By Jon Nordmark

Colorado made national headlines last year as the first state in the country to pass a comprehensive artificial intelligence law: Senate Bill 24-205, the Colorado Artificial Intelligence Act. It was framed as a consumer protection measure, introducing wide-ranging requirements for businesses that develop or use AI systems in areas like employment, education, housing, health care and insurance.

The intentions behind SB24-205 are good. We all want AI to be developed responsibly and with safeguards for the public. But as written, the law creates significant and likely unintended barriers to innovation. That’s why at Iterate.ai and across the broader startup community, we’re hopeful the special session called by Gov. Jared Polis will make improvements, so the law works as intended.

I’ve been starting and growing companies, including eBags.com and Iterate.ai, in Colorado since 1998. In all that time, I have never seen a law with the potential to so directly and immediately slow down the pace of innovation in our state’s tech sector.

The current requirements are especially tough on small AI developers. They call for producing large volumes of documentation, explaining complex technical systems in plain language for non-technical audiences, and preparing for potential enforcement actions that could be triggered by a single individual complaint to the Colorado Attorney General. 

For a startup, these demands pull precious time and resources away from building products, refining ideas and serving customers. At Iterate.ai our mission is to create technology that solves real problems. Shifting our energy into bureaucracy and paperwork slows us down, probably even crippling our ability to launch in many cases, and that’s a loss not just for us but for the people and businesses that could benefit from the innovations we’re working on.

Colorado is competing with technology hubs across the country, from Silicon Valley to Texas, Utah and North Carolina, where regulatory barriers are lower. If AI startups here are forced to build costly compliance functions before they’ve even had a chance to scale, we risk losing talent and opportunity to other states.

We have an opportunity to lead the nation, not just in regulating AI, but in doing so wisely. Consumer protections are essential, but we need to make sure the guardrails do not become roadblocks. The law, as it stands, could delay the development of tools that make hiring fairer, health care more equitable, and lending more transparent. Ironically, that could work against the very spirit of the bill.

Patents from startups with fewer than 500 employees receive 50% more citations than those from larger firms, signaling their outsized role in advancing new ideas. Research from the Kauffman Foundation shows companies less than five years old generate nearly all net job growth in the U.S. and produce a disproportionate share of breakthrough innovations.

Innovation flourishes when creators can move quickly, test ideas and refine them without unnecessary obstacles. To keep that momentum, we need smart, flexible policies that support ethical AI development while preserving the creativity and speed that fuel progress. Colorado’s tech community stands ready to work with policymakers to achieve that balance

I urge lawmakers to work with us, listen to the people building these tools and make the adjustments needed to ensure SB24-205 protects consumers while keeping Colorado a place where innovation thrives. This is too important to all of us to not get it right.

Jon Nordmark is co-founder and chief executive of Iterate.ai, co-founder of eBags and a board member of the Colorado Technology Association.