Angel, corporate, venture and institutional investors are taking notice of Colorado’s growing crop of emerging companies, deploying close to $1B in financing in 2013. This analysis provides an in-depth look at the financing and exit landscape in Colorado as well as the investors and companies fueling the Colorado startup ecosystem.
Specifically we’ll cover:
- Financing Trends By Stage
- Financing Trends By Sector
- Comparing Boulder vs. Denver
- The Most Well-Funded Colorado Startups
- Investor League Tables
- Exit Activity
In 2013, investment deal activity in Colorado rose to a five-year high, growing 138% compared to 2009. While investors are writing more checks to Colorado startups, they aren’t necessarily bigger ones. Funding to Colorado companies has dropped after topping $1B in 2011 and came in at $930M last year.
While deal activity has increased dramatically, quarterly funding levels are up slightly from 2009, The spike in funding in Q3 of 2011 was the result of a notable $175M investment into biofuels startup Sundrop Fuels, the lion’s share of which came from natural gas company Chesapeake Energy Corp.
Financing Trends By Stage
In 2009 and 2010, early-stage activity at the seed and Series A stages took 38% and 32% of all funding in Colorado, respectively. As those companies have matured, late-stage funding has heated up – with Series D+ funding share hitting a five-year high in 2013. After taking 60%+ of all funding in the state in 2011 and 2012, mid-stage dollar share (Series B & Series C) contracted a bit in 2013 – falling to 46%.
In terms of deal activity, Series A deals have topped in terms of deal share in Colorado in three of the past five years. After hitting a high in 2012, seed deal share cooled off in 2013, falling to a five-year low at 18%. Late-stage deal share (Series D+) grew in 2013 from recent years, rising from 4% in 2012 to 16% in 2013.
Financing Trends By Sector
Compared to tech-heavy hubs like NY (which is almost exclusively internet and mobile companies), Colorado’s financing landscape is much more diverse across industries. After falling to 32% of overall funding in 2011, the tech sector (internet, mobile, computer hardware, and software industries) has seen a resurgence to take 49% of the state’s venture capital in 2013. Tech companies have been taking share from Colorado’s healthcare and energy companies, which together have taken about half of the state’s funding between 2009 and 2011.
Despite shifts in funding dollars, the breakdown by industry in terms of deals is much more range-bound. Last year almost 30% of Colorado’s deals involved internet companies and 49% involved tech companies overall and this has been fairly consistent over time highlighting the state’s balance from an industry perspective.
Comparing Boulder vs. Denver
Investigating trends among Colorado’s largest startup markets, we see that Boulder and Denver constitute the vast majority of the state’s investment activity. Since 2009, the two cities have taken in over 55% of funding dollars and 58% of all deals in the state.
Though Boulder has had the most financing deals among Colorado cities since 2009, its deal frequency has stagnated at around 80 deals per year since 2011. Annual funding for Boulder-based companies hit a peak in 2009 at $350M, but has since declined to only $209M in 2013.
Denver, unlike Boulder, has kept up its rapid pace of deal growth since 2009. Since then, the city’s deal count has increased almost five-fold from 20 to 90 deals in 2013, surpassing Boulder’s deal level for the first time. And funding in Denver hit a five-year high in 2013, increasing a whopping 188% compared to 2009.
The graphs below comparing Boulder and Denver do a good job of highlighting the trajectory of Denver.
The Most Well-Funded Colorado Startups
Colorado’s ten most-funded, still-private companies span a diverse set of industries with the tech, energy, and healthcare sectors accounting for three companies each, and consumer services accounting for one. Together, these ten companies have taken in over $1.6B in total venture capital.
Zayo Group, a bandwidth infrastructure service provider, has raised over $300M in venture capital since its Series A round in 2007. The company’s key VC backers include Oak Investment Partners, Battery Ventures, and Columbia Capital. Quintess, a vacation home rental platform, has raised approximately $250M from the likes of Scorpion Capital Partners, Greenwoods Capital Partners, Atlantic Capital Group, and more. Denver-based cloud identity management firm Ping Identity, backed by investors including Fidelity Ventures and General Catalyst Partners, is a tech IPO pipeline candidate.
Investor League Tables
We used CB Insights investor data to find the most active investors (based on number of companies funded) within Colorado since 2009. Boulder-based Foundry Group topped our list, having invested in the most Colorado-based startups in the past five years. Together with Access Venture Partners and High Country Ventures, the three VCs financed 60 Colorado companies since 2009.
Seven of the twelve VCs below are based in Colorado, signaling heavy local investment in the state’s startups. Siemens Venture Capital was the most active corporate VC in Colorado in the last five years.
Foundry Group led early-stage investments among VC firms, funding over twenty Colorado companies at the seed or Series A stages since 2009. The next most active VC, High Country Venture, funded eleven companies in the same period.
Again, a significant portion of the active early-stage investors in Colorado (6 of 10) are local investors. 9th Street Investments, the venture arm of ceramic manufacturer CoorsTek, is the only corporate venture fund on the list.
Among Colorado angel investors and groups, David Cohen, Bullet Time Ventures, and Golden Seeds stood out as the most active early-stage investors.
Access Venture Partners and Foundry Group topped our list of most active mid-stage VC investors since 2009. Close behind were Highway 12 Ventures, Grotech Ventures, and High Country Venture. Of note is that New Enterprise Associates, one of the largest venture capital firms in the country, made the list with investments in a handful of mid-stage deals over the period.
Again, six of the ten investors listed below are Colorado-based.
Investing behavior at the later stages introduced some newer names to the mix as compared to the early- and mid-stages. The most active investor in this category, Vista Ventures, financed four companies in the Series D round or later. Other active late-stage venture capitalists include Appian Ventures, Access Ventures Partners, and Foundry Group.
The corporate venture capital funds In-Q-Tel (created by the CIA), Siemens Venture Capital, and Google Ventures also financed multiple late-stage companies in the last five years including well-funded renewable energy company Cool Planet Energy Systems. Of the fifteen listed investors below, eight are based in Colorado implying extensive local investment in late-stage startups.
Colorado-based private companies saw 108 exits per year in 2012 and stayed mostly level at 101 exits last year. The state has seen an increase in IPO exits both as a fraction of total exits and in absolute terms. Colorado was home to three IPOs in 2011 versus eight in 2013, but even so, M&A events continue to make up the vast majority of Colorado company exits as would be expected.
Denver led the state’s exit performance with 82 exited companies in the past three years, compared to 49 exits of Boulder-based companies.
Boulder Ventures saw seven of its Colorado companies exit since 2009, topping the list of investors by exit volume. Well-known global firms New Enterprise Associates and First Round Capital also had several of their Colorado-based companies exit in the period.
It is worth noting that, had venture accelerators been considered, TechStars would have actually ranked first on the list below.
This analysis includes private company investments in Colorado by venture capital firms, corporations, corporate venture investors, hedge funds/mutual funds, angels, incubators and accelerators. Debt, grants and lines of credit were not considered in this dataset.