Loveland and Fort Collins together form one of the most fertile grounds for tech startups in the country, according to a joint report released this week by the Kauffman and Engine foundations.

The two cities share the No. 2 slot on the report, which measured the per-capita density of tech companies between 1 and 5 years old. Colorado dominated the top-20 list, with Boulder (1), Denver (6), Colorado Springs (9) and Grand Junction (19) also gaining recognition for their high-tech industries.

The high ranking didn’t surprise Marcie Erion, a business development specialist for the city of Loveland.

“It was great to be acknowledged for the body of work that we’ve got going in this area,” she said. “The city governments here have really been supportive through incentives for small companies and providing professional development.”

In Loveland, that aid comes largely from the city’s “tech transfer” program, which has reimbursed dozens of companies for relocation, renovation and capital costs. Erion, who estimates there are between 50 and 75 start-up tech firms in Loveland, said city government has also improved access to high-quality energy resources and electronic services, providing an increasingly convenient setting for new businesses to thrive.

Additionally, the city offers free innovation and research classes for small businesses, improving their chances of winning federal research grants. Loveland firms received about $750,000 in grant money last year, but that figure could balloon to $7 million by 2016, since the grants are awarded in phases and can be leveraged upwards.

“The city has been fantastic,” said James Bilodeau, owner of a tech transfer beneficiary called Data Traks. “It’s been great working with them…bringing in new opportunities that we might not have had access to.”

Loveland may soon award Data Traks, which focuses on software systems for railroad companies, close to $20,000 for relocation fees associated with the company’s possible move to the city’s mostly vacant Rocky Mountain Center for Innovation and Technology.

Kim Wheeler, CEO of robotics firm Road Narrows, appreciates Loveland’s effort to help its own, but she thinks the location sells itself.

“We have access to a lot of great facilities that we need to nurture our business. Machine shops, circuit wire assemblies, great talent from the universities nearby, plus physically it’s such a nice ideal place for the types of employees we have. It’s really a full spectrum of things that we look for as a company wanting to have a good life and wanting to be successful.”

Bilodeau agreed, saying he’s had little trouble with recruiting people to live here or, more importantly, with retaining in-state talent. About one-third of his employees are recent graduates of Colorado universities.

“They’re completely talented and they have the skill set that we need, and I don’t have to pay to move them across the county. If you can find local people it’s better for everybody,” he said.

Along with good schools, local support and high quality of life, Erion partially credits Loveland’s high-tech business boom to an unexpected source: the cutbacks of huge companies like Hewlett Packard and Agilent, both of which had large footprints in the city within the past decade, rendering hundreds of engineers and computer scientists jobless. Many of the people laid off wound up founding their own startups in Loveland. According to Erion, the wealth of smaller companies has been a blessing for the city’s economic security.

“You can either have 100 companies with 20 people meeting lots of needs, or you can have one 3,000-person employer. If HP or Agilent downsizes or leaves, it has an enormous impact on the community. If one or two of your smaller companies leaves, it’s unfortunate, but it doesn’t affect the community like that,” she said.

U.S. Rep. Jared Polis, D-Colo., said in a phone interview Friday that he’s optimistic the region’s high-tech sector can sustain this success.

“It really is a very vibrant ecosystem in Northern Colorado that makes it easier to launch a startup,” said Polis, who co-founded tech startup mentorship firm Techstars. “I see the enormous opportunity for high-quality jobs to grow here. We have a lot of these examples of how we can home-grow our own next generation of companies and provide even more high-paying jobs in Northern Colorado.”

Alex Burness can be reached at 970-669-5050 ext. 521 or burnessa@reporter-herald.com. Follow him on Twitter @Alex_Burness.