Denver largely maintained its momentum in the venture capital space in early 2022, despite activity tapering back in the broader U.S. market.
The quarter brought 92 deals to Denver, largely in line with the prior two quarters, despite being down from the 2021 average of about 103 per quarter, according to data published by PitchBook. Those deals were worth a combined total of about $1 billion, down from an average of about $1.6 billion per quarter in 2021.
Both of those metrics are up significantly compared to the quarterly averages since 2014, which were $500 million per quarter and 72 deals per quarter, according to the PitchBook data.
Part of the momentum was lost to slower exits to public markets during the quarter. Public investors turned sharply to profitability, putting pressure on VC-backed startups that would otherwise be looking for an initial public offering, according to the report.
Environmental startup Project Canary’s $111 million Series B topped out the list as the largest Denver-area venture capital investment of the quarter. The company plans to use those funds to fuel growth that will more than double its headcount within a year. Project Canary offers oil and gas producers equipment to monitor for emissions leaks in real time and provides data allowing the companies to find and fix leaks quickly.
One other deal also reached at least $100 million in the Denver area. Evolve Vacation Rental raised $100 million in February, boosting its valuation from $600 million to $700 million. Evolve was at the top of the Denver Business Journal’s Fast 50 list in the large category, meaning it was the fastest-growing company with $29.1 million to $64 million in annual revenue. It grew by 145%.
Across the country, deal value dropped from $95.4 billion in the fourth quarter to $70.7 billion in the first quarter, according to PitchBook. The number of deals was also down from 4,098 in the fourth quarter, landing at 3,723.
Executives and others in the market have been expecting this moderation of the growth in Denver’s venture capital markets in the near term. There’s still enough capital in the marketplace to fuel deals, but investors are starting to slow the pace to some extent, and they’re becoming more conservative with their valuations, Scott Miller, managing director of Endeavor Colorado, said in an interview with the Denver Business Journal in March.
Despite that, Miller said he thinks activity in the state will continue to rise long term.
