Like many of you, I have been watching the Olympics this week and while watching the Ice Dancing events, I had an observation – pitching your company to Venture Capital Investors is like competing in the Olympics. Read more

 There is one place where the most angel and VC investors gather in Colorado to see pitches every year and that is the Angel Capital Summit. Companies who are raising capital for a startup and investors from all over Colorado and around the country come to see some of the best of what Colorado has to offer – and with four of the five cities for startups in the US you can be sure that the quality of these companies will be high. Read more

Thanks for this blog post referral from Jim Callahan of Janiczek & Company in Denver.  Lots of new trends in angel investing including younger angels getting involved, more engagement by Registered Investment Advisors in the Angel community and a growing divide among companies that work with Angel groups vs. those that try to go the crowdfunding route.  It’s a good read.


A New Game Not Just For Rich Guys


“Five or 10 years ago,  angel investing was a bit of a rich guy’s game,” says Allan May, managing director of Emergent Medical Partners, an investment group that focuses on the health-care, diagnostic and biotech industries.

Not anymore.

Accredited investors in fledgling companies who come together in so-called angel groups now are often in their 30s or 40s, says May. “They’ve made a block of money, they’re not über-rich in most cases. Often they’ve got day jobs or things they do. But they’re very serious angel investors; they’re not hobbyists.”

Advisors also need to take note: As angel investing becomes mainstream, RIAs will increasingly be the go-to people for fledgling companies looking for start-up funds.

What has changed since the 1980s, when the first angel investors were mega-wealthy individuals capable of putting a couple of million dollars into a start-up, is that the cost of starting companies has plummeted as technology development has gotten faster, cheaper and more powerful. Today, more accredited angel investors can fund more entrepreneurs for modest amounts of money.

Going Professional
In the mid-to-late 1990s, as more and more individuals started to invest in start-ups, they looked for kindred souls to help them find new companies and raise capital, according to David S. Rose, managing partner of Rose Tech Ventures and chief executive of Gust, an investor-relations platform. They began to form angel groups of a dozen to 100 people and, as the Internet came on the scene, put up Web sites seeking pitches. They would pool their deal flow and their expertise for doing due diligence on these companies. Then they would pool their money so each person could invest, say, $25,000.

In recent years, the angel group class of investment has professionalized. “One could say it has gone from being a hobby kind of enterprise, a club, to serious investing,” says May. The due diligence angel groups conduct is quantitatively and qualitatively much more sophisticated today. “It’s serious diligence on intellectual property, on the business model, the financial projections,” he says. In addition, the industry groups Angel Capital Association and Angel Resource Institute have educated investors about best practices.

Many angel groups, especially on the two coasts, are loaded with operational talent. More than 90% of Emergent Medical Partners is ex-CEOs, founders, CTOs and CFOs of biotech start-ups. “We bring to the table not only capital, but also commercialization skills,” says May. “We have successfully commercialized the technologies we’re investing in.”

As angel groups have matured, adopted best practices and become more professional, they have syndicated, sometimes in complex arrangements. According to the 2012 HALO Report, 70% of angel group deals involved co-investors. Syndication brings more deals, greater diversity and more investors. May sees this in his angel group, which co-invests with family offices and foundations.

Family offices and family foundations once used venture capital as their screen, and either co-invested or became limited partners in venture funds as the vehicle to address those investments. Now they’re investing directly without the middleman.

“With venture capital having collapsed after 2008, particularly in health care, they’re looking seriously at doing that same thing with angel groups,” May says. “The thought is that if we really focus on investing in deals where angel groups have or are investing and have or are participating in the management of the company, that’s a good filter and a good mechanism for building value going forward.”

The syndication phenomenon has also increased due diligence on prospective investments. In co-investment deals, companies are being vetted not only by the initial group, but also by every group that comes into the syndicate.

