A Colorado Springs-based startup business won third place last week in the state’s inaugural Go Code Colorado challenge, but now faces major business decisions before moving toward complete viability.
The eight members of Local Sage, after forming a winning team and developing a marketable app, now are weighing their options before accepting the $10,000 award contingent on a restrictive one-year contract with the Secretary of State’s Office.
“We see Local Sage as a business that is going to last beyond just the Go Code competition,” said team leader Spencer Norman.
Norman, who headed the team with Scooter Wadsworth, said that while the competition gave the band of tech enthusiasts a platform to create and innovate, it also created complex questions about what’s next.
The awards — $25,000 for first place, $15,000 for second and $10,000 for third — were presented at the final event May 9 in Denver by Secretary of State Scott Gessler and by event organizer Brian Gryth.
But the local sages have not yet accepted the offer, pending negotiations with the state.
“Go Code provided a great platform, and we were able to launch a company because of it,” Norman said.
Months after teams from Boulder, Colorado Springs, Denver, Durango and Fort Collins began preparing for the web-based app development challenge, it was over with three victors: Beagle from Fort Collins, BizLink Colorado from Durango and Local Sage from Colorado Springs.
“I think Beagle did a great job.” Norman said. “They had two great engineers, a great product and an impressive presentation.”
The goal of each team (only nine of 25 progressed to the final round) was to develop an easy-to-operate application designed to help entrepreneurs make informed business decisions related to such topics as site location, competitive landscape, access to capital, higher education resources and business partnerships.
“This data is out there, and people are using it in all kinds of different ways that we never expected,” Gessler said.
Judges of the final competition were Kimberlee Young, managing partner of Medea Ventures LLC; Erik Matisek, CEO of Colorado Technology Association; J.B. Holston, Sitrion board chair; and Dawn Greg, associate dean of programs for UC-Denver. The keynote speaker for the event was Patrick Ryan, who works as a strategy and operations principal for Google.
The event not only was the first of its kind regionally, but the first state-sponsored event of its scale in the country, according to Gessler. The Secretary of State’s Office worked in partnership with various other agencies and industry sponsors (including Google) to fund the $750,000 series of events and to provide the data needed to support the applications.
“No state in the country has ever done this,” Gessler said about the competition, adding that plans call for an expanded budget of $1.5 million for next year’s events.
Norman, Wadsworth and others on the Local Sage team (Chris Bachicha, Jeremy Folds, Mark Rantal, Kyle Tolle and brothers Chris and Vern Volpe) started Go Code in hopes that soon turned to realities for the Colorado Springs designers, engineers and entrepreneurs.
But the road to success is rarely one well-paved.
“Going into it, the dynamic was totally different,” Wadsworth said. “The business evolved, and that unfortunately complicated a lot of things. … But now it’s our job to push this thing forward.”
One of the reasons that decision is a difficult one to make, according to the two leaders, is that the three winning contracts give ownership of the app to the state for a year, which Norman and Wadsworth agree is a long time when it comes to business operations.
“What we’ve done is turn government contracting on its head,” Gessler said at the final event. “Usually you go out and have some sort of specifications for developers and they work at it. … It’s changing the status quo.”
Norman said that the competition rules and contract details have been vague, making it difficult to determine how to plan a future for the fledgling company.
“A year is a long time,” he said. “Companies are born and die in a year, so we’re very aware of how long that is and we’re open to all possibilities at this time.”
Wadsworth, who recently left his software engineering job to focus on the startup, said tough decisions will have to be made in coming weeks, as the team determines the appropriate structure, business model and market approach.
“I believe that we have something here worth spending time on,” Wadsworth said. “We’ve ended up with something that we think is incredibly marketable. We are pushing forward with Local Sage, but we just don’t know what that will look like yet.”
But the state is in that same boat, according to Secretary of State spokesperson Richard Coolidge.
“When we went into this, we thought that we would award winners and they would accept the contracts,” Coolidge said. “So we’re trying to dig into this and determine the best way to move forward.”
He explained that Gessler’s office is working to negotiate those contracts and to ensure success for both the program and the winning competitors.
“This is not an easy decision to make, and it’s not one we take lightly,” Wadsworth said.
In the meantime, the team will continue to work out of Epicentral Coworking at 409 N. Tejon St. — host to the preliminary Colorado Springs competition in March — and work out problems related to funding and future development of the app.
“Where the product is now, I think, is very much the same as we had in mind coming out of that weekend,” Wadsworth said. “But the product that is actually going to enter the market will likely look radically different” with different features offered to different market segments.
Each of the three finalists is also eligible to apply for a $250,000 two-to-one matching grant through the Colorado Office of Economic Development and International Trade’s Advanced Industries Accelerator Grant Program, according to executive director Ken Lund.
Wadsworth said he personally will kick in $10,000 regardless of the award, and the team should still be eligible for a $5,000 incentive from local sources.
Despite complications, Norman said the competition was a positive experience for the Springs representatives, because it inspired them to create something that has potential for civic usefulness.
“We started the project planning on creating an open-source, free-for-all application … and planned to wash our hands of it and get back to our normal jobs,” Norman said. “But we began to see that it had traction and potential as a business in its own right — that changed the way we approached the competition.”