value we create,” Wenger said. “So if we don’t create value, there’s nothing to share in; this isn’t about walking away with 50 percent of the company. It’s interesting and exciting for us to be around the table and put in our time and caliber of talent.”

The sherpas are: Wenger, CEO of Growth Sherpas and the person who advises on strategy and operations for clients; James Graham and Judd McRae, who operate Richtr Financial Studio and are the finance and accounting sherpas; Lori Jones, chief marketing sherpa and CEO of Avocet Communications; Mary Grothe, CEO of Sale BQ and overseer of revenue; David Kendall, founder and CEO of Bold Legal and the legal sherpa; and Kendra Prospero, CEO of Turning the Corner LLC and chief people sherpa. Their office locations — Boulder, Longmont, Denver and Castle Rock — all serve as Growth Sherpa meeting locations. In addition to providing their own expertise, the sherpas also can tap their employees to work with the clients, an investment by the sherpas to ensure that the best work is being done for the startups in the program.

“Investors invest in teams,” Wenger said. “If you play this out, given that we’re successful at what we do, we’re making it easier for these companies to get funded as well. We want investors to say ‘oh, you’re a Sherpas company, I know that team.’”

Wenger added that the Growth Sherpas aren’t becoming permanent members, but are rather co-re-founding. They’re there to help the companies get out of the late-stage rut, and then will ease away from the company after two years.

“There are so many professional advisers or consultants who come in for equity and advise,” Grothe said. “But there’s so much work for companies at the strategy level who need people to stick around and execute the strategy. We do not do a 60-day turnaround and get out. We stay by their side until they hit a milestone, and help them build the talent they need to execute internally.”
That idea of going through the startup process with the clients is how the name Growth Sherpas was selected: Sherpas are guides who climb daunting mountains like Everest along with the mountain climbers, who are there carrying gear and risking their own lives alongside the adventurers.

“In using the mountain analogy, we’re going on the journey with them,” Graham said. “We’re providing active leadership.”

Kendall added that he, as a lawyer, can make money even if a company is failing, and that he appreciates the Growth Sherpas model of only succeeding when the client succeeds.

“We treat it like we would our own normal clients,” Jones said. “You just accept there may be less return on investment in the beginning.”

Beyond forming a new accelerator model that can help seed-stage startups be more successful, Wenger said the goal is to grow  and retain entrepreneurship in the community.

“We do we solve this economic development issue for the Front Range in a sustainable way,” he said. “We’re part economic development initiative, part VC initiative, part later stage accelerator. We’re not here to come in and give advice; we’re here to execute and roll up our sleeves…. This is a massive opportunity. Imagine instead of 5 percent of these companies making it across the traverse, 40 percent could. What would happen then?”

Growth Sherpas currently has one company in its portfolio and plans to take another on in the coming weeks.

To provide more information about what it is doing and investing in seed-stage companies, Growth Sherpas is hosting a panel discussion at 5:30 p.m.  today at The Garage, 2150 Market St. in Denver. Companies of all stages, especially those in the seed stage that believe they may be interested in joining the accelerator, are welcome to attend.

on Facebook on LinkedIn