RIAs In The Game
Within the last decade or so, the average angel group member in Gust’s network has invested $25,000 or $30,000 per company and done five or 10 deals in total, Rose says. But there is a lot more money sitting around in family offices and under people’s mattresses. The SEC estimates that there are some 8 million accredited investors in the U.S., those with an income of $200,000 or a net worth of $1 million, excluding the value of their home. Big chunks of that money tend to be mentored by RIAs. “As the angel investing world goes mainstream, you’re going to find more of that capital coming in, and therefore more and more RIAs in the mix,” says Rose. “Ultimately, the RIA will be the person to whom the company is pitching on behalf of the client.

The RIA will do the grunt work of angel investing, he says. Because it is a complicated business, most investors interested in early-stage investing would prefer their advisor to handle the entire matter up to making the final decision to invest. In this scenario, it will behoove the advisor to join angel groups.
John Huston, founder and manager of Ohio Tech Angels, a group that invests exclusively in Ohio start-ups, is skeptical about RIAs’ enthusiasm for angel investing. “RIAs would lose fee income if a percentage of a client’s portfolio were taken out and invested with an angel group,” says Huston. “They would much rather put them into other alternative asset class opportunities in which they can get a fee.” Moreover, RIAs generally lack expertise to evaluate start-up investment opportunities, he says.

But Huston concedes that RIAs with clients who have enough interest to look at high-tech start-up deals would be well served to reach out to angel groups, attend meetings and get into the deal flow. He says his own investment advisor, who belongs to two angel groups, brings him deals that his clients bring to him. “One of the beautiful aspects of belonging to an angel group is that the smart RIAs use membership in a group as a big deflection bucket.” By this he means that when clients come in with an investment idea, their advisors can suggest that the idea be vetted by an angel group—people who see a deal every day and can provide a dispassionate assessment. In this way, the RIA takes himself off the hook. “Where so many people lose it is that they just don’t get an adequate return,” says Huston. “Just because a company turns into a great company doesn’t mean it’s a great investment in the start-up realm.”

The Liquidity Issue
One issue with private company ownership shares is lack of liquidity. “If you’re an angel investor and you invest in a company, you’re stuck holding on to that until the company goes bankrupt or is sold or goes public,” says Rose. “There’s no recourse for an angel investor.”

When Facebook and LinkedIn were edging toward IPOs a couple of years ago, a secondary market sprung up for outstanding employee or founder shares. “It was all about companies that people might want to buy into just because of their size or brand name without knowing their financials,” says Rose. “They ‘knew’ it would go public at a higher price. But nobody who was buying shares at that point could make a reasoned decision because there was no public material available about the company or its sales or anything else.” After the companies went public, the secondary market for private company shares dried up.

Rose expects this to change. At a recent Venture Forward Conference in New York City, panelists looked toward the emergence of platforms that would handle both the primary sales offering of a company’s stock and a secondary market for people to buy those shares. During the conference, Barry Silbert, founder of SecondMarket, announced plans for a platform to do primary and secondary sales of private companies.

Other platforms allow companies and investors to encounter one another. On the Gust platform, more than 200,000 start-ups display their financial and business information, and this is accessible to more than 1,100 angel groups searching for investment opportunities.

In July, the SEC lifted the eight-decade ban on general solicitation and general advertising on private securities deals. In a statement, Silbert says that “a much deeper, broader group of accredited investors will have the opportunity to hear about—and potentially invest in—private companies and funds.”
SecondMarket’s platform would be a general solicitation product that would enable issuers to handle a higher volume of investor interest and greater regulatory requirements that will accompany their general solicitation efforts, he says.

“This had to happen,” Rose says. “The general solicitation rules were to bring a little bit of sense into this operation. Now you can tell people that you’re raising money, but you can sell it only to the same people you were selling it to before, who are accredited investors.”

However, May expects angel groups, including Emergent Medical Partners, to adopt rules or practices that preclude investing with an entrepreneur who has advertised for investors on crowd-funding sites. Angel investors in biotech and diagnostics start-ups are going to need more capital than an initial $500,000 or $1 million to exit, he says. “You’re going to need follow-on investors, probably institutional money, whether [it be] venture capital or corporate strategic or family offices; you’re going to need partners.”

