Catalyst Campus in Colorado Springs gains tenants, new investment tool
Plans to add buildings to the Catalyst Campus business park are on hold, but the campus is growing in other ways; it has several new tenants, while a defense and space business accelerator program housed there is getting a new tool to help companies grow.
The accelerator has been the centerpiece of the campus, hosting a handful of small companies since 2018 for 2 ½ months at a time to develop new technology focused on national security ranging from weather, navigation and communication to cybersecurity, space situational awareness and intelligence, reconnaissance and surveillance.
The 107 companies that have completed the accelerator program have won 353 government contracts totaling $284 million, according to data from the accelerator.
That data also shows accelerator participants have landed nearly $290 million in investments and 11 have been acquired, including Synaptech, a Colorado Springs software engineering company bought in December by Washington, D.C.-based consulting firm LMI.
Synaptech employed 60 at the time of the transaction and focuses on making computer-generated simulations and visualizations for national security and space warfighting.
The newest tool the campus has for small defense companies is the Colorado ONE Fund, which has formed a partnership with the Colorado Venture Capital Authority to invest $34 million in startup aerospace, defense, homeland security and related businesses.
The fund is seeking companies led by or that employ veterans, have minority or female ownership and are in enterprise zones — parts of the Colorado Springs area and the state targeted for business development.
“This is Catalyst Campus 2.0,” said Kevin O’Neil, founder and CEO of One Fund and founder of Catalyst Campus.
“This is a seed and pre-seed (early financing rounds) fund for companies willing to headquarter in Colorado. We will have financing for small companies for research and development projects.”
The fund, composed primarily of current and former employees of The O’Neil Group (headed by Kevin O’Neil), had to match the venture capital authority’s $17 million in funding that came from a federal program designed to expand access to capital for businesses with fewer than 10 employees. O’Neil said the fund hopes to make about 20 investments during the next five years, sell those investments within 10 years and then start another similar fund.
The accelerator also started a consortium of nine of its participants to work together on bids for defense and government contracts none of the companies could win on their own, O’Neil said. The consortium meets several times a year and has already won a second phase Small Business Innovation Research contract for research and development, and consortium members also have won contracts individually using patents and other intellectual property shared among members.
The fund and consortium are designed to foster the growth of small defense contractors and combat a major drop in the number of small businesses receiving federal contracts — 40% since 2010 — even as federal awards continue to set records, according to the U.S. Small Business Administration.
During the same period, the agency said the number of small firms doing business for the first time with the federal government has declined at an even faster rate.
O’Neil attributes the drop to small defense contractors being acquired by defense giants; in Colorado Springs defense, intelligence and infrastructure conglomerate Parsons paid $300 million for Braxton Science & Technology Group, owned by the O’Neil Group, and $489 million for Polaris Alpha, both of Colorado Springs.
“We were part of that by selling Braxton,” he said in a previous interview, “but now we are trying to reset entrepreneurism in our community.” He hopes the fund and consortium will help replenish the field of small defense contractors that the Department of Defense relies on to come up with innovative new weapon systems.
Defense Secretary Lloyd Austin formed an Office of Strategic Capital in December to help small defense and technology firms find sources of private capital, primarily loans, for “critical technologies,” such as artificial intelligence, biotechnology and quantum science. O’Neil said he started the Colorado One Fund in response to the formation of the new office and the need to provide long-term funding to turn promising technologies into products.
O’Neil said plans to build a sixth office building in the 12-acre campus on the eastern edge of downtown Colorado Springs remain on hold due to high interest rates and inflation, but a limited liability company headed by an O’Neil Group executive acquired an adjacent building now used by KKTV in December for $1.85 million. O’Neil said the building will be renovated for a new tenant after the television station moves to offices near Woodmen Road and Interstate 25 next year.
Catalyst also has acquired two railroad dining cars that will be the centerpiece of its Catalyst Station development that will open in about a year and feature a restaurant (in the dining cars) as well as up to five food trucks for campus tenants and others.
The campus also has attracted seven new tenants not connected to the accelerator program that will work with other tenants to advance “innovation in support of national security,” according to a September news release from Catalyst Campus. The companies include:
• Hypergiant, a Texas-based artificial intelligence software company started in 2018 to create software for the space, defense and critical infrastructure sectors to provide users with “actionable intelligence” for rapid decision-making.
• Chickasaw Nation Industries, owned by the Chickasaw Nation and based in Norman, Okla., that includes federal contracting, manufacturing and filtration units to help safeguard the environment, secure key assets and provide other services.
• Two Six Technologies is based in Arlington, Va., and develops software for command and control, information analysis, sensor data integration and analysis, and information security for the Defense Advanced Research Projects Agency, the State and Homeland Security departments, U.S. Cyber Command and other federal agencies.
• 413 LLC is based at the campus and provides monitoring and evaluation, analytics, and technical and institutional support to federal agencies. The company also offers training exercises, pre-deployment and readiness training, strategy and planning and management consulting.
• American Systems is based in Chantilly, Va., and offers information technology and engineering and analysis, test and evaluation, and training for the departments of Defense, State and Veterans Affairs, and federal intelligence and law enforcement agencies.
• The Veterans Outreach Center is a program of the U.S. Small Business Administration that offers workshops for veterans, service members and military spouses planning to start a business as well as business plan preparation help, entrepreneur training and counseling, and mentorship.
• Raft is based in Reston, Va., and builds both secure systems for secure development and deployment as well as complex software applications. The company also offers expertise in artificial intelligence and data access for federal agencies.
Catalyst was honored last month by the Colorado Springs Chamber & EDC with its Company of the Year Award for “creating an ecosystem that cultivates partnerships and sparks innovation in small businesses and startups in the aerospace and defense industry.”
The chamber said a partnership of Catalyst, five nonprofits and three universities were awarded a two-year, $941,375 in grant in May from The U.S. National Science Foundation to support the Pikes Peak region space industry.
The Resilient Space Infrastructures, Systems, and Economy development award is one of 44 nationwide and is focused on spurring “technological innovation and workforce development to foster technology commercialization and technology transfer in space systems, space infrastructure, and cybersecurity for the space” industry, according to the foundation’s news release.
The grant is designed to help the partnership compete for a 10-year grant of up to $160 million to build a “regional innovation engine” to fuel local economic growth, create high-wage jobs and “advance national competitiveness.”
The partnership also includes the chamber, technology accelerator Exponential Impact, the National Cybersecurity Center, the Space Foundation, the Space Information Sharing and Analysis Center, the Air Force Academy, Pikes Peak State College and the University of Colorado Colorado Springs.
President & CEO of Downtown Partnership Susan Edmondson leads The Downtown Partnership board meeting last week in the Harvey House conference space at Catalyst Campus in downtown Colorado Springs.
Catalyst Campus staff work last week in the Lodge space of the main campus in downtown Colorado Springs.
Catalyst Campus staff work last week in the Lodge space of the main campus in downtown Colorado Springs.
Catalyst Campus staff work last week in the Lodge space of the main campus in downtown Colorado Springs.