By Andy Vuong

The Denver Post

POSTED: 04/20/2014 12:01:00 AM MDT2 COMMENTS

J.B. Holston, director of a new $4 million entrepreneurs network that will be based in Denver, says: "You create and keep much more wealth within the state" by keeping company headquarters in Colorado. (RJ Sangosti, The Denver Post)

While Colorado is recognized as a top hub for entrepreneurship and innovation, the state's startup ecosystem still struggles to keep potential large-scale successes from uprooting in search of capital, engineering talent or other resources.

The Blackstone Group, one of the nation's premier private-equity firms, will announce this week the launch of a $4 million program in Colorado to help address that shortcoming.

The Blackstone Entrepreneurs Network will also aim to strengthen Colorado's startup community by encouraging greater collaboration among local businesses, which are generally siloed by geography and industry.

"This is really a different and new and additive effort to everything else that is going on in the state," said serial entrepreneur J.B. Holston, who will serve as the network's executive director.

The network will identify so-called gazelles — high-growth companies that may be on the cusp of Google-like success — and connect them with resources to reach the next level without defecting to another state.

"We've got a lot of great conditions for fostering entrepreneurship and innovation ... but we have too many companies that get to a certain stage, then either stall out or sell out rather than scaling up," said Holston, chairman and founder of Denver-based enterprise software maker NewsGator, now called Sitrion.

The Blackstone Entrepreneurs Network, or BEN, has attracted 20 advisers that include the likes of Foundry Group's Brad Feld, Zayo Group's Dan Caruso, Wild Oats Markets' co-founder Libby Cook and iTriage CEO Peter Hudson.

Advisers will help find gazelles and the support they may need, which will include identifying prospective mentors, or "master entrepreneurs."

BEN will focus on five industry segments: technology and broadband, biotech and health, aerospace, natural foods and energy.

Companies that fit certain criteria, which will vary by industry, can apply to join the network. For digital technology companies, the requirement will be $5 million in revenue, 50 employees and 25 percent top-line growth.

The Blackstone Charitable Foundation will fund the program with a three-year, $4 million grant to be overseen by the Silicon Flatirons Center for Law, Technology, and Entrepreneurship at the University of Colorado at Boulder.

"It's a program that's been designed to create a deep network of experienced entrepreneurs in a variety of industries to help mentor high-growth companies," said Jonathan Gray, global head of real estate for Blackstone.

Gray said the idea to create the program in the state started with conversations Blackstone officials had with Sen. Michael Bennet, D-Colo., a little over a year ago. Blackstone has a similar network in North Carolina, but that initiative is primarily focused on identifying and supporting innovations from area universities.

Blackstone's presence in Colorado is set to surge with its pending $5.4 billion buyout of Denver's Gates Corp. The deal will take the number of employees who work for Blackstone-backed companies in Colorado to 4,000.

Bennet said the company's entrepreneurs network will help grow jobs in Colorado.

"What we've seen is there are companies that are founded in Colorado, but then they move, they go to California, or they go to Boston, or they go to Austin," Bennet said. "We want this to be a place where they stay, and where they can generate those jobs."

The benefits of keeping the headquarters of a highly successful startup would stretch beyond jobs.

"You get a lot more management experience," said Holston, who co-founded six Colorado enterprises over 16 years. "You create and keep much more wealth within the state. And typically you also then start to create a micro-ecosystem of companies around those really big successful companies."

Holston will be based at the Galvanize tech campus in Denver's Golden Triangle neighborhood. The network will also operate out of Galvanize's Boulder office.

Amy Stursberg, executive director of the Blackstone Charitable Foundation, said the goal of the foundation is to strengthen entrepreneurial ecosystems across the country. She said Colorado will serve as the steppingstone for the creation of similar networks in other states, helping Blackstone establish a "tool kit" for such programs.

The Blackstone foundation is issuing its largest grant to fund the Colorado network.

"This is an incredible inflection point for our entrepreneurial and growth-company community," said Erik Mitisek, CEO of the Colorado Technology Association. "When you think about Blackstone, one of the largest real estate and private equity operations in the world, for them to personally invest in the state of Colorado at this level is a head nod to the activity, to the opportunity and the type of companies that are coming out of our region."

Andy Vuong : 303-954-1209, avuong@denverpost.com or twitter.com/andyvuong

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When I travel outside the Mile High City, I’m often asked what makes Denver so attractive for startups. While our tech community and the companies it’s home to are gaining traction by the month, the benefits of launching a startup in Denver aren’t necessarily as obvious as those associated with major tech destinations like the Valley and, more recently, New York.

But when we were preparing to launch Convercent into the governance, risk, and compliance market, there was never any doubt where we should set up shop. In fact, I recently wrote in the Wall Street Journal about some of the key reasons why Denver-Boulder is in an exciting time for tech acceleration (and our mayor did, too). Indeed, the tech hub here is actually piping with opportunity — it’s by no coincidence that $280M in funding came through the city alone last year. The perks you’d find in the Valley like daily farm-to-table meals and ping-pong tournaments aren’t the standard, but there are other important and significant advantages to cultivating a tech company here, all unique to our own local culture.