Huston’s Ohio Tech Angels will also eschew start-ups that advertise. He says those who invest through crowd funding invest in entrepreneurs they have never met and probably won’t. “Why would they do that? The answer is because they care less about building entrepreneurial wealth than their own wealth. I’m not maligning that. I’m just saying we take a much, much more personal view.”


by James Lester, Managing Consultant with Cleantech Finance

Rockies Venture Club presenter Sun Number has announced an award housesof approximately $1 million to expand the geographic coverage of its rooftop solar assessment services through the Department of Energy’s SunShot Incubator program. The award also enables Sun Number to expand the scope of its services by providing additional data that solar contractors will use to grow their businesses and lower customer acquisition costs.

“Being chosen as a SunShot 8 Incubator award recipient to commercialize Sun Number data will significantly accelerate our growth as a company.  The SunShot funding will be used to quickly expand into new cities increasing the number of buildings analyzed to approximately 35 million,” said David Herrmann, co-founder of Sun Number.

Herrmann added, “The funding will also be used to integrate additional data into the analysis of properties, including data on the likelihood of a building owner qualifying for a solar lease or loan, and the statistical likelihood that a building owner will be interested in solar based on a behavioral model that will be developed.  The data that Sun Number provides brings an installer closer to being able to complete the design of a PV system from their computer in a fraction of the time it currently takes.”

According to the company, Sun Number Scores will now include the economic suitability of a property for solar. Integrating the suitability of the roof for solar with the local cost of electricity, incentives, tax benefits, and the local cost of installation, the Sun Number Score will tell a homeowner if the economics of solar make sense for their building. The new Sun Number Score will be dynamic and as the variables mentioned above change, so will the score. Homeowners with a low score today will be able to set a threshold for the future and get notified when their Sun Number Score reaches that threshold.

The SunShot Program, initiated by the DOE in 2007, has incubated the emergence of 58 U.S. startups. The program has leveraged $104 million in federal money to generate more than $1.7 billion in private sector investment, or nearly $18 of private sector buy-in for every dollar of taxpayer support.

The long-term SunShot vision is for the U.S. to get 14 percent of its electricity from solar by 2030 and 27 percent by 2050 and to drive down the cost of solar electricity to $0.06 per kilowatt-hour.

“Over the last three years, the cost of a solar energy system has dropped by more than 70 percent,” DOE Secretary Ernest Moniz said in announcing the awards. The new investments will back more programs that reduce “soft costs like permitting, installation and interconnection” and “improve hardware performance and efficiency.”

Sun Number, previously profiled on the RVC blog here, was co-founded by Herrmann and Ryan Miller after receiving a $400,000 grant last year from the Sunshot Incubator. Sun Number used the funding to develop a tool to make it easier, faster and less expensive for both homeowners and solar companies to analyze the solar potential individual properties. The tool, known as a Sun Number Score, engages consumers by providing a solar analysis of their home or office building with an easy to understand score between 1 and 100, and then putting them in touch with a local solar professional. Solar professionals are able use the tool to reduce the costs of customer acquisition, often called ‘soft costs’.

If you would like to learn more about Sun Number, visit their website or contact David Herrmann at

You think you can sell your company? Learn from those who have done it at 2013 CCC next week!


The entrepreneur’s dream: starting from scratch, building something significant, and creating value for everyonesuccess-next-exit on your side. Maybe that means holding on to a business you could retire on or pass down to your family. If you’re in the VC world, taking on investors means you are expected to cash out, hopefully for far more than was invested. Acquisitions and IPOs are great, but why doesn’t it happen more often? A successful exit can be a rising tide that lifts the boats around it – why do so few entrepreneurs actually make it? Beyond a little luck, what does it take to get there?

