Denver, Boulder are poaching more of California’s tech founders, workers and VC billions

This story is part of CNBC’s quarterly Cities of Success series, which explores cities that have transformed into business hubs with an entrepreneurial spirit that has attracted capital, companies and employees.

Most U.S. cities want a piece of the Silicon Valley action, and some have been getting more of it in recent years as California cities have experienced, to varying degrees, a business and worker population exodus exacerbated by Covid.

The Denver-Boulder metro region in Colorado is among the winners in the migration shuffle. AgentSync, an insurance compliance software startup, is an example. Niji Sabharwal founded the startup with his wife back in San Francisco in 2019. When the pandemic hit in 2020, the couple decided to pack their minivan and relocate their business to the Mile High City. It’s now thriving in Denver.    

The company has grown from six employees in San Francisco to over 200 in Denver. Sabharwal said the couple made the move largely looking for “access to talent” to keep up with company’s rapid growth and his appreciation for Colorado’s “business-minded” governor Jared Polis, who founded several companies before moving into politics. But investment has poured in since making the move too, according to AgentSync, ballooning to over $160 million.

Investors were skeptical about the relocation to the Rockies at first, Sabharwal told CNBC, but within a few month, he says, “we were kind of applauded as, you know, being geniuses for coming out to Denver.”

Led by Denver and Boulder, Colorado has built a thriving tech industry ecosystem attracting both startups and tech giants — Google, Amazon and Salesforce all now have a major presence in the area. The region is also becoming a hotspot for the latest frontiers in tech, including quantum computing.

Over 24,000 tech businesses call Colorado home, with about 73% of those businesses (17,500) specifically in the Denver metro area, according to the Colorado Office of Economic Development and International Trade. The industry supported nearly 140,00 jobs as of the end of 2023, a 37% increase within the past decade. 

“I think you’d be shocked as to how much funding is going into this ecosystem,” Boulder-based venture capitalist Dan Caruso, who recently started his own VC firm focused solely on tech in the region, told CNBC. 

Over the last five years, about $17 billion in VC funding has poured into the area, according to research firm CB Insights. 

“When I was able to slow down and really look around, that’s when it hit me how many exciting companies, across so many sectors, led by so many inspiring entrepreneurs, were in this region,” said Caruso, the former CEO and chairman of once publicly traded telecommunications company Zayo Group.

While the Denver startup community has seen dramatic expansion, it hasn’t made as much progress on diversifying its business community. Black-owned businesses account for 1.5% of all companies in the area, according to a recent Brookings Institute study, compared to a metro-area Black population that is 7.1%, according to the study. However, even the top 10 cities for Black-owned business growth in the study fall far short of corresponding metro population metrics.

“The challenges that the founders that we serve face really are about capital, access to capital” said Zaneta Kelsey, co-founder and CEO of Access Mode, a local non-profit working to help more minority-owned tech startups get off-the-ground. Since 2022, Access Mode has provided over 50 startups with a combined $1 million in funding, free educational classes, and access to VC networking events.

Donavan Bennett is one of the Black business owners that Access Mode is helping succeed. Mili Llama, an app Bennett created in 2023, streamlines the hiring of substitute teachers for school districts.  

“You can think of us as the Uber for substitute teachers” Donavan told CNBC. 

The $20,000 his startup received was what he needed to turn his idea into a live app, and helped him score two school districts as paying clients.

Bennett said there’s work to be done when it comes to fostering a more inclusive industry in Denver and Boulder, but he says it’s a great place to start and run a business. “The beauty of living here in Denver is there’s so much support in the city of Denver for a new startup. And as a new startup, that’s what you’re looking for, you’re looking for support, validation. To help you get to that next level.”

TUNE IN: The “Cities of Success” special featuring Denver and Boulder will air on CNBC on April 11 at 10 p.m. EDT.