Startups bouncing back in the Springs [The Gazette, Colorado Springs, Colo.]
(Gazette (Colorado Springs, CO) Via Acquire Media NewsEdge) March 24--Startups are making a comeback in Colorado Springs.
A dearth of funding during and after the 2008 financial crisis left entrepreneurs in the Springs and many other cities unable to turn ideas for new products and services into businesses that one day could grow into major employers. Venture capital funds have bypassed the Springs for more than three years.
But the startup drought is ending, said Jan Horsfall, a top local entrepreneur and organizer of Startup Colorado and SpringsStartup.com, statewide and local groups of entrepreneurs helping each other solve problems with their businesses.
"The capital providers had to heal after the financial crisis, and now they are starting to come back into the market and finance startups," Horsfall said. "Now it is a buyer's market for investors, but I think we are on the back end of that kind of market. Once private equity and corporate money come back into the market, we will see another boom in startup funding. There are a lot more good startups here than we give ourselves credit for."
The latest crop of local startups is dominated by technology companies, such as Stinky Kid Math, an online site designed to help struggling students improve their math skills, and HTML5.com, an application marketplace for electronic devices using any operating system.
HTML5.com, which already has a commitment for venture capital funding and is seeking more, could be the city's next startup success story, Horsfall said.
"HTML5.com is a big and powerful idea. It is a classic case of an inventor with a big idea, and it is the kind of idea you would expect to see in the (San Francisco) Bay area or in the Route 128 corridor (near Boston)," he said.
Here's a look at four local startups:
Stinky Kid Math
Todd Matia started Stinky Kid Math early last year to offer a remedial math teaching system he developed for middle and high school students online after plans to publish a book about the system fell through.
Matia, a pre-engineering and math teacher at Sand Creek High School, came up with the system five years ago while teaching a class for other teachers offered during summer sessions at the University of Minnesota. He had planned to write a book and had secured a federal grant with the help of former U.S. Sen. Wayne Allard, R-Colo., but the funding for the grant disappeared during the financial crisis.
"I was teaching this math refresher course for other teachers and using a lot of algebra as part of the curriculum, but we found that teachers weren't getting it," he said. "I developed a system based on algebraic movement, which helps people understand the order in which things move in an algebra equation and makes math much easier to understand. I had the book nearly done when the grant fell through."
Matia instead got approval to use the system in Falcon School District 49, including in his classes at Sand Creek High School. The program was so successful in the first two years that Matia couldn't offer enough sessions for all the students who needed it. So he began looking for ways to offer the program to larger groups of students. .
Counselors at the Colorado Springs Small Business Development Center helped Matia turn his idea into a business. They helped him write a business plan, taught him the basics of human resources and business strategy, finance and accounting, helped him find an attorney, gave him marketing ideas and found him a Web developer. In all, Matia worked with eight counselors at the center before launching Stinky Kid Math in November.
Matia financed the business with $110,000 in investments by several friends and co-workers that he used to produce 350 video pre-algebra, algebra and algebra 2 lessons with modules on addition, subtraction, multiplication and division. The lessons were filmed at locations around the Springs and in Denver.
Access to StinkyKidMath.com costs $39.99 a month, but the monthly cost is lower if parents buy a nine-month membership for $249.99, Matia said. The site has about 40 users on a test basis, with sales slated to begin by the end of April; there's a target of about 500 users by the end of the second year, he said.
Janet Corniel started MovinGal out of frustration: She moved 11 times in 16 years with her husband as his job with Ford Credit sent them around the country and across the Atlantic Ocean to England.
Corniel started MovinGal as a blog in 2010 to give advice to families making moves; it was a way to gauge demand for the online service she envisioned and build a following and a recognizable brand through social media. She launched a test version of the MovinGal.com website in mid-2011.