I don’t know all the answers to these questions. If I did, I might be taking a yacht to the island I just bought to relax for the rest of my life. More likely, I would be looking for the next masochistic opportunity to work really hard at something for no cash for years, in order to do it all over again. I haven’t exited a company (yet) so I can’t tell you the secrets from experience. Thankfully, a few serial entrepreneurs who have been through it all will share their minds on the subject at the Colorado Capital Conference November 6th and 7th.  This year’s theme is “begin with the end in mind” – Habit #2 of Stephen Covey’s 7 Habits of Highly Effective People.

Here are this year’s speakers, who together have built billions of dollars in value in Colorado:

Ryan Martens, Founder and Chief Technology Officer of Rally Software. The Boulder Colorado-based company, which specializes in agile project management software, priced its 6 million shares at $14, raising $84 million at a valuation of $315 million which has more than doubled since it’s IPO earlier this year.

John Spiers, CEO and Founder of NexGen Storage. John Spiers story of entrepreneurial lightning striking twice, first with his sale of LeftHand Networks to HP and this year’s sale of Nexgen to Fusion-IO for $119 million.
Kevin Reddy, CEO of Noodles & Co.   Noodles started with $73,000 in personal funds from founder Aaron Kennedy and raised $200,000 from friends and family.  The company grew to $300 million in sales and had an IPO that more than doubled in its first day and has continued to grow since then to a market cap of over $1.3 billion.
– Steve Georgis, CEO of LineRate.   Louisville based LineRate received early venture backing from Boulder Ventures and wroked in stealth mode with its Software Defined Networking product that increases speed and efficiency in data centers and just ten months after their product announcement achieved success with an acquisition by F5 Networks in one of the largest acquisitions in the Boulder area in the past several years.

Jared Polis, Congressman and a two-time successful entrepreneurial exit success story! His first exit with for $780 million and then ProFlowers for $480 million.

– Morgan Rogers McMillan, Executive Director of Entrepreneurs Foundation of Colorado (EFCO). EFCO brings together local venture capitalists and start-ups to set aside 1 percent of their profits to charity.

Register here for the 2013 Colorado Capital Conference. The opening Gala in Denver is the evening of Wednesday November 6th, and the full day conference in Golden is Thursday the 7th. Hope to see you there!

The Rockies Venture Club has announced the companies that will pitch at the Colorado Capital Conference. On Thursday, November 7th, the following 12 will give investor presentations:



These companies are now working with their volunteer individual ‘pitch mentors’ from the Rockies Venture Club. RVC will also provide volunteer ‘deal mentors’ experienced in startup financing to help entrepreneurs navigate investor term sheets and the post-pitch process.


This year marks the 25th annual Colorado Capital Conference and will be hosted in Denver and Golden on November 6th and 7th, 2013. It is one of the biggest events for early stage companies and investors in Colorado, and features a great speaker lineup this year. Register here if you haven’t already!

On November 6th and 7th, the Rockies Venture Club will host the 25th annual Colorado Capital Conference in Denver and Golden, CO. 12 companies will be selected to pitch to investors, and the 2-day event will focus on recent Untitledsuccessful exits from other Colorado businesses.

2013 CCC speakers include Jim Lejeal, CFO of Rally Software that went public this April, and John Spiers, CEO of NexGen Storage, who sold to Fusion-io just a couple weeks later. Congressman (and Techstars founder) Jared Polis will also keynote the conference. A rare breed in politics, the Boulder native earned substantial entrepreneurial success, including multiple exits and an E&Y Entrepreneur of the Year Award, before running for office.

Applications to pitch are competitive, and open until October 15th. Conference attendees and investors can find early-bird discount registration until October 10th. The Colorado Capital Conference is one of the most important events of the year in Colorado both for investors, and companies looking to raise $100k to $2 million. In 2012, companies that pitched through Rockies Venture Club received over $22 million in financing, and this year’s CCC is sure to kick off the last big funding push of the year!


