Economic Forecast Breakfast, Part II
By Jan Wondra
Had the South Metro Denver Chamber’s economic forecast breakfast occurred in a different year, the speakers may have been the same, but the message may not have been. As it was, the speakers at this annual economic worship session were bullish on 2016.
“Colorado is the fourth fastest growing economy, eighth in terms of state population growth,” said Dr. Richard Wobbekind, executive director of the Business Research Division and senior associate dean for academic programs at the University of Colorado. “We’ve seen strong employment growth across every sector except energy and mining. In fact, the category of greatest growth is software programming.”
The standing-room-only event featuring Wobbekind, Peter Adams, executive director of Rockies Venture Club; and Jane Miller, president and CEO of Charter Baking Company, was a who’s who of business categories and leaders from across the 6,000 members of the South Metro Chamber. They listened to a series of positive economic statistics from Wobbekind, with two cautionary notes. While the state is forecasting a 10-15 percent growth in employment, the state’s available, in-state labor force is anemic, ranked No. 38 in the nation.
“We’re back to the pre-recession employment numbers, but with 30 percent less workforce. The talent shortage is a key theme across all categories,” said Wobbekind. “We’re struggling to back-fill. The other concern is education funding; TABOR limitations mean that cutbacks loom and higher education is necessary to raise an educated workforce.”
Colorado’s real GDP increased 3.8 percent in 2013, the latest year for which data is available, according to the Bureau of Labor Statistics. The top five states for employment growth include Colorado, Washington, Utah, North Dakota and Texas.
Wobbekind says they share an important commonality: “All of them are in high tech and oil.”
Funding startup activity
Filings for new companies are considered a good indication of job growth, and Colorado. Specifically, metro Denver is among the top five states in the nation for business startups, according to the Kauffman Index report on startup activity. This is up from No. 7 in the 2014 index.
“Colorado is a national leader in startups, with Denver leading the state,” said Adams. “We’re seeing 500 to 1,000 Colorado companies a year looking for funding. We pitch maybe 80 to 100 to venture capital groups.”
While startups occur across a broad array of companies, Adams says health care, especially digitized software, has been a fertile source of startups.
“Some 17 to 18 percent have been in the related healthcare groups. And while we may not be thrilled about it, the cannabis economy is a reality,” said Adams. “The cannabis capital summit has been held for the last three years. Leadership is becoming sophisticated, backed by Harvard MBAs.”
Adams says that the country and Colorado need to remain welcoming to startups.
“There are some 4.8 million startups each year worldwide, and 2 million of them are in India. We need to foster an innovation culture,” he said.
Startup trends have shifted over the past few years, says Adams.
“Four of the top 10 metro areas for startups are in Colorado. We see startups like Uber, which are actually service companies, they don’t own a fleet. The other huge trend in the last four or five years in startup funding is crowd-sourcing to support early-stage companies,” Adams said.
Our biggest startup problem in Colorado, says Adams, is capital.
“We have a huge supply of startups and not enough capital in the state. We have 20,000 accredited investors here and fewer than 1,000 of them are investing in this state.”