"After moving so many times, I felt there had to be a better way for people to move and settle into a new location," Corniel said. "Six months after you moved in and built a support network, the Welcome Wagon people show up and by then they are useless. You end up staying up all night trying to find a pediatrician and school for your kids and a dry cleaner for your clothes -- all those things your real estate agent doesn't tell you about."
The site allows users to type in a single U.S. address and get lists of movers, schools, utility providers, churches, medical practices and facilities, entertainment, other service providers and nearby military installations, all of which can be stored online. The site offers a premium service for military families, real estate agents and relocation coordinators that gives information on multiple addresses and allows those users to label the service with their own brand.
Corniel has financed MovinGal with $35,000 of her own savings plus about $5,000 she earned in revenue from her blog. She is negotiating with an investor who would help her market the company and website. She is seeking to raise about $300,000 to help her expand into coupons from some of the providers listed on the site and to add features such as allowing users to calculate their commute to work.
"If there is a place for Angie's List, there is a place for us," she said. "We could eventually expand globally because there is a huge gap for relocation information internationally."
Corniel spent most of her career in transportation and urban planning, including with planning giant URS and engineering giant Parsons Brinckerhoff as well as the London Underground subway system.
Ian Lee, Nick Lee and John Stewart want to quit their day jobs.
The three founders of Tins.ly hope to raise enough money that they can devote full time to making the QRlette a hit among smartphone applications. They hope the small codes will quickly replace QR codes used by many businesses and other organizations to create Web links for smartphone users because QRlette codes can send users to multiple Internet locations in a pre-defined order.
"We are building a bridge between the virtual and the physical worlds for brands to engage with consumers," Ian Lee said. "Consumers are less likely to scan a QR code because it only goes to one place -- it doesn't add much value. QRlettes can send users to up to 15 places and in any order the business or brand specifies while also allowing businesses create, manage, track and update QRlettes."
The three created the company under the name Engage LLC as a social media consulting firm for small and midsize businesses, but soon found the local market was flooded with social media consultants. They switched the company's focus to creating the QRlette product as it searched for a product or service that it could develop and later sell quickly and inexpensively.
Tins.ly is targeting marketing agencies to sell packages of codes with five QRlette codes selling for $9.99 a month and a package of 50 codes for $49.99 a month, but an individual or business wanting one code can get it free.
Ian Lee forecasts that the company will generate $1.5 million in revenue this year and plans to build a local staff of up to 10 people during the next year.
Tins.ly's founders are trying to raise $100,000 to boost marketing for the QRlette codes as well as developing the next generation of the code. Lee said the company doesn't need much financing because it has no employees and keeps its expenses minimal.
HTML5.com is just 8 months old, but the company already has a $2 million commitment from a California-based venture capital fund to help launch its applications marketplace for smartphones later this year.
The company wants to be the open-source marketplace for software developers to come up with applications that can be used with any electronic device connected to the Internet using any operating system, founder and CEO Charles Mason said. Consumers today are forced to buy applications a second time when they buy a new device that uses a different operating system.
"We will be competing with all of the major players in the mobile industry who operate their own app stores, including Apple, Google and Microsoft, but our advantage is they are all closed ecosystems. Consumers are caught in a battle like the Betamax-VCR format war decades ago. We tell them they don't have to take sides," Mason said. "This market generates between $1 billion and $3 billion in annual revenue today and is expected to generate $35 billion by 2016."
HTML5.com was started by Mason, a former technology director for advertising giant Leo Burnett. He hopes to land another $3 million in venture funding within two months to build and launch the marketplace and could hire as many as 350 people locally for customer and technical support and other positions within a year.
The company won a contest at the Consumer Electronics Show in January in Las Vegas, which helped it gain a higher profile as well as attract the interest of venture capital funds, Mason said. He has invested some of his savings in the company, but is skipping a step most startups follow by not seeking midsize investments from wealthy individuals called "angel investors."
Contact Wayne Heilman: 636-0234 Twitter @wayneheilman
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(c)2012 The Gazette (Colorado Springs, Colo.)
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