By Michael Price,

Executive Director of Coalition for a Connected West

Innovation takes action. That’s a core takeaway from Denver Startup Week and the APEX Conference the prior week.  Both events were jam packed with amazing entrepreneurs who told inspiring stories of perseverance and anecdotes of how they made their ideas a reality.  Now people are wondering if the energy and excitement generated by DSW will have a lasting impact.  That may be the wrong question to ask.

DSW shouldn’t be looked at in isolation. The event is the culmination of years of hard work and is predicated on the fact that a startup culture already existed in Colorado.  Before DSW there were small meetups in coffee shops, at bars and larger ones like New Tech.  DSW’s existence and subsequent success is actually a sign that Colorado’s startup community is growing stronger.  If the community is going to continue to mature, it’s going to take constant action.

“Do it yourself first,” is a principle espoused by the book Rework by Jason Fried and David Heinemeier Hanson (creator of Ruby on Rails).  Colorado’s most successful startup entrepreneurs are people who embrace this perspective, and it’s a trait that has weaved itself into the local DNA.  Entrepreneurs see gaps in the market, create solutions and provide services that consumers are compelled to buy.  They don’t always need a lot of money or government support, they just do it.

Colorado’s spirit of innovation has grown despite threats to its existence. Using outdated models for managing markets, regulators can stifle innovation or, even worse, stop it in its tracks.  While there’s an interest in protecting consumers from bad actors, regulators can sometimes overreach and prevent great ideas from reaching their full potential.

That’s why it’s important that entrepreneurs be the leaders of the startup community, a philosophy of Brad Feld’s “Boulder Thesis.”

Entrepreneurs are the best vessels to carry the message that innovation can’t be contained and the winners and losers should be chosen by the market.  Those with the ability to take ideas from conception to consumer should be rewarded and allowed to compete.

At the Coalition for a Connected West, we strive to generate a dialogue between entrepreneurs and policymakers so that innovation in Colorado can continue to thrive.  We have a great advisory board of thought leaders, who also happen to be entrepreneurs, and are compelled to get involved.  They are the ones who can have the most impact because they live it every day.

If the startup community in Colorado is going to continue growing, it’ll take a commitment from entrepreneurs to be both leaders of their businesses and of their communities.  Have awareness about the policies that affect your community.  Learn more and work with organizations like CCW, Rockies Venture Club and Colorado Technology Association to make a difference.  Take our future in our own hands.


Crowdfunding has been a growing force in the financial industry, disrupting sectors each time it reaches a new one. p2biMicroloan platforms like Kiva and peer-to-peer lending such as Prosper have proven to be a quickly growing alternative in debt, and have increased access and choice for those looking for financing. Companies such as Indiegogo and Kickstarter have given rise to donation and pre-sale based funding for a wide range of people and businesses, and with the implementation of the JOBS act, equity can be sold over similar platforms as well. New technologies that connect people in meaningful ways have a way of changing the world, and P2Bi plans to be a part of that.


One area of financing that has not been disrupted by crowdfunding (yet) is the business receivables market. The idea of a business selling its invoices (accounts receivable) to a 3rd party to raise cash isn’t a new idea, and was even established in the Code of Hammurabi nearly 4,000 years ago. However, this $136 billion industry (in the US alone) has been quiet with relatively little innovation. Transparency has been an issue in the factoring industry in the past, and since it usually involves business-to-business transactions, it isn’t found in a public light very often.

P2Bi (Peer-to-Business Investor) is working to change this. As the first crowdfunded business receivables market, they have opened up a new and transparent path to finance growing companies, and have been connecting investors with small businesses since early 2012. This is an increasingly important gap to fill – according to a Pepperdine report, nearly 2/3 of small businesses in the US were recently unable to secure bank loans, where many had the ability and desire to repay loans but not the credit for a traditional bank to provide funding to them. With P2Bi, business owners are able to find competitively priced loans, and accredited investors can buy into portfolios of asset-backed business receivables, which are likely to generate a higher interest rate than cash instruments that are currently returning closer to 0 than even 1%. P2Bi works with a wide variety of small businesses, with the exception of transportation and construction.

