Incubator overload, Wolverson
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Jim Deters is an idealist. the angel investor who founded Galvanize, a 30,000-sq.-ft. start-up school and workspace in Denver, talks more like a tree hugger than a guy working in finance. The words community, ecosystem and sustainability come up repeatedly as he describes his goals. Deters, 37, came of age during the first dotcom boom and got hooked on the tech world right out of college when he went to work for a slew of software companies in Denver. His crowning achievement is Ascendant Technology, the business-software-development company that he launched in 2003 and sold to Avnet for $50 million last year.
Deters used his acquisition booty to become an angel investor but says that after 18 months, he felt a calling. "I was looking for a better way to be a venture capitalist," says Deters. "I didn't want to just be writing checks to entrepreneurs." Galvanize was the answer. Deters says there's a disconnect between the skills that wannabe entrepreneurs need and what universities can offer. "In most cases, people are wasting their money on traditional education," Deters says. "The future of employment is small businesses that will be forced to figure things out for themselves."
Even if start-up school can't turn all its pupils into future employers, Deters thinks it will at least give them a better shot at a good job in start-up-land. It's well known in the tech world that many start-ups across the country can't find the computer programmers they need. So Deters roped in Jeff Casimir, a coder who had designed a developer-training program for the daily-deals site LivingSocial, to launch a computer-programming class at Galvanize's gSchool. He plans to roll out other courses in design and mobile development. The rest of the 30,000-sq.-ft. space at Galvanize houses rentable workspace for existing start-ups and seed investors. There's also a gym; a game room with ping-pong, foosball and video games; a restaurant and bar; and perhaps most important, designer coffee.
There's a benefit for Deters too: a steady stream of fledgling entrepreneurs and cash. Unlike many venture capitalists, who often wait five to seven years for their bets to pay off, Deters can supplement his income with cash from the school, the real estate and the restaurant. "The traditional route of raising a huge fund to pay a handful of partners off a management fee makes it hard to write small checks that help early start-ups," he says.
Innovation Pipeline
In some ways, start-up schools are just the latest in a line of efforts over the years to bring some structure into the freewheeling world of technology. During the first dotcom boom, there was a proliferation of incubators, organizations that offer services like office space and accounting help, and accelerators, which typically trade a small sum for a cut of the fledgling business. The Internet gave rise to a new kind of small business with big growth prospects that proved too risky for big banks to fund. Venture capitalists filled the void, but even they couldn't keep up with the number of start-ups taking root.