In a recent report of Colorado private market trends, Ansarada & PitchBook highlight trends across private equity, venture capital, and M&A transactions. The report lists Rockies Venture Club as among the most active investors in Boulder & Denver. 

Colorado’s private markets roughly doubled in the last decade, with Colorado VCs bringing in about 7% of all US VC deal volume. Also contributing to this growth is strong accelerator programs like Techstars, strong out-of-state investment coming in locally, abundant PE and M&A activity in industries like mining and energy, and over a dozen major tech companies opening offices in the state, bringing in more tech talent.

The report also highlights 6 VC trends to look for in the Colorado startup ecosystem:

1. VC activity is growing in Denver and Boulder

2. Historically diverse sectors, like energy, are shifting

3. Early-stage valuations are climbing

4. VC deals sized up in Denver and down in Boulder

5. Local VCs are becoming more active

6. Outside firm are investing in Colorado startups

Read Full Report on Pitchbook

In a new report focused female-founded ventures, Pitchbook has identified a concerning downward trend in VC funding for women-led companies. Their data reflects a decline in both deals and capital invested, with firms investing a total of $434 million in Q3—the lowest figure since the second quarter of 2017. Q3 2020 also reflects a 48% drop in funding from Q2, when female founders received $841 million across 132 deals.

Why is this happening? The report brings forth a few hypotheses: venture capitalists’ unwillingness to adopt new processes related to deal flow; additional caretaking and remote-schooling responsibilities that disproportionately burden mothers; economic uncertainty discouraging risk-taking; and the trend toward follow-on vs new investments in the downturn. 

While RVC’s angel investment portfolio has maintained close to 50% investment in companies founded or led by women, the contracting venture capital ecosystem represents an increased need to mobilize female founders and investors. RVC and the Women’s Investor Network are bringing together women founders, funders, and allies for an evening of community-building and angel investing at Reversing the Trend: Funding Female Founders on Thursday, November 19 from 3-6pm MT. 

At this event, investors and community supporters can learn and discuss with industry experts, hear pitches from women seeking capital, network with founders and funders, and start the RVC angel investment process, all in a virtual setting. 

If you are a startup CEO, or work for a startup – these are challenging times. The world as you know it is on hiatus, and uncertainty reigns. I would like to share some wise advice from my friend and fellow board member at the Angel Capital Association, Pat LaPointe from Frontier Angels in Bozeman, MT. This is advice that I hope every startup CEO in our community takes to heart.
Best wishes, and be healthy,

Dear <CEO> –

I hope you and your families and friends are healthy and staying safe. There is no “sale” worth jeopardizing your health. No meeting is worth exposing yourself or your team to something for which there is presently no cure. Please be careful.

I was running early stage companies in both Sept 2001 and in March of 2008. This feels EXACTLY like those situations. Fear and uncertainty reign. No one person has a completely accurate view of the situation because it is SO complex and unprecedented. In case you care, here are a few observations on how I would apply my own experience if I were running an early stage company today:

  1. If I was selling to enterprise or government buyers, I’d expect everything to stall. Sales pipeline will get rigor mortis and nothing will move forward for months. That means any revenues you were counting on from companies not already under contract will NOT materialize anytime soon.
  2. If I had contracts with cancellation clauses, I’d expect to see half my enterprise customers exercise those clauses. Government buyers don’t tend to cancel in the near term, but commercial enterprises will start shedding expenses UNLESS I’d already been able to PROVE clear cost savings for them. If my value proposition was about generating more revenue for them, they will STILL cancel because many of their clients/prospects will not be buying right now.
  3. If I had less than 12 months of cash on hand, I’d start preserving cash NOW. TODAY. It is incredibly painful to have to lay off people who you worked so hard to recruit and train, and who have worked so hard for your shared future and vision. But you have to think about the business surviving first so you will live to fight another day and have any hope of re-hiring people later. I would triage my accounts payable and stretch my vendors to 90 days or more. I’d call and tell them I was doing that, but I had no choice if the business was going to survive.
  4. Even if I had more than 12 months cash on hand, I’d move to conserve cash immediately. I’d defer discretionary expenditures. I’d look for opportunities to reduce my non-strategic expenses like rent or other things where I may be able to renegotiate the deals.
  5. I would look for opportunities for “customer financing” – getting happy customers to pre-pay for the next 12 months of product/service and offer something special in return.
  6. If I had a revolving line of credit, I would draw it down NOW. The interest cost is small price to pay for the security of the cash.
  7. If I had a termsheet on the table or was in mid-raise with “soft circles”, I’d expect it will fail. Venture funds will continue to invest, but only after a few months go by to allow them to reassess the market dynamics and even then the valuation they offer will be much lower even if there is no apparent reason for that. Angels already have “alligator arms” and are fast shutting down all investing until they understand their own personal liquidity. They are thinking about their families and their own health since the majority of them are over 60. I’d expect them to be cautious and slow-moving for at least 6 months. I’d look to find capital from family and friends and credit cards and second mortgages to stay alive. Another option…
  8. I’d look for opportunities to sell services to customers/prospects for short-term revenue flows to keep the lights on. I’d think about where my expertise is and how I can leverage that near-term to create value for someone.