P2Bi recently raised a Series A investment round, including investors from the Rockies Venture Club and John Spiers (who recently exited NexGen), among others. This follows their August 2012 seed round, and will be used to help the business scale. Among other activities, they will be hiring for multiple positions (LINK) and relocating from Louisville, CO to Denver. “We’re really excited about moving to Denver. It makes the most sense with the density of businesses and the finance industry in Denver,” said Krista Morgan, co-founder and CMO. P2Bi will also benefit from local investors and connections in the community. “Peter Adams (of RVC) was really instrumental in getting investors there and convincing them to come on board, Krista said.

Congratulations to P2Bi on closing their Series A, and best wishes helping small businesses grow while creating value in Colorado!

Tim Harvey is a Master’s of Engineering Management student at CU-Boulder and a regular contributor to the Rockies Venture Club. He has started a few businesses (nothing big yet) and most recently worked as a Fortune 500 marketing consultant with a neuroscience-based startup. Prior to that he was an investment advisor for individuals and corporations, holding FINRA Series 7 and 66 licenses.

Rocky Mountain Innosphere, an incubator focused on high impact scientific and technology startup companies, recently announced the launch of the cleantech focused “Innosphere at CREED”. CREED is the Colorado Center for Renewable Energy Economic Development, co-located with the National Renewable Energy Laboratory (NREL) in Golden, Colorado. Until now, Innosphere’s sole physical location has been in Fort Collins, Colorado, so the new location represents a significant geographic expansion.Innosphere_Circle
Innosphere’s move into CREED comes a few months after CleanLaunch, an incubator focused exclusively on cleantech, moved out. Four CleanLaunch companies transitioned into Innosphere during this time, including Fabriq, US e-Chromic, Solid Power, and EcoVapor Recovery Systems. Rob Writz, former Director of New Ventures at CleanLaunch, is now Innosphere’s Director of Clean Technology Programs. Clearly, Innosphere at CREED has enabled some continuity in the support available to former CleanLaunch companies, and it has preserved the presence of a cleantech focused incubator at CREED, which are both good things for Colorado’s cleantech industry.

Historically Innosphere’s industry focus has been much broader than CleanLaunch’s was, but according to Innosphere CEO Mike Freeman, Innosphere has always been committed to the cleantech space. This is reflected by the fact that Innosphere has nine current cleantech clients in addition to the four that recently came over from CleanLaunch. Innosphere at CREED reinforces this commitment to cleantech, and strengthens it through a closer relationship with NREL and NREL’s ecosystem of cleantech focused investors and partners.
Cleantech is an incredibly broad industry, so Innosphere has chosen four specific segments to focus on, including transportation technologies, building efficiency, electrical systems integration, and sustainable materials. Even these segments are extremely broad, but they are still narrower than the cleantech industry as a whole, which allows Innosphere to provide deeper support than they could if they tried to cover every clean technology.

Overall I believe Innosphere’s move into CREED represents a positive development for cleantech in Colorado, in part because it brings a new organization and some fresh eyes to explore ways to help local entrepreneurs take advantage of all that NREL has to offer. Sometimes it helps to shake things up a bit when tackling something as challenging as commercializing new clean technologies, and combining the substantial organizations of NREL and Innosphere might open up new opportunities and new paths to funding for startups that weren’t available, or weren’t easy to find, before.
As a next step, I’d love to see Innosphere open up a space for cleantech entrepreneurs in Boulder. Given the interest in co-working spaces there, which I’ve experienced first-hand at Colab Boulder, I don’t think they’d have a hard time filling it with paying tenants. Impact HUB Boulder, a co-working space for those trying to create a positive impact, comes closest to meeting this need today, but I think there would still be demand for a space dedicated to cleantech. I’m sure Innosphere has its hands full integrating its new CREED site, so I don’t expect to see any new sites opening soon, but I’ll keep my fingers crossed.

Jay Holman is Principal of Venture to Market LLC, a Boulder based consultancy providing go to market services for new ventures in the cleantech industry.