While early stage angel investor-backed deals decreased by 2% between 2018 and 2019 according to Pitchbook, Colorado’s ecosystem saw an increase of over 28% during the past year.
On a global scale, we’re seeing a “gentrification of capital”, with funds getting bigger, deal sizes growing, valuations rising and company exits taking longer. All of this means that capital has been moving away from early startups – except in Colorado.
Colorado’s vibrant startup community has a lot to do with that. Community leader Rockies Venture Club (RVC) had a record year of furthering economic development throughout Colorado, with more investments in local startups and more out-of-state deal syndication dollars brought into the community than in the past 35 years of its operations.
RVC held a total of 121 events throughout the year with nearly 2,700 people attending. These events included the Angel Capital Summit, the Colorado Capital Conference, two local HyperAccelerator programs and additional HyperAccelerators in Bozeman, MT and Adelaide, Australia. The organization also expanded its Angel Investor program from a one-day Angel Investing 101 program to three full days with Angel Investing 201 and 301. The advanced classes include topics such as leading angel syndication deals, serving on boards, post investment management, portfolio theory, tax strategies and hands-on due diligence process with live companies as well as case studies. According to Peter Adams, RVC Executive Director, “Angel investing education is rare, but for RVC it has become the cornerstone to creating a lively investing community in Colorado resulting in above average portfolio growth for well-educated investors of over 30% in most years.”
RVC has made twenty-four investments along with the Rockies Venture Fund, totaling nearly $5 million in 2019 – with all but three investments going to Colorado companies. RVC has actively syndicated with other venture funds, angel groups and individuals to help companies raise the capital they need with over $69 million additional investment contributed. Over half of RVC’s deals are syndicated in 2019. Investors in RVC deals are seeing year-on-year increases of about 30% on their investments, most of which are structured to be 100% free from federal long-term capital gains taxes.
The Rockies Venture Fund, which co-invests with RVC, also made eleven investments in Colorado companies such as GeoVisual Technologies, Inc., P2BInvestor, CirrusMD, Shotzr, CaliberUX, PolyPort, Sheets & Giggles, Nymbl Science, SmartMedia Technologies, Bitsbox and Realvolve. The Fund has now made thirty-three rounds of investment in twenty-four companies since its founding a little over two and a half years ago.
RVC’s officers are launching their next Colorado focused fund in 2020: the Rockies Impact Fund. The Rockies Impact Fund will be focusing on early-stage investments in companies that have measurable social and environmental impact, while providing returns at market-rate level or better. Investors in the Rockies Impact Fund will have an option to invest in the Fund for high returns, or through the Rockies Impact Donor Advised Fund (DAF) where they can leverage their tax-deductible giving up to 10X by investing their donation in the Rockies Impact Fund, then allocating the returns to their favorite charities.
RVC is also expanding its reach with new angel groups in 2020. “We’re looking forward to a big year in 2020 with a host of new angel investing groups focusing on Cleantech, Life Sciences, Tech, and regional access to capital in Colorado.” says Dave Harris, RVC’s Director of Operations. These efforts, and a goal to grow RVC by 110 new angel investors, is supported by Colorado’s Office of Economic Development and International Trade (OEDIT) with a grant to help mobilize capital throughout the state of Colorado. Paul Foley, RVC’s Director of Capital Mobilization says, “We expect to be able to invest even more in great Colorado Startups in 2020 and beyond, thanks to these new initiatives.”
One of RVC’s largest investments this year came via Realvolve, a Denver-based real estate technology company. Realvolve helps real estate agents to cultivate client relationships from lead generation to transaction management through to relationship management post-sale. CEO Dave Crumby shared on the process of working with RVC as his lead investor, “My relationship with RVC is a partnership of high value. The culture there has always been defined by an appreciation for people over plans and product. They have a commitment to focus on strategic issues, a drive for practical solutions, and respect for operating expertise.”
RVC led Realvolve’s 2019 fund raise, along with participation from Rockies Venture Fund I, L.P., an early stage venture fund that has a strategic partnership with RVC. The two entities combined to invest over $700,000 in Realvolve.
Healthcare was one of the main industries that RVC investors gravitated towards in 2019. The Angel group made follow-on investments in portfolio companies like PharmaJet, a medical device company that creates needle-free injection devices based in Golden and CurvaFix, a Seattle-based company that develops flexible rodscrews that help repair fractures in curved bones.
RVC investors also backed a number of healthcare companies for the first time, like Nymbl Science, a Denver health-tech company that aims to improve balance in Seniors and prevent 1 million falls, and most recently, Vaporox. Vaporox has developed a patented, and FDA-510K-cleared technology that has shown the ability to dramatically speed up the healing process for 7 different types of skin wounds, including diabetic foot ulcers (DFUs) and pressure ulcers (bed sores). Vaporox first presented at RVC’s annual Angel Capital Summit in the spring of 2019, gaining a large following from the local Angel community. “It was great working with RVC on our company’s first outside financing,” said Alan Sage, Vaporox’s CEO. “In my mind, RVC is what an angel investor group should be. RVC’s March 2019 ‘Angel Capital Summit’ conference gave us the opportunity to present our case directly to RVC members. After that, RVC’s knowledgeable and very professional staff worked with us to price and lead our investment round, thus making it easy for other angel investors to follow.”
Lastly, RVC investors helped Buderflys Technologies, Inc. close the first tranche of their round of series Seed funding at a total valuation of $4,250,000 post-money. RVC led the round with a number of other investors participating. From CEO/Founder Shea Gerhardt, “Buderflys mission is to own the ear while fundamentally changing this $20B, high-margin industry for the better, with our proprietary squishy, high-end acoustical line of earbuds/hearables. Buderflys are a high-end wireless earbud system different from anything on the market. They conform to your ear as you move while creating a near perfect seal. This combined with our advanced speaker system, provides an unparalleled pristine sound and talking experience (Buderflys.com). We like to say that it is like a sophisticated little pillow in your ear.” This new round of funding allowed Buderflys to ramp up for their international launch.
About the Rockies Venture Club: Rockies Venture Club is the longest-running and one of the largest Angel Groups in the U.S.A., founded in 1985, whose mission is to advance economic development by actively connecting the most promising entrepreneurial companies with Angel investors, venture capitalists, and other community members. Every year Rockies Venture Club invests in about 25 companies and offers over 140 educational programs, mastermind groups, angel forums, and two major conferences for both investors and entrepreneurs.
Rockies Venture Club