Published: Oct. 10, 2014 By

Colorado incumbent Gov. John Hickenlooper insists his leadership has helped Colorado’s economy bounce back from the latest recession that hit the state hard.

On the campaign trail this fall, Hickenlooper faces a fierce challenge from former Republican Rep. Bob Beauprez, who continuously questions the governor’s policy contributions to the state’s recovery. Beauprez reiterated his concerns during a debate at The Denver Post last week.


“There are still many people in Colorado wondering where this recovery is for them,” the Republican candidate said.

On its website, Hickenlooper’s campaign staff does its own “fact check” of the Beauprez camp attacks. It concludes, “False Claim: Beauprez attacks Gov. Hickenlooper’s leadership on the economy.” As proof, team Hickenlooper brings up an array of economic rankings, among them this one: “Colorado is now ranked [the] second-best state in the country to start a business.”

CU News Corps took a close look at that specific statement and found that it polishes the ranking and lacks crucial context.

Innovation and entrepreneurship only part of the puzzle

The study the governor and his staff cite is the fourth annual Enterprising States report, published by the U.S. Chamber of Commerce Foundation. The organization is an arm of the conservative-leaning U.S. Chamber of Commerce, which – contrary to popular belief – is not an agency of the government, but is in fact the largest and most active lobbying group in the country.

The report lists Colorado at number two for innovation and entrepreneurship, second only to Maryland. The two measures take into account half a dozen determinants.

  • Science, technology, engineering and math occupation concentration

  • STEM job growth

  • High-technology businesses as a share of all businesses

  • Academic research and development activity

  • Birthrate of business establishments

  • Growth in full- and part-time self-employment

That ranking is certainly good news for Colorado entrepreneurs and the sitting governor. But it is also only one part of the Chamber of Commerce Foundation’s evaluation and subsequently only one factor that plays into the decision of whether or not to start a business in Colorado.

The same report ranks the state fifth in performance, seventh in business climate and 10th in both the “talent pipeline” and “infrastructure” categories. These sections also provide important and necessary context for 1) a new business to consider before launching and 2) for voters to keep in mind when the governor talks about Colorado’s number-two ranking in business creation.

The Hickenlooper campaign did not return multiple calls and emails, and spokesperson Eddie Stern’s mailbox was full on Friday when NewsCorps tried to reach him one last time.

Although the state’s ranking specifically for innovation and entrepreneurship hasn’t changed from 2013 to 2014, the report notes a trend that is also necessary for context. In the last 12 months, innovation and entrepreneurship have nationally decreased 7.5 percent on average. In Colorado the decrease wasn’t quite as bad, but with 1.7 percent it dropped nonetheless.

The report’s authors write, “Colorado is a leader in measures of technology and entrepreneurship, offering a strong support network for innovators.” They specifically cite the Colorado Innovation Network, which the state’s economic development office launched in 2011 (during Hickenlooper’s first term) to rally industry support for the creation of a startup-friendly business environment.

Venture-capital investors hesitant

In August, COIN published its 2014 annual Innovation Report. It found:

  • “Colorado has a technically trained workforce and is developing new talent in the fields of science, technology, engineering and math,

  • Colorado has been successful in undertaking new research into new findings with commercial potential,

  • Colorado ranks among the highest of its peer-group states (Arizona, California, Georgia, Illinois, Massachusetts, New York, North Carolina, Texas and Utah) for startup creation and job creation, and

  • Colorado companies are doing well at obtaining federal grants, yet they need to improve their ability to attract interest from the venture capital community.”

Beauprez is trumpeting up and down the campaign trail that access to venture capital is a problem for Colorado’s economy.

Venture capital is money provided to small, high-potential startups early in the creation process. Potential investors hesitating is a central component of Beauprez’s criticism of Hickenlooper’s economic leadership, which the governor’s staff is trying to disprove with its own fact check.

Beauprez’s website states, “Companies, like startups, clearly want to locate in Colorado. But access to venture capital has decreased.” It also quotes a Denver Business Journal story, which reads, “The state comes out on top for startup and job creation, but venture capital investment in the state has been declining steady since 2012, causing the state to lag behind its peers. Nationally, VC has been growing.”

Kauffman Index: Colorado 5th in new businesses started

For more context on Colorado’s position in the national race for business creation, it is worth considering other reports, too, such as the Kauffman Index of Entrepreneurial Activity.

The nonpartisan Kauffman Foundation, a Kansas City-based group working to enhance entrepreneurial activity across the U.S., looks at Census data to determine the number of new business owners in their first month of significant entrepreneurial activity.

The index ranked Colorado fifth in the nation, with 380 per 100,000 adults who started a new business here each month. Montana led the pack with 610 new entrepreneurs per 100,000 adults. The average across the U.S. was 280.

The Kauffman Index serves as a good numeric indicator of how many prospective entrepreneurs each state can convince to actually start a business within its borders. Therefore the report should not be left out of the equation when making statements about emerging-business rankings.

To conclude, Colorado is certainly among the handful of states in the country that are leaders in attracting new businesses. But the Hickenlooper campaign’s sweeping statement doesn’t stand the test of more careful examination. It is overly broad and not representative. Rather, the governor’s staff grabbed the best-looking number they could find and stripped off crucial context.