Blog

Capital Concern for Businesses Large and Small

Wednesday, February 25, 2015
At Denver Metro SBDC's Trout Tank, Colorado entrepreneurs pitched their businesses to a panel of lenders.

 
By Sara Crocker, Denver Metro Chamber of Commerce

With record new business filings and consistent rankings as one of the top five most innovative and entrepreneurial states in the country, all eyes are on Colorado as a hub for start-ups.

“We’ve created, I think, the deserved reputation for being a great place for the creative class—entrepreneurial, innovation-oriented, well-qualified individual—to go out and have a life,” says
JB Holston, the executive director of the Blackstone Entrepreneurs Network. “Not just a career but a life.”

And while that designation is driving a true migration to the Front Range, what’s less discussed is where the money to launch these new ideas comes from. While Silicon Valley’s venture capitalists and the East Coast’s long-endowed family funds carry near-legendary status, Coloradans are taking matters into their own hands.
 

Getting Started

For most entrepreneurs, the dollars and cents can be the most challenging part of getting a business off the ground.

Kata tents from Under the Sky Event Rental

Kata tents from Under the Sky Event Rental

The idea to launch Under the Sky Event Rental came to Rebecca Anderson when she told her seatmate on a flight to Denver about her wedding. She and husband Patrick had their intimate wedding under katas—Nordic tents that resemble Native American tepees. But, she had only seen them rented in her native United Kingdom.

“That planted the seed,” she said.

Back in the U.K., there are roughly 30 kata rental companies, up from just seven in 2007. When she inquired about distributing, she found out her company would be the first in the U.S.

“They’re just perfect for Colorado,” Anderson said. “They match the outdoor beauty.”

The Andersons decided they’d need help getting started. And, they’d be on a tight timeline in order to start renting the tents at the start of this year’s wedding season. They turned to theDenver Metro Small Business Development Center (Denver SBDC), an affiliate of the Chamber.

“I thought if we were going to look into it we should write a business plan and see whether it was viable and give ourselves an instructor and some support,” Anderson said.

They got on track with Leading Edge, where they wrote their plan, and Loan Request Preview—a companion program led by Denver SBDC consultant Dale Clack that introduces a business and its owners to a large number of lenders. To date, the program has led to $2.1 million in loans awarded.

“I wasn’t positive we were going to get lending,” Anderson admitted. “I felt like it was kind of a longshot.”

They were floored when they heard back from four lenders right away. Now, their tents are en route to Colorado, which will be their first market. They hope to expand to other areas in the next two to three years. Anderson says they wouldn’t be where they are today without the Denver SBDC.

“It made us accountable,” she said. “The consultants are a resource that I think every small business should know about.”
 

Scaling Up

It’s not just start-ups that need a hand.

Gazelles, those companies that are on pace to grow by at least 20 percent over four years or more, are also getting support to ensure they become the region’s next big employers.

“In Colorado there’s a terrific innovation and entrepreneurship ecosystem, including a lot of support for early-stage start-ups. But, there’s a lot less support and focus on scaling up some of these companies that have gotten to the point where they’ve got really big, interesting prospects,” said Holston, whose Blackstone Entrepreneurs Network (BEN) helps Colorado’s gazelle companies grow.

BEN is focused on aerospace, energy, health, natural foods and products and technology companies—areas where Colorado has perennially been competitive.

While Holston loves the entrepreneurial spirit here, he cautions that “if we don’t have some of these (companies) become really big employers down the line, we’re going to have a real imbalance in the ecosystem, particularly with the influx of Millennials and a general influx of highly talented, highly qualified folks looking to build their careers here on the Front Range.”

Once a company is selected to join the network, they focus on creating connections to help the company move past any barriers to growth.

While capital can be part of the conversation, “in most cases capital is not the constraint,” Holston said.

But, by creating a peer network, they’re building local resources. Recently, Zayo Group—a Boulder-based telecom company that went public in October—offered a master class with its CFO Ken desGarennes on preparing and launching an initial public offering.

Colorado ranks fourth in the nation for IPOs, based on the number and value of IPOs as a share of total worker earnings, and it’s helping these companies grow.

