Startup scene looks poised for robust return
Companies and programs face post-pandemic challenges, but also new opportunities
When the pandemic hit in March 2020, dozens of innovators operating out of FatPipe New Mexico’s two co-working locations in Downtown Albuquerque and Rio Rancho disappeared.
The number of people renting space dropped from about 90 pre-pandemic to just two or three holdouts who kept coming in, said FatPipe Chief Operating Officer Lisa Adkins.
“Most of the world went to work from home, but we struggled to keep the centers open,” Adkins told the Journal. “We had some diehards who were still coming in, but we definitely saw a huge drop in our membership.”
Once statewide vaccinations got underway, people started trickling back in. As of late June, about 50 people were renting space again.
And now, with the state’s full economic reopening on July 1, FatPipe is set for a new surge in activity.
“Things are definitely picking up,” Adkins said. “Things are really flowing again.”
Like FatPipe, New Mexico’s myriad entrepreneurial programs, startup accelerators, newly launched businesses and networking forums are all preparing for a robust return to in-person activities. And most of the community’s movers and shakers expect the startup ecosystem to come back even stronger than before, buoyed by a virtual world of interaction that kept the bustling, preCOVID startup landscape alive and vibrant, even during the pandemic.
The lessons learned from life online are now ingrained in the fabric of business operations and community activities, likely enriching all in-person programs and events going forward as virtual participation continues alongside face-toface interaction. The weekly community meet-up event 1 Million Cups, for example, will resume in person this month at FatPipe Downtown, but Zoom participation — which kept the forum alive throughout the pandemic — will remain a constant option.
“We got a lot more people participating in 1 Million Cups statewide, and even nationwide, by going online,” Adkins said. “As we come back live, we’ll continue it as a hybrid format.”
At the University of New Mexico’s Rainforest Innovations — which manages all of UNM’s entrepreneurial programs and technology-transfer efforts at the Innovate ABQ high-tech research and development zone across the street from FatPipe Downtown — key programs will permanently become hybrid structures with some federal funding for online options.
The National Science Foundation, for example, awarded a $120,000 grant last fall to reinforce online delivery of the locally run Innovation Corps program at Innovate ABQ. Rainforest Innovations and UNM’s Innovation Academy launched the iCorp program in 2017 with an $800,000 NSF grant for teams of students to work on strategies to take UNM technologies to market.
NSF found that virtual programming at its iCorp sites nationwide greatly increased participation for a more diverse audience during the pandemic, said Rainforest Innovations president and CEO Lisa Kuuttila.
“NSF told us it wants to keep our sessions online because it made it more accessible and expanded diversity for students from underrepresented backgrounds to participate,” Kuuttila said.
The U.S. Economic Development Administration also awarded a $350,000 grant last fall for UNM to expand its online entrepreneurial training programs to branch campuses, and to entrepreneurs across the state. Rainforest Innovations used a previous EDA grant to develop an eight-week online course for all New Mexico businesspeople to learn how to build e-commerce platforms during the pandemic.
That has attracted hundreds of participants statewide since spring 2020 and will continue now with the new EDA funding, said Innovation Academy Executive Director Rob DelCampo.
“The pandemic fundamentally changed the way we operate,” DelCampo said. “We expect to always have an online option for every program going forward.”
In-person activities, however, remain critical, particularly for innovators, entrepreneurs and investors to mingle face to face in diverse settings. That paves the way for serendipitous encounters, or human “collisions,” whereby people spontaneously meet one another and share ideas, often leading to new collaborations and partnerships to nurture budding business ventures.
“Most would say the vibrancy of the ecosystem has to do with collisions that are mostly unintended,” DelCampo said. “There’s a lot of pent-up demand now to get back to that.”
In fact, notwithstanding the advantages of hybrid programming, people are generally clamoring for a return to in-person activities, Adkins said.
“Many people are Zoomedout,” she said. “Everybody’s asking when in-person things will restart.”
FatPipe is well prepared, having taken advantage of the pandemic slowdown to open two new co-working centers, including an East Mountains location in Edgewood and another one in Taos. FatPipe founder Stuart Rose invested in a major fiber optics upgrade with Plateau Telecommunications to provide high-speed broadband for the new Edgewood co-working space.
“We had a grand opening on June 11 after Plateau finished the fiber installation,” Adkins said. “It will open a lot of opportunities for people in the East Mountains. We’re already seeing significant activity there.”
Still, program managers and startup businesses will face new challenges as the economy reopens fully, including fundamental changes in employee expectations now that so many people have grown accustomed to working from home, said Rose, who also founded the Bioscience Center in Uptown Albuquerque.
“Employees now increasingly want flexibility to not go into the office all the time, nor work from home all the time,” Rose told the Journal. “They want the freedom to choose, to create a work-life balance where work is a part of their outside life, not
separated from it.”
Most startups strive to be nimble and flexible by nature and by necessity, often pivoting their business strategies to meet emerging market demands and grow in new directions. Those who adapt to new employee expectations will do well, but those who resist could suffer, Rose said.
“Business owners and management must recognize that the world has changed,” he said. “I suspect those companies that insist on returning to the way things were before the pandemic will have problems.”
Startups may also face the same employee return-towork reluctance that other businesses, such as restaurants, have found.
“It’s hard to find employees now and that makes everything more difficult,” Rose said.
Adkins has faced both return-to-work challenges and employee demand for more flexibility at FatPipe, and at Ingenuity Software, an Albuquerque startup that builds websites and other online capabilities for companies.
She hired one new employee in June via an online interview to staff the new Taos co-working space. But that employee never showed up for the first day of work.
“People are still getting more from unemployment and many are seeking jobs to meet requirements without actually taking them,” Adkins said.
At Ingenuity Software, where Adkins is also chief operating officer, the company had to fire one employee who didn’t want to return to work.
“When we asked people to come back, that employee threw a fit and refused,” Adkins said.
In addition, the transition to remote operations will likely alter leasing trends by companies in Downtown Albuquerque and in other startup hubs, said Ingenuity Software CEO John Mierzwa.
“So many companies abandoned their physical locations in the pandemic and it’s yet to be determined how many will come back,” Mierzwa said. “There are many cost considerations involved and people like to work from home. Things will likely remain in turmoil in that regard for the rest of the year before we see how it all that shapes out.”
At the Bioscience Center, all the incubator’s lab space remains filled because startup staff need to build and test things onsite. But there’s now a 70% vacancy rate in the facility’s office spaces.
“Before the pandemic, we were filled up on both sides,” Rose said.
On the other hand, the ability to work from anywhere creates opportunities, as well, particularly for co-working spaces such as FatPipe.
“People like the independence and flexibility of remote operations, but not necessarily working from home,” Rose said. “Many want the bandwidth, social interactions and tech support they can get in a place like FatPipe. We’ll see how it all plays out, but I think it will be a mixture of onsite and remote working, with home offices, coffee shops and co-working spaces all playing roles as we move forward.”