Bottom line: act fast to preserve cash so you have more options 6 or 12 months from now. Expect the situation to get far worse than you may initially think (e.g. 20% unemployment; 8-12 weeks of “social distancing”; a big viral rebound in the fall of this year; fundraising rounds taking 12-18 months). If it’s any better than that, you’ll be ahead of the game.

I will never forget how my first big exit completely fell apart in the fall of 2001 and took many months to put back together (at a lower price). Or how I had bankruptcy papers on my desk in 2008. Or the incredible pressure of having to keep my family afloat and protect my staff – many of whom had become close friends and all of whom had families of their own. In both situations, I acted too slowly, was overly optimistic about how soon things would turn around, and pushed the company too close to the edge. I was too optimistic and overly confident of my own ability to impact a market being buffeted by forces far larger than I could overcome – no matter how hard or smart I worked. 

But we adapted, learned, and thrived. You can too.

We (Frontier Angels) are huge fans of you and your team and want to help.  We are still investing. What we’re looking for are companies who A) have good market traction, B) have the ability to ratchet-down their monthly burn rate, C) are sufficiently well financed to seize opportunities in the market, and D) have CEOs who are not prone to mistaking hope for judgment. Call anytime we can help with anything.

Stay well; act fast. Remember, YOU are the core of your asset. Take care of YOU.

“New Space” is what we’re talking about.  It’s not your granddaddy’s aerospace that was government controlled, cost billions of dollars and was top secret national imperative sort of stuff.  Rockies Venture Club is pursuing its first Aerospace Investing program May 7th in hopes of raising our awareness of this booming “new” category of angel investing.

Yes, aerospace does include billion dollar projects, but now, more than ever, there are micro opportunities that angel investors can make a significant impact on.  Another way of looking at this is that outfits like SpaceX are so significantly reducing the cost of getting payloads into space, that startups can now put their projects into space for relatively low cost.  Getting a satellite launched now can be as little as $250,000 today with SpaceX vs. millions of dollars just a few years ago. Mic Black, an Australian entrepreneur from Queensland recently launched a meat pie into space for under $50,000, showing that low cost space projects are not just a pie in the sky idea by showing that he could launch a pie into the sky for much less than it cost Elon Musk to launch a Tesla into outer space.

On a more serious note, the low cost of getting projects into space opens up myriad possibilities for entrepreneurs that have not previously existed.  This is reminiscent of those who sold the picks and shovels during the gold rush era. Entrepreneurs may not be building billion dollar space projects, but they are providing solutions to the thousands of problems that new space programs present.

One with a creative mind can see many possibilities – and challenging implementations:

  • Space “as infrastructure”;
  • Space mining for rare minerals or those not available on earth;
  • Productive World policy for Space Usage – and Sanctioning bodies, Weapons in Space Policy (US SASC), International Space Law (Ownership, Rights, etc.) beyond Maritime type Law;
  • Solar Energy in space transported back to earth (something akin to wireless??);
  • Robotics for Space (Truly, Humans don’t do well in Space via current capabilities);
  • Deep Space Travel and Exploration;
  • The long-term future of Space colonization (so complex);
  • Chemistry/Biology in Space and New Product and Health Solutions;
  • 3D Printing, and Manufacturing in zero-G;
  • Govt/Private Economics for Space endeavors;
  • Etc.

So, what does this have to do with angel investors?

Angels and VCs are rapidly jumping on the space bandwagon.  There are thousands of startups working on small parts of the space ecosystem and some of them have big solutions that they have creatively broken into smaller tranches with achievable milestones that can be funded with $1 million or less.  Space-specific angel groups have formed such as Space Angels, EBAN Space, GEN Space, Seraphim Capital and more. Angels and VCs poured more than $3.25 Billion into space in 2018, a 29% increase over the previous year. With a large number of corporate entities rapidly acquiring new technologies developed by startups, there is an active exit environment which is crucial for angels and VCs.  International competition for space is also driving the speed of growth in this sector. Europe, China, Australia and other countries are growing their space entrepreneurship programs to keep competitive.

There are about 534 venture capital funds that have invested in space since 2009 with 114 of those making their first investment in 2018.  This is a place that angels should be investigating and getting in on the ground floor.

Rockies Venture Club first ever signature series themed “Aerospace Investing” will take place on Tuesday, May 7th 5-8pm at the CSU Denver Center. Join Us as we explore this interstellar field!

With 2019 in full swing, we at Rockies Venture Club want to, first and foremost, wish everyone a happy new year. With everyone back from the snow and the holidays, we thought we would start the year off strong.

Blockchain had a red hot year in 2019. For many, the technology is synonymous with cryptocurrencies after 2018’s tumultuous Bitcoin rollercoaster. As a result, blockchain is nothing but buzzword nonsense to a lot of folks.

Built as a technology to make things trustworthy, blockchain makes things ‘immutable‘. As such, blockchain is here to stay.

The top of the list? Voting, healthcare, and financial services, along with supply chain management, are all in the running to receive top impact from a technology designed to make trust easier.

Other industries that might see major shake ups land all across the board. For example, utilities may be able to switch out smart meters for sensors that utilize IoT and blockchain technologies.

Ohio decided that it would adopt the future with its major cities adopting major blockchain policy. McKinsey forecasted the impact by industry of blockchain (which investors may want to check out here to know when blockchain is an important part of an investment, or just a buzzword).

Read Ethan Harden’s outlook here to get the full picture.