After two years of a pandemic, economic downturn and continued recovery, more entrepreneurs, investors and state officials are taking a measured gamble on Las Vegas. With a designated “Innovation District” Downtown and new funds for startup incubators, the Valley has become attractive for some entrepreneurs looking for the right environment to grow their businesses.
At a December 1 startup “showcase” Downtown, five Las Vegas-based founders made fine-tuned pitches to a room of guests. The event was the culmination of a 12-week accelerator operated by the nationwide company Gener8tor for the Governor’s Office of Economic Development.
“It’s an emerging scene, for sure,” says Kegan McMullan, managing director of the Gener8tor Las Vegas program. “We’ve been very fortunate at the end of the pandemic and quarantine … [with] the mass exodus from California and [with] Nevada being very close and having a favorable tax climate. [Those] are really good reasons to start a business in Vegas.”
Alongside the mayors of Las Vegas and Reno, Gov. Steve Sisolak announced in March that the “inaugural” Gener8tor accelerator program would support and provide $100,000 capital investments for five startups in both cities. The investments are drawn from Gener8tor’s venture fund and from the State Small Business Credit Initiative (SSBCI)—a federal program that received a $10 billion injection last year from the American Rescue Plan Act.
One of the participating startups relocated from Colorado Springs to participate in the program. Founder and CEO Justin Knapp says he believes he’ll be able to sustain and scale his business to Las Vegas, which is “ripe for startups.”
“I am moving my company headquarters to Las Vegas, so I believe in the ecosystem,” he says.
His company, SpaceTogether, provides an online platform similar to Airbnb, but for commercial space. Anyone with underused commercial space—a church, school, gym or commercial kitchen, for example—can use the platform to list and rent it out. Typical renters include nonprofits, freelancers and newly formed churches or clubs and other startups.
Knapp says his company’s founding in 2017 was “driven by personal experience” of him needing space for a nonprofit and, with few options in a hot real estate market, getting stuck in an expensive five-year lease. He listed the commercial space in an online classified ad for people to rent out, and, he says, it didn’t take long for dozens of responses to start pouring in.
The following year, SpaceTogether hired its first two employees. “We now have properties listed in 30 states,” Knapp says.
Las Vegas Mayor Carolyn Goodman has pushed to make the city a premier destination for innovative and tech businesses, and for investors to find them. In response to the state’s launch of the Gener8tor accelerators earlier their year, she said the program would “continue” the work that Vegas had already begun, and pointed to workspaces that the city opened in 2019, which support companies like Dragone and SafeArbor.
“Las Vegas has more than 1,200 startups and they are critical to the present and future of our city’s economy … The city has been a leader in creating a startup ecosystem that is among the best in the nation through our International Innovation Centers @Vegas,” Goodman said in a statement with the governor’s announcement of the Gener8tor programs.
The city also has provided a $1 million grant to the nonprofit statewide accelerator and business incubator StartUpNV to support its AngelNV program, which finds a group of investors and creates a $200,000 fund for a selected startup. The program also provides mentorship at the city’s Innovation Centers on how to invest successfully, along with free training for the selected startup.
McMullan says he believes startups “have the power to transform the landscape.”
“Look at Zappos. At one point, it was a startup. Tony Hsieh made this platform just to see if people would buy shoes online,” McMullan says. “Years ago, it was actually kind of a thing you didn’t do—you wanted to go try them on. That was Hsieh and his cofounders … And look now—they’ve made a huge imprint with the jobs they’ve brought to Southern Nevada. And getting acquired by Amazon was a fantastic piece.”
With regard to startup funding, Nevada is just getting started. Treasurer Zach Conine in August announced that SSBCI money also will be used to match capital investments made by StartUpNV’s venture funds, to support 40 Nevada-based startups in pre-seed (less than $500,000 in revenue) and seed stages ($500,000 to $2 million in revenue) over three years.
It’s part of a push to diversify that state’s hospitality-based economy, which tanked during the pandemic with one of the highest unemployment rates in the country.
“We recognize that startups create more jobs per 1,000 people here in Nevada, than in any other state in the nation … The availability of this capital will allow new and innovative ideas to not just start here, but continue to grow here,” Conine said in an address at an August 31 press conference at the International Innovation Centers @Vegas. “This vital support to early-stage businesses to the accelerator program will result in more viable and stronger Nevada-based startups, while also working to generate good, paying jobs for our residents.”
In September, the Nevada Legislature approved a first tranche of $35 million SSBCI funds to use over three years. Nevada could receive up to $105 million over the duration of the federal program, according to the governor.
All components of SSBCI-funded accelerator programs are expected to launch by January 2023.
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