Investor: Springs has base for entrepreneurial community
The Colorado Springs area has many of the ingredients needed to build a long-term, sustainable entrepreneurial community, according to a Boulder-based entrepreneur, startup business investor and venture capital fund founder.
The Springs area has a good base of entrepreneurs and startup companies, and a higher-education system to add to the supply of entrepreneurs, but building such a community takes time — typically at least 20 years, said Brad Feld, co-founder of the Foundry Group and Mobius Venture Capital as well as Boulder’s TechStars startup accelerator. And the effort must be led by entrepreneurs and not government, nonprofits, venture capital fund partners or so called “angel investors,” who often provide the first outside money to fund startup companies, he said.
Feld made the comments to about 170 entrepreneurs, angel investors and others attending the Peak Venture Group breakfast Friday at Colorado College.
“You have to focus on engagement of the entire stack of entrepreneurs from the first-timer to the experienced entrepreneur, you need an accelerator to add excitement and you have to get fresh meat into the system continually. That starts with university students, and any new person in town who is an entrepreneur has to be engaged,” Feld said. “It is also really, really important that the entrepreneurial leadership recognizes this is not a zero-sum game where they are competing with each other for investor attention.”
Feld said after his speech that a dearth of venture capital in the Springs area — no startup here has received venture funding in nearly three years — is not the best measure of entrepreneurial activity. Since startups are attracting angel investments — about $10 million during the past 18 months — that suggests area startups are getting funded and may be at too early a stage of development to attract venture funding.
The important trend to follow is year-over-year increases in the number of high-growth companies started, Feld said.
“That is a good indicator of entrepreneurial activity. (Startups) will attract funding,” he said. “If you have about 10 now, then you have 20 the next year and 40 the year after that, then that is interesting. The quantitative measure of venture capital really doesn’t matter.”
Feld also encouraged local angel investors, who pump between $25,000 and $100,000 each into startups, to increase the speed at which they make such investments. He has invested in about 75 such companies during the past 17 years, and said that such investors should be ready to double their initial investment in a second round of funding to make sure the company has enough cash to have a good chance to succeed.
“With my 75 investments, two companies have returned more than 100 times my money. If the other 73 are zero (only 20 or 30 were), I will still have tripled my money.”
Interest in bringing the TechStars program, a 90-day boot camp for entrepreneurs that gives them up to $18,000 in funding and mentoring from experienced entrepreneurs, to the Springs has grown, said Peak Venture Group President JoAnn Schmitz. Discussion among the group and others will continue about bringing the program — now in Boston, Boulder, New York and Seattle — to the Springs, she said.
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