Tech Startups Are Springing Up in Colorado
It’s hard to miss a pattern that has emerged in the current crop of tech startups either going public, being acquired or getting funded in recent months: While the majority have been based in Silicon Valley and San Francisco, a fair number have also come from Colorado.
It has been about a year since Boulder-based Rally Software, a company that supplies software development tools in the cloud, raised $84 million in an IPO. More Colorado companies are likely headed down the IPO pipeline: Denver-based Ping Identity, which supplies software to help companies manage the login credentials of their employees, raised $44 million in a Series F last year in anticipation of an IPO that could happen this year. And just last week, Twitter acquired Boulder-based Gnip, a supplier of Twitter’s data stream, after it had raised about $7 million in two funding rounds.
While it’s no Silicon Valley, Colorado’s venture capital community is gaining momentum. Today the state’s leading venture capital organization will announce a new conference called the Colorado Venture Summit to be held on June 19 that’s intended to promote new business in the Rocky Mountain state, where VCs have invested roughly $3.5 billion since 2008.
There are practical advantages to starting up in Colorado. The cost of living is lower, so salaries tend to be a bit lower than in San Francisco or New York. Robert Half, a staffing firm, pegs the average starting salary of a software developer in Boulder at about $85,000 a year versus about $101,000 a year in San Francisco.
The same is true of real estate. The average lease on San Francisco office space has been creeping up to $60 and $70 a square foot in some cases. The average in Denver hit a record last year of $32 a square foot.
Those factors can make a difference, said Jim Franklin, CEO of SendGrid, a company that provides cloud-based email marketing services. “It’s not as cheap to operate here as it is in Iowa or Kansas City, but it’s not as expensive as New York or Boston or San Francisco either,” he said.
Colorado has seen its share of business cycles — booms and busts, for sure, but also a long series of successful exits, said David Gold, the chairman of the conference and a managing director at Access Venture Partners, a VC firm based in Westminster, Colo. “One of the great things that has happened in Colorado over the last 15-20 years is that we’ve had a lot of new companies get started from the second layer of executives. That kind of talent base takes a long time to build and we’ve been doing it here for decades.”