State builds on image as high-tech hub
By Paula Aven Gladych
The days when Colorado was considered solely an energy economy are long gone. Now, the state is nationally known as a high-tech hub, with Boulder, Fort Collins, Colorado Springs and the Denver metro area all hosting high-tech industry clusters.
The top high-tech industries in the state are aerospace, aviation, beverage production, bioscience, broadcasting and telecommunications, energy, financial services, health care and wellness and information technology-software, according to the Metro Denver Economic Development Corp.’s 10th annual Industry Cluster Study.
All of the state’s technology clusters, particularly software, IT, aerospace, aviation, financial services, clean energy and bioscience (both pharma and devices) are exploding again, said Tom Clark, chief executive of the MDEDC.
“We are highly encouraged with the momentum we see in our industry clusters,” he said. “Colorado is certainly top of mind among site-selection consultants and expanding companies for its highly educated workforce and high-performance business climate. Targeting our marketing and recruitment efforts in these innovation clusters is the right strategy to drive our economic future.”
Because of its diversity, Colorado’s economy continues to grow, even in the wake of an energy industry slump that shuttered fracking operations across the state and caused many companies to sell their Colorado positions and close their local offices.
“What is interesting is that even though we had declines in mining and lodging, primarily oil and gas, these other industries are still growing. It proves that the momentum we had throughout our recovery was not just from oil and gas but across industries,” said Laura Blomquist Rodriguez, senior manager of strategy and analytics for global business development, at the Colorado Office of Economic Development and International Trade.
Colorado ranked fourth in the nation for the number of high-tech industry startups in 2015, according to the Kauffman Index Startup Activity Ranking, and the Denver-Aurora-Broomfield metro area ranked No. 5 on the Kauffman Index out of 40 metropolitan areas.
Why would large technology companies move to the nine-county Denver metro area over other parts of the country, and what makes it a haven for startup tech companies and entrepreneurs?
Blomquist Rodriguez pointed out that the state has the second-most highly educated workforce in the nation behind only Massachusetts, which makes it very attractive to high-tech companies. The average annual wage in Colorado’s high-tech sector in 2015 was $76,260, “which is higher than the statewide average for all jobs,” she said.
OEDIT recently surveyed startups in the state to see how they benefited from being in this community and to determine the costs and other hurdles they face in the state.
“What they get from being here far outweighs the cost,” Blomquist Rodriguez said. Networking opportunities for startups was the top reason businesses were satisfied with their decision to launch in Colorado. Surprisingly, access to funding and a talented workforce were not as important to those surveyed as were the networking opportunities.
“That is why they choose these areas, in addition to the local atmosphere. That’s not just arts and entertainment or bars and breweries, it is an openness to new ideas,” she said. “That’s what separates Colorado from other areas.”
Clark said he believes the ability to attract talent to Colorado is the driving force behind the state’s growth as a high-tech hub.
“The wonderful thing about technology is it is not like steel,” he said, noting that in the late 1800s, when the United States first became an industrial nation, thousands of people knew how to make steel but only a handful could get the money together to commercially produce it.
With advances in technology, innovation can come in the form of a $500 laptop computer and an internet connection, he said.
OEDIT’s June forecast showed that high-tech activity in the state is an “important driver of our economy, both now and in the future.” Much of the high-tech growth in the state is “being driven by an emergence of mobile devices, social media, cloud computing and internet search engines.”
Boulder is the “R&D center of the metro region and even the Rocky Mountain region,” said Clark. “So much innovation comes out of there and so much of it is spread throughout the region because the citizens of Boulder want a compact urban village.”
Organizations such as Techstars, which helps entrepreneurs bring their ideas to fruition, and Startup Colorado, which is a regional initiative to increase the breadth and depth of the entrepreneurial ecosystem across the Front Range, have helped put the metro area on the map. There are numerous opportunities for entrepreneurs and highly skilled workers to network and share ideas across the state. All of that has made the area very attractive for new businesses.
Information technology software is a “hotbed of innovation activity, fueled by a talented IT workforce, modern infrastructure and an entrepreneurial spirit,” according to MDEDC’s industry cluster report. Colorado ranked third in the country for its number of high-tech workers per capita, according to the report. It employed 48,610 IT workers at 4,810 companies throughout the nine-county region in 2015.
Colorado also has become known for its clean-energy research, much of it driven by the major universities along the Front Range and the National Renewable Energy Laboratory in Golden. The industry employed 54,720 people at 3,140 companies in 2015.
Financial Services was the second-fastest growing industry in the region in 2015.
“We’ve always been a financial center simply because there is nobody else around to compete with us, except Salt Lake City,” Clark said.
Large financial companies such as Charles Schwab, Fidelity and TIAA-CREF have a huge presence in the state, spurring a need for new financial technologies and services. Much of the financial services growth is a result of startups that have come to the state to help the banks, investment companies and insurance companies improve how they disseminate information.
Medical device manufacturing continues to grow in the state, particularly in the southeast corridor, Clark said. Even though growth in Colorado’s broadcasting and telecommunications industry slowed slightly last year, some of the biggest players still have a major presence in the state, including Level 3 Communications, Comcast and Zayo Group.
In 2015, San Jose, Calif., continued to have the largest concentration of high-tech companies, with 21.4 percent of its workers in high-tech occupations. In comparison, Boulder had 15.6 percent of its workforce in high-tech jobs, followed by the Fort Collins-Loveland area with 9.3 percent, Colorado Springs with 9.1 percent and Denver-Aurora with 8.3 percent. Statewide, 7.9 percent of the workforce is in high-tech jobs, according to the Colorado Department of Labor and Employment and the U.S. Bureau of Labor Statistics.
After the energy industry crash of the ‘80s, Colorado made a major push to diversify its economy.
“Here we are 30 years later and we are the third or fourth most diverse economy in the U.S.,” Clark said. “We weren’t in the top 25 in 1983.”