But just like most relatively new, fast-growing developments in the tech sector, we still need to iron out some kinks and improve upon certain areas before Denver truly recognizes its full potential. There are distinct areas where Denver’s tech innovation excels, but also places where we still need to grow to take our own tech scene to the next level.

What we do best

Denver has an ideal work-life balance. The city isn’t just home to slew of high-growth tech startups, it’s also home to very successful awesome food start ups as well as some of the best breweries in the US. The Rocky Mountains are in our backyard for people who love their skis and snowboards in the winter and mountain bikes and hiking boots the rest of the year. In fact, it’s this balance that often attracts top talent from New York and the Valley to Denver — people get burned out and are drawn to Denver’s high quality-of-life. The outdoors are a key part of Denver’s overall culture and everyone makes a point to take pride in these defining factors and enjoy what our city has to offer.

Within our working world, the quality of life is arguably just as high. The tech community in Denver works to foster a cohesive, supportive environment where people have unique access to the resources they need to scale: The Mayor, Erik Mitisek’s band of superstars at the Colorado Technology Association and local incubators like Galvanize all actively find ways to help startups excel and forge a close-knit network. In fact, the city of Denver and Mayor Michael B. Hancock recently helped Convercent open the doors to its new office in Denver’s Golden Triangle district, a vibrant, up and coming neighborhood where it seems a new startup sets up just about every other week.

Even the tech companies themselves work to support each other’s growth, which is a dramatic contrast to the competition you find in other tech hubs where everyone’s concerned about who’s launching what first. Our office is also a communal, shared space for local artists, entrepreneurs, and other startups to come use at no cost, as well as a venue for local networking and tech events. Even as Denver’s tech hub becomes more dense, this supportive nature hasn’t wavered. In fact, the recent and steady successes of the Denver/Boulder region’s companies seem to have only fueled our drive to help each other excel.

This close-knit community also helps give way to focused, thriving corporate cultures. In Silicon Valley, founders and CEOs are constantly concerned with other companies poaching their employees. Being outside of this noisy ecosystem, Denver is less susceptible to this company-hopping routine and, as result, employees are overall more invested in their work, driving greater company morale and productivity. Companies are able to stay focused on their visions and goals without the distractions of passing tech trends and launches.

Where There’s Room to Grow

I’d like to see Denver creating a few juggernauts on the level of Salesforce or Google. We need a few of these behemoth tech companies to help anchor Denver as major hub for technology, and help bring in the top talent and resources needed to propel the smaller surrounding companies forward.

The success of TeleTech, an innovator of customer-experience technolog; Ping Identity’s recent $44 million round; and Rally Software’s recent initial public offering (now up 100 percent) are all steps in the right direction. But we need more.

We need Sympoz, Datalogix, Sendgrid, Newsgator, Full Contact, and Convercent to continue along the path they’re on until they become nationally-recognized businesses that are leading their respective markets. Lastly, we need Governor Hickenlooper and Tom Clark, the CEO of the Metro Denver Economic Development Corporation, to continue their great work bringing companies like Arrow Electronics to Colorado and land a few other giant, anchor companies for Denver’s tech community to reach new levels of success.

Another development that would help significantly grow our local entrepreneurial community is a bigger market for angel capital. The issue isn’t that money for seed startups is hard to come by — there’s plenty of money if the opportunity is right. The issue is that investors only want to bet on proven technology executives with ample experience in successfully scaling companies.

These “fundable” teams aren’t as prevalent in a newly developed tech scene, and while our early stage companies are often piping with new and innovative ideas, a certain track record is required to attract capital. Incubators like TechStars are helping to usher in more qualified seed startups, but what will really move the needle is recruiting respected founders into Colorado, inspiring our own executives to start their own businesses, and encouraging Denver’s proven entrepreneurs to continue launching new companies rather than simply enjoying Colorado after some initial success.

Lastly, part of what’s hurts Denver’s tech community most is its own reputation. The Rocky Mountain West is known for skiing, hiking, turning Rocky Mountain spring water into Coors beer, and creating the cable industry. Outside Colorado, there’s an underlying sense that a technology company springing out of this unassuming area can’t possibly be ahead of the curve. A shift in this kind of thinking should come organically as Denver’s tech market continues to gain traction, but until it gains more national recognition, some extra effort goes into proving that your company has what it takes.

Despite a few areas to improve upon, I wouldn’t trade Denver’s high quality of the life, supportive tech network and strong company cultures for the advantages that come along with real estate in one of the coastal the tech hubs. With Colorado now claiming four of the top ten most popular cities for startups, I have ambitious hopes and dreams for how the region’s tech community will continue to take shape.

Patrick Quinlan is the chief executive of Denver-based Convercent, an enterprise cloud software company that raised a $10.2M series A in January (check out VentureBeat’s profile of its dynamic office space). He’s been leading Denver tech companies for decades.