Despite a slowdown in startup investing across the country, Denver companies raised $1.1 billion in venture funding during the second quarter of 2022 — an increase of 116% from the city's average quarterly funding over the past year, according to investment firm York IE.
The growth landed Denver on York IE's latest list of the 10 fastest-growing startup cities. Denver was listed as No. 10 behind Kirkland, Washington; Stanford, California; Madison, Wisconsin; Birmingham, Alabama; Wilmington, Delaware; Ann Arbor, Michigan; Cleveland, Ohio; Santa Barbara, California; and Dover, Delaware.
Across the United States, startups received $58.7 billion during the second quarter of 2022. That's a decrease of 18.6% from the first quarter of the year and a 20.8% decline when compared to the second quarter of 2021, according to the report. Investors attribute the slowdown to market turmoil and the overall uncertainty about macroeconomic conditions.
However, Kyle York, the CEO of York IE, argued that startups can still find the money they need to grow if they're "focused on building successful, sustainable companies," the report states. Kirkland, which was the fastest-growing city for Q2, increased its funding by 1,724%, raising nearly $300 million over eight rounds.
"If you’re not playing the Silicon Valley growth-at-all-costs game of chasing vanity metrics on a fundraising hamster wheel, you’ll be able to find there is a ton of capital available to you from many committed partners,” York said in the report.
The report was the third published by York IE that has highlighted U.S. cities where startup funding has increased the most, along with the companies that are driving growth in those locations. Denver didn't make the previous reports, which were published following the third and fourth quarters of 2021.
"Denver makes its debut on this list thanks to several mile-high funding rounds," the report states.
The second quarter brought 27 funding rounds for Denver businesses, which totaled $1.1 billion. The largest was a $400M Series B financing round for Velocity Global, a Denver-based startup that helps companies hire in other countries and establish international locations.
The next-largest funding round was a $350M Series C for Crusoe Energy Systems, a company that uses wasted natural gas as a power source for bitcoin-mining operations. The Denver-based upskilling leader Guild Education brought in the third-largest round, with $175M invested in June. Investors in the Series F financing round included media leader Oprah Winfrey.
Rounding out the top five funding rounds in Denver were Housecall Pro and Shenandoah Energy Partners. Housecall Pro, which developed a mobile software platform for home-service businesses, raised $65 million in June, and Shenandoah Energy Partners went through a $34M funding round.
In the same report, York IE also listed Denver as one of the country's top startup hubs, where companies received the most funding in Q2. Denver was ranked No. 5, behind San Francisco; New York; Boston; Palo Alto, California; and Cambridge, Massachusetts. Ranked below Denver were Los Angeles, Seattle, Austin, Texas and Wilmington, Delaware.
San Francisco startups raised the most funding, with nearly $9.8 million raised through 278 funding rounds during Q2.
Several cities that were on the list of top startup hubs in York IE's previous report didn't qualify this time because of a drop in funding. Those included: San Jose, California; Mountain View, California; Waltham, Massachusetts; and Miami.