“We now have a local CFO who can say, ‘I’ve been there, I’ve done it, let me show you what it is that you need to know,’” Holston said.
 

Be Pitch Perfect

At Denver Metro SBDC's Trout Tank, Colorado entrepreneurs pitched their businesses to a panel of lenders.

At Denver Metro SBDC’s Trout Tank, Colorado entrepreneurs pitched their businesses to a panel of lenders.

What’s key for any business looking to raise capital is to have a well-balanced pitch, said Rockies Venture Club Executive Director Peter Adams.

“There is no template really,” he said. “You’re telling a story and every pitch should be unique.”

The most common pitfall he’s seen in the angel and venture capital world is too much of a focus on the what, not the why: “They talk about their product the entire time and they forget they’re selling equity in their company.”

While Rockies Venture Club has connected entrepreneurs with investors since 1985—it’s the longest-running angel investment group in the country—Adams says there’s more that can be done to invigorate investment here. He notes that while there are some 16,000 angel investors along the Front Range, only about 1,000 are actively investing.

“We need a better way to motivate the inactive angels,” he said.

With more focus on education for investors and events to make more connections, he thinks they’ll see more interest.

When it comes to funding, those connections often prove invaluable, from start-up to scale-up to going public.

Creating that strong network of business leaders and creating a tie to the community is important, Holston said: “The more companies are embraced in the community, the more likely they are to grow here because they’re just that much more connected.”
 

Kick-Start Raising Capital

Denver Capital Matrix – As a small business or entrepreneur, use Denver’s resource directory of funding sources.

Loan Request Preview – This Denver Metro SBDCs program facilitates the process of finding a loan
by connecting business owners with lenders.

Pulse – This free online financial management tool, powered by BodeTree, connects business owners to
financing resources.

Funding Options Panel – The Denver Metro SBDC’s triannual workshop panel introduces business
owners to different types of funding options. Join them for the next panel on March 19.

Trout Tank – The Denver Metro SBDC’s triannual event gives business owners the opportunity to pitch to the lending community. Share your next big idea June 9.

Colorado Crowdfunding – In this Meetup group members can learn more about types of crowdfunding and how to successfully launch campaigns.

Sara Crocker is the communications manager for the Denver Metro Chamber of Commerce.



Introducing Pulse, Powered by BodeTree

Sunday, September 14, 2014


BodeTree, an online service that helps small business owners better understand their finances, has partnered with the Denver Metro Small Business Development Center (SBDC) to provide an online platform specifically built for greater small business success. The platform, named “Pulse,” is built to further grow and support consulting and development efforts already in place with the Small Business Development Center to ensure that Colorado continues to remain a top state for small business growth. With the platform coming online, more than 16,000 Colorado small businesses can now utilize Pulse to help drive greater business success.

“The creation of Pulse is allowing us to continue down the path of enhanced technology offerings for small business owners. This tool is meant for the busy entrepreneur who doesn’t have time to sit down every week with one of our consultants, but does have intentions on making decisions based on fact, not on hope,” said Abram Sloss, executive director for the Denver Metro SBDC. “There are SBDCs across the country offering services to small businesses today. We feel with Pulse we’re at the forefront of technology and bringing a truly innovative approach to providing greater services and capabilities to Colorado small businesses.”

“The launch of the Pulse platform in Colorado really builds upon our mission at BodeTree to empower small business owners with a big picture understanding of their financials and help them make the right decisions for growth and success,” said JT Archer, chief operating officer at BodeTree. “We’re big believers that coupling the capabilities of the SBDC with a platform built for success will ensure Colorado remains at the top of the nation for small business growth and success.”

“RTL Networks has found that Pulse is an excellent tool for our company, but we never would have found it, were it not for the Denver Metro SBDC,” said CEO Richard Lewis. “We at RTL appreciate the assistance the SBDC provides to so many small businesses and the connections to wonderful technology applications like Pulse.”

To learn more about Pulse, visit www.coloradosbdc.bybodetree.com


NEWSLETTER SUBSCRIPTION