Entrepreneurs flock to a town known for its rock climbing.


BOULDER, Colorado - Sixty engineers, entrepreneurs and financiers were sipping yerba mate tea at a coffee shop down the street from a bong-and-lingerie store on a recent sunny day in Boulder, and discussing how Boulder - usually seen as an enclave of hippies, marijuana dispensaries and rock climbers - has become a hotbed of capitalism.

Experienced tech entrepreneurs and investors sat alongside people who had just moved to Boulder hoping to start a company in this small city, which is breeding tech start-ups at an attention-grabbing rate. In the first three months of the year, 11 Colorado tech start-ups raised $57 million in venture capital, solidifying Boulder’s place among America’s up-and-coming tech centers.

“In Silicon Valley, you’re a small fish in a huge pond, and it didn’t seem as collaborative and a lot more corporate,” said Chad McGimpsey, who recently moved to Boulder and is now a regular at the twice-a-month coffee club. “Here, you’re a big fish in a small pond. Plus, there are the mountains.”

A long list of communities around the United States have tried to become “the next Silicon Valley.” But very few have the mix of money, universities, a high-tech talent pool and appealing lifestyle needed to hatch tech start-ups. Boulder, however, has been luring tech industry veterans and young entrepreneurs from Silicon Valley and Manhattan with promises of a tech community that allows for lunch-break hikes in the foothills of the Rocky Mountains.

The town’s big successes include Rally Software, a fast-growing company that makes project management software; Socialthing, a social media service acquired by AOL; and Kerpoof, which makes Web design tools for children and was acquired by the Walt Disney Company.

Venture capital dollars are following the entrepreneurs to Colorado. From 2007 to 2009, venture capitalists invested $1.9 billion in 275 Colorado start-ups, up from $1.6 billion in 247 companies from 2004 to 2006, according to the National Venture Capital Association. The money is coming from Colorado venture firms - including the Foundry Group, a prominent firm in Boulder - as well as from Silicon Valley and New York.

The recipes of other cities for creating the next Silicon Valley usually leave out a few main ingredients. Richard Florida, who wrote “The Rise of the Creative Class” and studies why certain cities foster creativity, cites three crucial factors: talented people and a high quality of life that keeps them around, technological expertise, and an open-mindedness about new ways of doing things, which often comes from a strong counterculture.

“Boulder has reached this beautiful sweet spot, where it has many advantages of a university town - tech and talent and openness - but without many of the costs and traffic and congestion that may disadvantage incumbent centers of innovation,” Mr. Florida said.

This balance did not come about accidentally. Natural foods companies like Wild Oats Markets and Celestial Seasonings started here, and several national labs and big-tech companies like I.B.M. opened outposts. Early on, the biotech, telecom and data storage industries took off in Boulder, bolstered by Sun Microsystems’s $4.1 billion acquisition of Storage Technology in 2005.

Many tech types in Boulder move here precisely because they want to escape Silicon Valley and its institutionalized tech scene. “There is a feeling in Silicon Valley that if you win, someone else loses,” said Kimbal Musk, chief executive of OneRiot, a real-time search engine based in Boulder. “It has driven success, but it has also driven people to leave.”


By CLAIRE CAIN MILLER