BOISE — Paul Dlugosch has plenty of experience with semiconductor engineering from his years at Micron Technology, Inc., but when it came to starting his own business, he needed some backup.
That’s where Trailhead, a nonprofit business incubator in Boise, came in.
Dlugosch and several of his former coworkers at Micron left the multinational tech giant and launch artificial intelligence company Natural Intelligence Systems on their own in 2016. They had the expertise to start building their product, but they needed guidance in connecting with investors, legally incorporating their startup and, most important, finding an affordable place to work.
They found this support through Trailhead, an organization launched in 2015 by the city of Boise and private-sector donors, such as Micron and Albertsons. Trailhead now has two downtown Boise locations and provides office space, advising, networking and the possibility of funding for startups and entrepreneurs.
In its first five years, Trailhead has received rent support from Boise’s urban renewal agency, Capital City Development Corporation. The agency, which is funded through property taxes, covers Trailhead’s rent at its main location on Eighth and Myrtle streets — a roughly $164,450 cost in fiscal year 2019, CCDC spokeswoman Jordyn Needaels said. Half of this was reimbursed by the city of Boise, leaving CCDC’s total cost at $82,000, which went to the building’s owner, Rimview, LLC.
The future of this arrangement is up for negotiation, as Trailhead and CCDC’s lease with Rimview expires this year.
Urban renewal board members discussed the contract last month but have not yet decided on how much to contribute to Trailhead in the future, according to Neerdaels.
Starting at the end of this month, Trailhead will move to a month-to-month lease while conversations continue.
Trailhead Executive Director Tiam Rastegar said he is optimistic CCDC will continue to support Trailhead, even though the lease paperwork has not been finalized yet.
FIVE YEARS INCCDC chose to help fund Trailhead when it launched five years ago because the effort ties into the urban renewal agency’s mission of promoting business growth in Boise, Neerdaels said.
“One of our key strategies in the work that CCDC tries to do is economic development and trying to support a resilient, diverse, local economy,” she said. “This was an opportunity to create a community-focused effort to help build up that next generation for business success.”
Trailhead has now grown to roughly 290 members, who in the past 18 months created 37 jobs, raised $39 million in business investments, and generated $30 million in revenue, according to Rastegar.
The goal of launching Trailhead was to encourage entrepreneurs to grow their business in Boise instead of taking their ideas and talent to a bigger city with more resources, said Nic Miller, who was Boise’s economic development director at the time and is now the executive director of Boise State University’s Venture College.
Five years later, that effort has paid off, Miller said.
“At its core, to me what Trailhead is, is a community of people who want to drive entrepreneurship and innovation and create something new in Boise,” he said, “and now they have a place to go and do that, where five years ago they didn’t.
In his role at the Venture College, Miller said the connection to Trailhead is invaluable. His program is a place for students to learn how to start their own companies and turn new ideas into salable products, so he said Trailhead is a “natural home” for his students after they graduate and are ready to start their careers.
Another main goal for Trailhead, Rastegar said, is to create a place for Boise’s would-be business owners to work together and access resources, instead of being spread throughout the city and not interacting.
“One analogy that was made was we wanted to find a way to pull all of this entrepreneurial talent out of coffee shops into one node, where the programs are tailored to help them succeed, as opposed to a coffee shop,” he said.
WHAT TRAILHEAD OFFERS
Trailhead caters to business owners in a variety of stages. Many business owners start at the program with “ideas on napkins,” Rastegar said, and then work toward creating their product, hiring additional team members, moving into private offices at Trailhead and then “graduating” out into the free market on their own.
Everything starts at “base camp,” which is the main location for Trailhead at 500 S. Eighth St. There, anyone can become a member for $35 per month and sit at any of the desks throughout the large, shared workspace. There is a private booth to make phone calls, an open-air meeting area for group projects with a white board, and free coffee, tea and snacks available throughout the day. Members also have access to free or heavily discounted programming to assist in building a startup.
Rastegar said the goal in this early phase is to provide as much support as possible to entrepreneurs who are working to develop an idea into a product that can be sold, which is referred to as a “minimum viable product” or MVP. He said the path between an idea and having an MVP is referred to as “the valley of death” because of how easily the venture can lose momentum during this period.
“As you walk through the valley of death, you’re burning cash, but you’re not making any money because you don’t have anything to sell yet, so it’s in our best interest to get (Trailhead members) through that as fast as possible, as cheap as possible,” he said.
Once a company has a product to sell, they can start adding team members and taking advantage of Trailhead’s programs to help them learn to launch the business and find people who want to purchase their product. They can also participate in the numerous pitch competitions Trailhead has every year, where entrepreneurs present their products to investors and compete for funding.
The next step in the process is for a company to move to Trailhead North at 404 S. Eighth St., which has dedicated desks, more private meeting rooms and a more traditional office environment. This rents for $150 per month, or $500 monthly plus $150 per employee if a company wants its own totally private office space.
There is no set time for a company to move out of Trailhead. Some companies leave after they go public, others leave once they get significant outside investment to grow their company, and some companies leave once they sell to a larger company. Lovevery, a company that recently graduated from Trailhead that designs baby toys specially for cognitive development, spent three-and-a-half years at the incubator before getting outside investors and moving to its own office.
Dlugosch’s company is set to leave Trailhead North in the coming weeks and move into its new space with additional employees. He said without Trailhead, he’s not sure Natural Intelligence Systems would have gotten this far.
“I wouldn’t know where or how to start without Trailhead, but that support structure was there and for us it worked out really well,” he said. “You come from the corporate world where the legal department is just down the hallway and you don’t even have to think about it, it’s just given to you, same with a finance group or insurance.”
Although Rastegar celebrates Trailhead’s success as an individual organization, he said one of the most important parts of Trailhead is its growing place in Boise’s entrepreneurship community. He said the growth in Boise’s startup scene can be partly attributed to people fleeing high-priced cities like San Francisco, Seattle and Portland — but a large number of Trailhead clients, he said, are longtime Boiseans.
“A lot of this activity you see right now, when you look at that cohort and arguably they didn’t move here,” he said, about some of Trailhead’s biggest success stories. “Those are people that are from here or who have lived here for some time. (That growth is) due in part of the seeds planted five years ago, through Trailhead and the Venture College. The ecosystem as a whole is producing its own organically, and we’re having an influx from out of state.”