A variety of factors paint the picture of Colorado’s recent startup ecosystem growth.
From funding announcements and expansion news, to anecdotal wins and community recognition; and, of course, data.
Innosphere Ventures, a Colorado incubator for science and technology companies, partnered with PitchBook prior to Covid-19 to collect and publish data that outlines the positive and negative attributes of Colorado’s venture capital ecosystem. It also seeks to highlight the challenges we see in accelerating early-stage growth.
The Colorado Venture Ecosystem Review analyzes a variety of venture data sources to illustrate where the ecosystem stands and how it can improve.
On Thursday, July 9, at 1 p.m. MST, Innosphere will host a webinar to discuss how these new findings can provide a pathway to support and accelerate Colorado's venture ecosystem and provide strategies on how we can improve access to capital in our state. Webinar registration found at https://conta.cc/3e4CvQj.
Now, onto our four takeaways from the report:
Deal value and count reach records in 2019
The state’s startups raised nearly $2.5 billion across 417 deals in 2019, according to the report, easily topping 2018’s totals. With more investment capital available across the country, this growth is encouraging, albeit expected. But, Colorado is not just seeing an increase in late-stage capital, seed funding is on the rise as well.
“Colorado’s economic performance stood out over the past decade as few states between the coasts were able to perform well,” said Innosphere CEO and General Partner Mike Freeman. “A key driver of this performance was growth in early-stage companies as well as supporting venture investment.”
Value in Colorado startups
It’s no secret that building a business in Colorado is cheaper than in coastal competitors, due in part to the state’s lower cost of living. The report shows that median pre-money valuations or seed and Series A Colorado venture deals are increasing, though still far lower than California, New York and Massachusetts. The median Series A valuation checks in at nearly $16 million, while the three previously mentioned ecosystems all top $20 million, according to Crunchbase. The same goes for seed stage deals, with Colorado coming in at a median of $6 million and California, New York and Massachusetts all above $8 million.
Industries on the rise
Early stage investments in specific industries are key indicators of rising verticals across the state; and a few industries stood out in 2019. Colorado SaaS companies raked in a record $178.5 million in early stage investment in 2019, topping the previous year’s total by nearly $40 million. Early stage healthtech startups also saw a boom in 2019, raising nearly $40 million across 16 deals, far outpacing 2018’s total of $20 million.
Missed opportunities for local investors
While funding activity continues to grow in Colorado’s startup scene, companies are increasingly looking out of state for the dollars to fund their growth. The data from the report shows that about two-thirds of the total investment dollars for local startups came from outside of Colorado.
Looking even further, Colorado investors are focusing much of their capital on investments made in companies outside of the state. So, local companies aren’t feeling the financial support from the Colorado investor community, and investors are focusing their investments elsewhere.
