Making Every City a Startup City
On August 4, 2015, President Obama hosted the first-ever White House Demo Day, which brought over 90 entrepreneurs and hundreds of other stakeholders from across the innovation ecosystem to the White House for a day of conversation about how to increase participation in the American startup economy and technology workforce. Demo Day highlighted America’s need to foster entrepreneurial talent from all walks of life, and in all corners of the country. Sustained startup growth is an economic imperative for our country, as new businesses account for nearly all net new job creation and almost 20 percent of gross job creation in America.
Starting a new company requires support. And for a long time, entrepreneurial financing for high-growth companies has been predicated on the idea that the best funding opportunities come through referrals at big venture-capital firms in innovation hubs like California’s Bay Area, or the Boston metro area in Massachusetts. In recent years, for example, venture-capital funding to California firms often has equaled or exceeded that for firms in the other 49 states combined. The innovation economy of tomorrow, however, will necessitate diverse and dispersed opportunities for entrepreneurs to connect to capital and mentorship resources.
In Telluride, Colorado, people are turning the stereotypic view of a successful startup ecosystem on its head. Telluride has a long history of being a small ski town (with a population of just over 2,000) in a rural area of southwestern Colorado, but back in 2012, the city’s community foundation—the Telluride Foundation—started a program called the Telluride Venture Accelerator (TVA). Now in its fourth year, TVA’s mission is “to make Telluride a great place to start and grow a business”. TVA’s five-month-long residential accelerator program for early-stage entrepreneurs has raised almost $9 million in start-up funds since its inception.
I recently sat down with the two co-founders of the Telluride Venture Accelerator to learn more about their model and how other communities across the country might be able to replicate the work that they’ve done in southwestern Colorado. Paul Major is the President and CEO of the Telluride Foundation, and Jesse Johnson is CEO and Co-founder of the Telluride Venture Accelerator.
Tell us a little bit about the genesis of the idea of a partnership between the Telluride Foundation and the Telluride Venture Accelerator.
Jesse: The idea behind TVA grew out of a series of conversations between Paul and me. The Telluride regional economy has historically been pretty fragile and two dimensional—relying heavily on tourism and housing—and lacking much of a middle class. Meanwhile, we saw that the community had an incredible resource in the form of a growing number of successful entrepreneurs and investors spending time in our region.
Paul: We began by exploring the role of entrepreneurship and its potential to diversify the region’s economy. We arrived at the idea of a community-focused, non-profit accelerator after meeting with other programs and after receiving enthusiastic interest from foundations, philanthropists, potential mentors and angel investors.
How did you identify the need for more resources for entrepreneurship in your community?
Paul: We picked up on the need through our own experiences. I saw the need given my role as head of the area’s community foundation. Jesse is an entrepreneur and thinks like an entrepreneur and spent significant time as a child here and is now raising his family in Telluride. We both recognized that there was a lot of entrepreneurial talent in the community and some active angel investors, but they didn’t know each other and funding wasn’t happening.
Jesse: We started asking ourselves, “What if we could creatively bring all of these people together and get them focused on supporting local entrepreneurship efforts that benefit this community? We decided to test our idea with a one-year trial to answer lingering questions – would compelling companies apply, would mentors show up and prove helpful and would investors take interest?
What impacts has the Telluride community seen as a result of this effort?
Jesse: We are excited to say that seven TVA companies and partner companies have started in or relocated to Telluride. They are raising money here, hiring here and growing here. Soon after the accelerator started, a number of second home owners came together to form an early stage venture capital fund called the Telluride Venture Fund (TVF). They have invested in 50 percent of the TVA graduating companies, acting as lead investor on several. It has been estimated that TVA has generated over $25 million in local economic activity and our companies have raised over $9 million. Another exciting development is that Dentons, the world’s largest law firm, has started a dedicated legal tech incubator/accelerator in partnership with TVA here in Telluride.
Paul: Most recently, a group has come together to create weekly “entrepreneur meetups” that are helping to build a sense of community amongst local entrepreneurs. A co-working space is scheduled to open soon to further nurture the local startup community. We have actually been told by several new residents that the activity [created by TVA] in this area was a key reason for them choosing to move to or buy a second home in Telluride.
The Administration is interested in promoting innovation and startup creation by more people from more places across the country. What role do you see community-centered entrepreneurial support programs like TVA playing in this effort?
Jesse: Innovation and startup creation is alive and well in most of the country’s cities. We hope that Telluride might serve as a model for how to bring this to more remote or rural areas. TVA’s impact has been much larger than the impact it has on the startups that are accepted to the program. We have seen a huge surge in startup and entrepreneurial activity in Telluride as a result of TVA’s presence. A community-centered program greatly impacts a broad range of activities, not just the futures of the companies that pass through its program. Our hope is that programs like TVA can serve as inspiration, helping other communities create a unique movement in their own backyards.
Paul: I think community-centered programs can play a more substantial role in endorsing innovation and startup creation if there is a convener with some risk appetite and risk capital. This is what the Telluride Foundation has done. If a program is truly community-centered, then it will help attract impact investors, entrepreneurs with community-minded attitudes, and mentors who are willing to commit their time.
How can Americans build similar entrepreneurial support networks in their own communities? What advice would you have for other communities interested in developing something similar?
Jesse: Every community is different and has its own needs, challenges, opportunities, and assets. To start, you have to take inventory of these things. Telluride’s unique assets are its beautiful natural surroundings, access to capital, and its community of potential mentors.
I think important first steps include:
- Create a leadership team with a high level of dedication and shared vision;
- Take an inventory of the things I just mentioned, including looking at mentors, funders, potential niche areas of focus, etc.;
- Secure seed funding for at least one year so the focus is on program development, mentor development and company recruitment;
- Engage regional high net worth individuals, investors, and entrepreneurs; and
- Ideally, find a local philanthropic organization as the convening partner.
You have to keep in mind that accelerators are startups themselves, and you must be open to trying multiple options and efforts to see what sticks. TVA started as a one-year pilot, and we could have never predicted the many changes and pivots that have led to the present-day TVA.
Terah Lyons is a Confidential Assistant at the White House Office of Science and Technology Policy.