Colorado Springs Technology Incubator continues nurturing start-ups

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Tucked away in a labyrinth of cubicles and small offices on the campus of the University of Colorado at Colorado Springs, sits Colorado Springs Technology Incubator (CSTI). CSTI nurtures raw technology start-up talent and vision. Though its grand opening was on August 22, 2002, the CSTI has been nurturing some of its six initial start-ups since as early as May 2001.

Fortunately for Colorado Springs’ incubating companies, the organization’s chief executive, Gary Markle, has himself successfully completed all stages of a business start-up – not once but twice. In both cases, his vision, teamwork and passion have paid valuable dividends.

Markle believes that good companies are crafted, not born. As the former CEO of two technology companies, his roots into the world of start-ups, venture funding and management go deep. In August of 1999, Markle sold his interest in Systems Integration Services (SIS) Corporation, and was hired by the company’s new owner, Emergent, to continue as president of one of the company’s divisions. “We were the perfect ‘plug and play’ package,” he says of SIS. “We had a good product, strong earnings, accounting systems in place and great management.”

Soon after accepting his new role as president, Markle realized that success would be measured strictly in three-month increments. “We no longer could set our own strategic vision; if we didn’t make our numbers for the quarter,” he recalls, “nothing else mattered. I resist that kind of bite-size thinking. Publicly-traded companies may or may not always dovetail with a truly entrepreneurial vision.”

Markle was invited to become part of the Colorado Springs Technology Incubator board in spring 2001. When the board undertook a national search for a chief executive, he applied. Rocky Scott notes that it was Markle’s combination of vision and his real-world success in starting and growing companies made him an ideal choice for the job.

“You could say that we started at just the right time,” he says. “So many incubators were already full of dot.coms. We started after much of the carnage was already realized and the lessons learned.”

Since he made the decision to return to early-stage entrepreneurial involvement, Markle has not looked back. Fortunately the Colorado Springs Technology Incubator provides an ideal setting – not only for his skills and background but for an important local economic development initiative. CSTI was originally conceived after months of discussion by EDC’s Rocky Scott, Al Steiner (a retired Hewlett Packard executive who heads the board), and Gary Cuddeback of the city’s economic development office. The triad asked local angel investor, Jeff Cooper and researcher, David Bamberger, to develop an incubator model. As a result, a phased five-year plan was adopted based on initial funding from the city, state and private individuals. Founded in May of 2001 after months of planning, CSTI’s board of directors today includes fifteen members and works closely with the academic, technology and business communities.

CSTI’s first company accepted for the program was XAware, which recently made headlines as the recipient of $2.1 million in venture capital funding. “XAware is our first success story – they are the poster child for a successful incubator company, and it took just 18 months for them to graduate. We’re obviously very proud of their success; it shows the viability of the Incubator,” Markle says.

CSTI looks for owners who want to build the company at any cost – and who are passionate about their product. “I’ve found that someone with technology that needs work can still do well if they’ve got that passion to succeed,” Markle says. Another key factor in a start-up’s success includes a well-synchronized management team that usually has worked together for some time. “There’s nothing wrong with a little friction now and then; that’s normal in a dynamic organization facing numerous unknowns.” He also adds that CSTI looks for management that is willing to give up equity chunks or that will take investor capital at less than optimal terms. Most of all, says Markle, “We look for companies that want to learn.”

Entry into the incubator program begins with signing a contract. “It’s tantamount to a company agreeing that they will be coachable,” he says, adding that a start-up must also demonstrate that it will create a financially-viable product or service, attractive to venture investment.

Both Markle and Scott credit UCCS College of Business Dean Dr. Joe Rallo and Chancellors Linda Bunnell-Shade and Pam Shockley with moving the program ahead so quickly. “We’re on track to be very successful over the next five years,” says Scott, “and much of the credit for that goes to the University for providing the physical location, graduate-level interns and academic resources so important to CSTI.”

In the meantime, however, companies like recent “graduate” XAware and the Incubator’s most recent addition, Corporate Hearts (just accepted in July 2002), will continue to benefit from this Pikes Peak region initiative. “I’ve known Gary Markle for at least seven or eight years,” says Mike Hill, XAware’s start-up chief. “He seems to have the Midas touch, a sort of sixth sense about what will and won’t make it. That’s very helpful to starry-eyed companies with a vision, but with no grounding in building a business.” He also praises Markle’s extensive personal contacts and credible reputation in among venture capitalists. Finally, he credits CSTI’s tie with the University as an invaluable asset to lean young companies.

Dr. Walli Carranza, chief development officer and co-founder of Corporate Hearts concurs. “We have already learned more in three months with CSTI than we knew after two years in business,” she says. “Gary put us through an intensive business boot camp – and keeps us from going down the wrong path.” She quotes business failure statistics for new businesses at 80 percent, but notes that only 20 percent of incubated companies fail. “There are always companies that shouldn’t make it,” she admits, “but Corporate Hearts will be successful.” Carranza credits Markle’s guidance in the selection of a new CEO – and his help in identifying important strategic alliances for her firm’s bright future. “There was so much we didn’t know about business practices. Now we expect to graduate in the next 18 to 36 months.”