Stites & Associates (SALLC) has long been a supporter, evaluator and developer of new technologies. These have ranged from new marketing techniques to new chemical processes. This has resulted in multiple start-up operations and five awarded patents.
One of the persistent problems with technology development has been funding that development. Frequently the initial ideas can be generated and even tested at a bench scale using personal funds, discretionary funds within organizations, small grants and loans. The problem becomes critical when the idea looks to have merit and needs real scale up testing and design.
The “valley of death” in raising capital is in the $500,000 to $5,000,000 range. This is too much money for those “informal” sources and too little for institutional investors. This might be a range for some government programs like NSF, DOE, DOD, USDA or even SBA but the risks are high, those programs are often too narrow, or they are more focused on political issues than on good science and economic success.
Many good ideas just die. That is a shame, but not the worst that can happen. Occasionally, an idea that “sounds good” but is flawed, grabs the attention of an overzealous investor and becomes a newsworthy, cringeworthy disaster – often with the help of naïve government support.
Ron Stites, the founder of SALLC, has founded a new entity, the Colorado Center for Innovation in Community Capital (the “Center”). This business is piloting a program in Colorado to supply capitalization support for small businesses. The idea is to advance the costs and provide the talent needed by small, innovative businesses to help them raise capital. This capital will be used to do the kind of testing and evaluating needed to determine if the “great” idea can be made into a sustainable business.
We are using the recent Opportunity Zone legislation to help kickstart this program. That legislation allows tax breaks to investors if they will rollover capital gains from past investments into businesses located in designated, economically depressed areas. This must be “patient money” in that the investors need to wait at least 10 years before taking out their money. This give the innovative company ample time to do the thorough evaluation, development and planning that is needed to turn the “good idea” into a great business.
We chose Colorado for several reasons, but one of these is that the selection of Opportunity Zones in Colorado was done quite well. There is a good blend of rural and urban areas, with many of the Zones having enough infrastructure to support small, innovative businesses. Hence, there are a wide variety of possibilities ranging from agricultural to housing to technological and scientific innovations.
We plan to soon expand beyond Colorado and Opportunity Zones. For now, our main focus is finding innovative companies in Colorado Opportunity Zones that are ready to take the next steps toward success. These businesses may apply for support by completing a signup at:
Each of these small businesses needs investors with capital gains that they might want to put to work supporting innovation and local economic development. If you are interested or just want more information, contact Ron Stites at [email protected] or visit:
Colorado Center for Innovation in Community Capital
Ron Stites is the Founder and Principal at Stites & Associates, LLC, and the Technology Development Network, a group of technical professionals who work with clients to improve decision making in technology driven companies by applying good management judgment based on objective evidence and sound scientific thinking. For more information see: www.tek-dev.net or email us at [email protected] .
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