Most people in the cleantech community recognize that Santa Clara Valley is a unique and beautiful place with world-class universities, piles of venture capital and an entrepreneurial history second to none, but recent trends indicate that cleantech companies are beginning to consider a new home base on Colorado’s Front Range. According to the Milken Institute’s “Best Performing Cities 2013”, four of the top 25 large cities in the U.S., were from Colorado’s Front Range (Boulder, Denver, Fort Collins and Greeley). The Institute cited “[t]echnology and energy were the forces powering this year’s top performers, even more than in 2012,” and the report noted that Denver, for instance, had a very strong business climate, skilled work force and strong international links. These assets have led to Denver’s high-tech gross domestic product concentration exceeding the national average by 60 percent.
In addition, the Cleantech Group recently reported that for 2013, cleantech venture investment in Colorado totaled more than $195 million. In addition, according to the “2013 Colorado Startup Report” issued by Built in Colorado, 28 Colorado digital companies exited in 2013, including 27 that were acquired and one that went public, generating more than $1 billion. This was a dramatic increase from the number of exits and the amount generated by exits in 2012. According to Cleantech Group, biofuel and biochar company Cool Planet, which moved its global headquarters to Colorado from California last summer, raised more than $29 million in 2013 from Google Ventures, GE, BP, ConocoPhillips, NRG Energy and Exelon Capital Partners in a growth equity round, and Denver-based Gevo, a renewable chemicals and biofuels company, raised more than $22 million from Khosla Ventures, Total Energy Ventures and Virgin Malaysian Life Sciences Capital Fund, among others.
So, what makes Colorado’s Front Range so unique and attractive? Many say that it’s a combination of a highly skilled workforce, and nationally competitive federal research centers and research universities, like the Department of Energy’s National Renewable Energy Lab. Located 20 minutes west of Denver, NREL is the only federal research lab specifically dedicated to renewable energy and energy efficiency research and development. In addition, it employs more than 1600 full-time employees and works with nearly 750 visiting researchers, interns and contractors from across the globe.
According to the University of Colorado’s Leeds School of Business, the economic impact of NREL on Colorado was estimated to be $814.8 million in fiscal year 2012. Included in this matrix of federal innovation facilities on the Front Range is the National Wind Technology Center, the National Center for Photovoltaics and the Hydrogen Technologies and Systems Center. In addition, Colorado has the National Oceanic and Atmospheric Administration and the National Center for Atmospheric Research, which focus on the environment and complex atmospheric systems and which are located 30 minutes from Denver in Boulder, Colorado.
Another Colorado asset is the Rocky Mountain Innosphere, a 501c3 non-profit corporation formed to accelerate the success of high-impact scientific and technology start-up companies. Most agree that it is essential for cutting-edge technology companies to have the right kind of business support to commercialize their technology and take that technology to scale, and that’s where the Innosphere comes in. The Innosphere is a unique institution that provides entrepreneurial start-up companies with resources such as specialized test and demonstration facilities at NREL, the Colorado State University Powerhouse and in a 30,000-square-foot LEED Platinum certified building with state-of-the-art wet lab facilities, assistance with raising capital, access and connections with academic and leading government institutions, a network of experienced advisors, and professional and business development networking opportunities.
Last year, the Innosphere incubated 44 client companies that focused on cleantech, software and biosciences. One of the Innosphere’s value propositions is its ability to provide critical funding for innovative start-ups through the non-profit’s internal capital access programs that include dedicated pools of funding for seed investments, debt and access to angel funding, venture capital and corporate strategics. Last year the Innosphere was hired by the Department of Energy to be NREL’s sole cleantech incubator. This unique ecosystem of world-class facilities, seasoned professional advisors and access to risk capital allowed the Innosphere in 2013 to serve 44 client companies, which generated close to $16 million in revenue. These 44 start-ups employed 199 full-time employees and 97 part-time employees and raised more than $35 million in 2013 alone and more than $85 million since being in the Innosphere.
Cleantech companies are flourishing along Colorado’s Front Range and attracting significant capital from both the West Coast and East Coast due to an attractive set of assets that include state-of-the-art federal research facilities and research universities, innovative business incubators, human capital, a progressive state energy policy and first-rate transportation infrastructure. Indeed, Denver currently is involved in executing on the largest multimodal transportation expansion project in the nation, the $8 billion FasTracks program. Many are coming to see Colorado as a center of gravity for innovation, a very strong talent and workforce hub, and the focus of international cleantech business development efforts.
Last month, the UK’s Technology Strategy Board picked Colorado for one of its 2013 “Clean and Cool” missions, in part to provide its most promising early stage and innovative cleantech companies the opportunity to attend NREL’s annual Industry Growth Forum. The Clean and Cool Mission website cited the Forum as being, “the premiere event for clean energy startups to maximize their exposure to receptive venture capital, corporate investors, and strategic partners.”
The website asks “Why Colorado?” and provides that “Colorado is rapidly establishing its U.S. and global prominence as a cleantech innovation ecosystem. The state has over 300 cleantech and 1600 support companies and is currently 3rd for U.S. in cleantech VC financing.” In a Renewable Energy World post on December 13, 2013, Rob Saunders, Head of Energy at the UK's Innovation Agency, Technology Strategy Board, explained that the UK came to the U.S. “because it has a rapidly growing cleantech cluster with inspiring organisations like the Rocky Mountain Institute and Innosphere, a great industry association in CCIA (Colorado Cleantech Industry Association), and of course the National Renewable Energy Laboratory in Denver.” My British friends, I could not have said it any better.
Lead image: Solar and wind via Shutterstock