CEO Roundtable: NoCo startups adapt to life under COVID
A group of startup leaders and supporters said Northern Colorado’s startup ecosystem is seeing both opportunities and pitfalls in having to radically shift to the demands from the ongoing coronavirus pandemic.
A group of nine executives gathered for a video chat discussion on the state of Northern Colorado’s startup scene Tuesday morning for BizWest’s bi-monthly CEO Roundtable.
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Funding pressures
Lisa Gumerman, CEO of cloud management platform Sunshower.io, said a fair number of friends and family have made investments in her company because it looks like a safer bet than the volatility of the stock market in recent months.
But her company has had less luck trying to land funding from angel or seed investors, particularly within Colorado.
“I do sort of feel like if we were to go raise a seed, it almost feels like you need to go through an accelerator, just to get that name recognition and PR, so people know you exist,” she said.
LaunchNo.CO executive director Jana Sanchez said Northern Colorado in general has been overlooked, particularly when Boulder draws so much attention from venture capitalists and aspiring CEOs. While some additional steps have been taken to boost the region’s name recognition in the investing community, she called for a larger campaign to spread the word about Northern Colorado’s startup scene.
“Those guys are in Boulder, and they don’t drive the 30 minutes north to figure out that we have … highly investable, profitable companies that need angel investors,” she said.
For others, finding funding has been easier when looking outside of the state. Red Mountain Scientific Inc. CEO Mike Moses said the company has made connections with startup groups along the Front Range, but the majority of its funding so far has come from groups within the oil and gas industry in Texas.
Red Mountain develops software to capture and analyze data from utility inspections, including photos taken from drones.
“It’s really become very much a strategic approach of looking at companies and other investment groups that understand our industry domain,” he said.
Innosphere chief operating officer Scott Sampl said a recent research project the accelerator did with startup database Pitchbook estimated that about 65% of investors and 80% of venture capital dollars in Colorado-based startups are from out of state.
That research also showed that investors are looking for companies to be farther along in the growth stage before making investments, including more evidence of market traction and longevity.
“The expectations at the seed level have gotten to be almost like the maturity that you would have expected a few years ago for a Series A,” he said.
For other executives, the dramatic uncertainty caused by the pandemic has led to a somewhat different source of venture capital.
Vortic Watch Co. CEO R.T. Custer said his company is still doing well and generating plenty of cash from sales. He said a lot of customers who buy his watches are in angel investing, and the discussions he’s had with them suggests they’re more willing to invest in startups that can be run online or have essential business status in case another spike in COVID cases leads to another round of stay-at-home orders.
“I think investors are asking, ‘Is your business really essential? What happens if they lock us down again?’” he said. “I’ve had that conversation with a lot of my customers, even just for service.”
Managing a company in the midst of COVID
COVID has forced much of the world to conduct business online, which several executives said can ease the geographical restrictions that would be in place for smaller investors.
But at the same time, Sampl said remote work has made it harder to keep employees satisfied with workplace culture and build a sense of solidarity through video chats.
“The peeps are lonely,” he said.
Laborjack co-founder Blake Craig echoed that sentiment, saying that while it’s easier to reach more people via video chat, he finds himself building stronger bonds with people he knew and met with before the pandemic.
“It’s so much easier to connect with other people, but you don’t get that same level of connection,” he said.
TurboTenant CEO Sarnen Steinbarth said his company recently hired a manager away from the Denver office of human resources software maker Gusto, a company that was valued as high as $3.8 billion last year.
That employee enjoyed working in-person with her colleagues, he said, but now that nearly every technology company is working remotely, the competition for talent between small startups and unicorns is on a more even playing field.
“Quite frankly, if COVID hadn’t happened, I think she would probably still be really enjoying the everyday work environment at Gusto, but we can now make a very similar online environment,” he said.
At the same time, living almost exclusively at home is forcing employers to rethink how they determine how effective employees are, especially when the work is being done outside of a structured office environment.
Tina Todd, a partner at SimplyHR, said the companies she’s worked with have had to adapt to being more flexible when they ask workers to complete tasks, in particular because those tasks can be done outside of normal office hours and when it doesn’t create a conflict with personal lives.
That flexibility is critical, she said, especially as many parents are trying to figure out how they can balance their work with the possibility that their children may not take in-person classes at their schools this coming school year.
“Looking at myself personally, I’m a parent of elementary-age children, and I very much love my work, and I feel like I’m not effective at both right now,” she said. “If I try to multitask, that’s not going to work.”
Andrea Bazoin, CEO of technology and small business consulting firm everHuman, said that the shift to more flexible work was already happening, but COVID accelerated it.
She also believes that flexibility should be applied to making businesses more open to hearing the thoughts of employees who aren’t necessarily in decision-making roles about what the future of the company looks like.
“It’s not just a conversation in the room with the C-suites, it’s everyone who has to be involved with that conversation so that we can look forward together,” she said.
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The CEO Roundtable is sponsored by Flood & Peterson, Plante Moran and Elevations Credit Union.
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