Nestled at the base of the Rocky Mountain foothills is an unlikely--yet booming--startup ecosystem.
At first glance, Boulder, Colorado may not appear to offer many advantages to small businesses. The city, which counts just over 100,000 residents, is probably better known as a countercultural enclave.
Still, with its wealth of tech resources, Boulder is nurturing more than just "cannabusinesses." In fact, a recent report from research firm Compass named the city as a runner-up on its list of the top global startup ecosystems. The report scored the city based on factors such as funding, market reach, and the rate of exit growth (where Silicon Valley unsurprisingly ranked first).
"It's always been hard to secure a job in Boulder because a lot more people want to live here than the existing economy can support. That's why the baristas and window washers all have master's degrees," explains advertising mogul (and Boulder native) Alex Bogusky.
Bogusky is also a co-founder of the Boulder-based startup program Boomtown Accelerators. "For a long time, the only way to have a decent job has been to create that job. Because of that, Boulder is entrepreneurial at its core," he explains.
As recently as 2013, Boulder was found to have the highest density of tech startups nationwide, according to a report from the Kauffman Foundation. It even housed twice as many companies per capita as San Jose, Calif., the No. 2 hub. Bogusky notes that the food and advertising sectors have long reigned supreme in the Colorado ecosystem.
Kickfurther, a crowd-funding platform which purchases inventory for startups, is one Boulder-based startup that is reaping the city's benefits. Founder Sean De Clercq elected to leave his native New Jersey in 2014, when Kickfurther was accepted into the Boomtown program.
"Talent is a lot cheaper here," says De Clercq. "All of our expenses are 20 percent lower than they would be [in New York], and that includes what we would have to pay developers." Currently, Kickfurther counts four full-time employees, and has about 85 businesses registered on its platform. It has successfully funded as much as $40,000 worth of inventory for a single business.
Although Kickfurther declined to discuss its revenues, De Clercq says he's presently in talks with investors to raise a sizable funding round.
Here's a quick look at why small-business owners are hanging their hats--and hiking gear--in this rapidly advancing Western hub:
1. Access to startup resources, tech behemoths.
Boulder is home to the startup incubator Techstars, which has a presence in 18 locations worldwide, including New York City and London. The accelerator selectively funds small businesses, doling out $118,000 worth of seed investment for 7 to 10 percent equity in the companies. Other perks offered include free office space and the opportunity to connect with influential members of the business community. On average, startups incubated through Techstars go on to raise more than $2 million from third parties.
Boomtown Accelerators is another notable incubator. "One of the big things that Boomtown did was that it connected us with people we needed to speak to," says De Clercq. When the company needed legal advice, Boomtown introduced them to a Denver-based lawyer, who helped them free of charge.
Small though Boulder may be, there are plenty of opportunities for entrepreneurs to make valuable connections in the community. New Tech Colorado now has over 10,000 members, with hundreds attending its monthly meetups in Boulder. In fact, there's almost always a waiting list for the event. Other regular meetups include StartupWeekend, StartupWeek, Ignite Boulder, Mobile Monday, Boulder Is for Robots, TEDx Boulder, and Entrepreneurs Unplugged, to name just a few.
It doesn't hurt that cemented tech companies such as IBM and Oracle also have offices in Boulder, because they serve as talent magnets.
2. VC investments are pouring into the city.
In 2013 alone, nearly $1 billion in venture capital investment went into Colorado-based companies, according to research from investment database CBInsights. Significantly, nearly half (49 percent) of that funding went into tech companies, followed by education and health startups.
"In the case of Boulder, a startup community whose evolution I've observed and participated in closely over the past many years, the cultural and economic transformation has been extraordinary," noted Brad Feld, co-founder of VC firm Foundry Group and founder of Techstars, in the Kauffman report.
In the fourth quarter of 2014, companies from Boulder and Broomfield Counties accounted for 15 of Colorado's 21 venture capital deals, according to data from PricewaterhouseCoopers LLP and the National Venture Capital Association. Overall, Colorado deals totaled $342 million, which was the state's best performance since the third quarter of 2001, when $350.4 million was raised on 27 deals.
VCs are increasingly hungry for a slice of the city's companies. "The most important factor that makes Boulder such a vibrant startup community is the attitude of 'give first' that pervades the entire ecosystem here," says Seth Levine, co-founder and managing director at Foundry Group. Although the firm invests in a variety of companies across the country, he notes that there's a lot of interest in Boulder, where success stories like Gnip--which was acquired by Twitter for $134 million in 2014--have made their name.
Levine is quick to credit Boulder's creative culture, where he says it's "impossible not to feel the sense of community here in town, and the feeling that we're all in this together."
To be sure, the number of investments in Boulder startups pales in comparison to either of the coasts. Silicon Valley counted as much as $6.3 billion in venture capital investments in the fourth quarter of 2014 alone, with New York City bringing in $1.2 billion during the same period, according to PwC data.
3. Cost of living is comparatively low.
When launching a business, founders know well that every spending corner cut can mean big gains in revenue.
Another factor making Boulder especially appealing is its comparatively low prices. In fact, although the cost of living rose in Boulder in the first half of 2015--due largely to increases in shelter prices, according to the Bureau of Labor Statistics--wages in Boulder tend to be above the national average. As of 2014, around 45 percent of families in Boulder earn more than $75,000 annually, with a medium income growth rate of about 4.5 percent each year.
"A huge amount of tax dollars are coming into Colorado," De Clercq adds. "New roads, new highways, all of that adds to the feeling that you're in a vivacious and upcoming place."
4. The University of Colorado graduates tech talent.
The University of Colorado at Boulder boasts the No. 1 graduation rate for public universities statewide, with nearly 30,000 students enrolled at present. Tens of thousands of employers recruit graduates from the school each year. In 2014, Forbes named it the 19th most "entrepreneurial" university in the country.
Kickfurther, for its part, effectively used the college campus as a way to test out its product. To gauge Millennials' interest in crowdfunding for inventory, De Clercq interviewed around 40 students, all of whom said they would love to participate. None of them, however, ended up creating an account on Kickfurther, and that's when De Clercq realized that young professionals with heftier sums of cash--and experience in the work force--would have to be the target demographic.
5. A vibrant quality of life.
Quality of life in Boulder is relatively high, with the city's lush, natural beauty and communal spirit.
"The idea of balance is an important one in Boulder, and I think differentiates it from other markets," says Levine. "Most people who live here have something else they're passionate about. There's a strong belief that balance is important--and something that adds to productivity rather than taking away from it."
Entrepreneurs in Boulder are demonstrably willing to give back to the community, too. The Entrepreneurs Foundation, for instance, encourages founders to donate a portion of their funds to local charities, and has generated around $3 million so far.
Boulder is definitely a far cry from its geographic sibling, Silicon Valley, but what it lacks in capital it has in spirit. "Boulder doesn't have the funding and deep pockets of Silicon Valley, but we try to make up for it with community support," Bogusky tells me. Perhaps paradoxically, he adds, "It can be hard for new residents to adjust to how much help they get. It feels weird at first."
There, it's not hard to imagine that pitch meetings are held in Vinyasa yoga studios, or at the edge of Boulder Creek.