During the Covid-19 pandemic when remote work became the norm, venture capital dollars were dislodged from coasted tech hubs and became more dispersed across the United States.
As the country returned to a closer version of normal in 2022, that phenomenon reversed — for the most part.
About 73% of capital raised during 2022 was funneled into New York and the San Francisco Bay Area, according to the latest Venture Monitor Report published by PitchBook and the National Venture Capital Association. But a few cities — Denver among them — bucked the trend. Along with startups in Nashville and Philadelphia, Denver-based companies brought in an amount of capital much higher than pre-pandemic levels.
Colorado startups raised $5.7 billion in 2022, lower than its record of $7 billion in 2021 but significantly more than the $3 billion raised in both 2020 and 2019.
"As we emerge on the other side, there has been a return to traditional VC epicenters," the report states. "However, there have been some notable exceptions to this trend in middle-market and smaller ecosystems, such as Denver, Nashville and Philadelphia, where capital raised has been on par or ahead of 2021 figures."
The funding environment for Colorado startups wasn't all rosy in 2022. As fears of a recession loomed toward the end of the year, venture capitalists slowed their investments.
In Colorado, the number of deals declined during the third and fourth quarters. The end of 2022 saw only 79 venture capital deals, the fewest since the fourth quarter of 2016 when 71 startups were funded.
Funding amounts remained high in the last half of the year, despite the number of deals falling. While only 79 startups snagged deals during Q4, they raised $1.4 billion. In contrast, the 71 startups in Q4 of 2016 raised a total of $298 million. Q3 of 2022 also saw fewer but bigger deals for Colorado startups than in the prior quarters.
Throughout last year, 14 startups raised more than $100 million each, according to PitchBook data. Here's a look at the year's biggest deals.
Crusoe Energy Systems: $505 million
The biggest deal of the year went to Crusoe Energy Systems. The startup, founded in 2019, pioneered building systems that capture natural gas being flared at an oil well and burning it to generate electricity that powers cryptocurrency-generating computers onsite. It hit unicorn status with its $505 million Series C deal in April. According to PitchBook, it was valued at $1.8 billion at the time.
Velocity Global: $400 million
Velocity Global, a Denver startup that helps companies hire in other countries and establish international locations, raised a $400 million Series B round in May. As of then, the startup had helped more than 1,200 client companies find overseas talent and hire a workforce in other countries without having to establish a corporate structure elsewhere.
DispatchHealth: $332 million
The Denver health-tech unicorn DispatchHealth raised $257 million in venture capital and $75 million in debt in November. CEO Mark Prather said his company, which sends caretakers to patients’ homes to provide at-home care, would use the funding to build a technology platform capable of onboarding and triaging patients.
Pie Insurance: $315 million
Pie Insurance, dually headquartered in Denver and Washington, D.C., raised a $315 million Series D round in September, more than doubling the total capital the company has raised since its founding in 2017. Since then, the insurtech startup launched a new line of business and started the process of becoming a full-stack carrier. "We're working really hard to make Pie a household name for small businesses," Craig told the Denver Business Journal in December.
Guild Education: $265 million
Guild Education raised a total of $265 million in a Series F round last year, which included an investment from media leader Oprah Winfrey. Guild, founded by Rachel Romer, is an upskilling company that serves as a connector between a business's employees and education partners to allow for debt-free educational opportunities. The deal helped make 2022 a record-breaking fundraising year for female-founded startups in Colorado.
Pax8: $185 million
Pax8, a business-to-business cloud services distributor, reached unicorn status when it raised a $185 million in April. According to PitchBook, it was valued at $1.7 billion at the time. The startup provides customers and partners with a marketplace and platform in which to buy, sell and manage cloud products. It's been growing rapidly in recent years and was looking to increase its headcount with the infusion of capital.
Everside Health Group: $164 million
Everisde Health Group, formerly known as Paladina Health, hit unicorn status with its $164 million round in July. The raise was announced just one week after the startup withdrew its request for an initial public offering, citing market conditions. It planned to use the venture capital to build more health care centers, invest in technology and continue an M&A strategy.
Meati Foods: $150 million
Boulder's plant-based protein maker Meati Foods raised $150 million in 2022 to finish building its “Mega Ranch” factory and start developing larger-scale commercial production. Meati makes meat-like "chicken" and "steak" cutlets from mycelium, a mushroom root, that it grows in tanks, harvests and flavors. The company’s breaded chicken cutlets and steaks started being sold in three Sprouts grocery stores in the Denver-Boulder area in July.
Housecall Pro: $125 million
Housecall Pro, a remote tech company with an office and CEO in Denver, raised a $125 million Series D round in July. The raise lifted the startup to unicorn status, with a valuation of $1.1 billion, according to Pitchbook. Housecall Pro's mobile software platform is used by about 27,000 home-service businesses, including plumbers, cleaners, electricians and HVAC technicians, to connect with homeowners, handle payments and manage their schedules, among other functions.
Ocelot: $117 million
The Boulder edtech company Ocelot snagged $117 million in its first-ever outside investment. The Boulder startup, which facilitates communication between universities and their students, was founded in 2003. Ocelot created a platform that allows students, staff, professors and administrators to communicate with each other. It uses an AI-powered chatbot, two-way texting and live chatting for student outreach and has a library of thousands of video explainers and question-and-answer pages.
Project Canary: $111 million
Denver's Project Canary raised a $111 million Series B round at the start of 2022, enabling its plan to hire dozens of employees. The startup uses equipment to monitor for carbon dioxide and methane emissions leaks at the well pads of oil and gas producers. The tech provides data in real time, allowing the companies to find and fix leaks quickly. Project Canary has found its footing in the oil and gas industry, as producers are pledging to reduce and completely offset methane emissions to combat their contributions to climate change.
Infleqtion: $110 million
Boulder-based Infleqtion, formerly known as ColdQuanta, is on a quest to commercialize its quantum technology, and it raised $110 million in November to push the effort forward. The company is building out its product portfolio and racing to become one of the first companies to harness and sell quantum tech to commercial customers. The Series B rounded included an investment from Breakthrough Victoria, a government-managed fund in Victoria, Australia. Infleqtion will use that portion of the funding to open a new quantum computing and technology facility at the Swinburne University of Technology in Melbourne.
Jetti Resources: $100 million
Boulder's Jetti Resources raised a $100 million Series D round in October, launching the startup to unicorn status with a $2.6 billion valuation. Jetti developed the technology to extract copper from low-grade ore that goes unused at existing copper mines. The demand for copper is expected to grow substantially in coming years because of its use to produce drivetrains for electric vehicles.
Evolve Vacation Rentals: $100 million
Evolve, a vacation rental hospitality company, raised $100 million in February to build out its technology and grow its staff. At the time, Evolve managed more than 19,000 homes in 750 destinations and generated more than $2 billion in rental income for its owners. The company helps vetted homeowners rent their properties and takes a 10% management fee for helping to get these homes booked.
This article has been updated to include Infleqtion's $110 million raise in November and the correct dual headquarters location of Pie Insurance.
