The Greater Colorado Venture Fund, based in Durango, closed a $25 million fund that will be used to invest in 25 to 30 rural startups over the next five years, the investment company announced Tuesday.
The fund is the second raised by the Greater Colorado Venture Fund. It closed its debut fund of $17.5 million in 2018, which it used to make 29 investments across Colorado. The investment company plans to focus the new funds on startups in the outdoor recreation industry, as well as cybersecurity, government technology, energy, aerospace, agriculture technology and consumer goods.
The new fund will help "drive meaningful change in a greatly underserved and overlooked market," said the news release announcing the fund. According to fund managers, less than 1% of venture capital invested in Colorado startups goes to companies based in rural communities.
"We continue to be inspired by the quality of founders that we find in Colorado, especially as we emerge from a COVID world," Marc Nager, a co-founder of the fund, said in a statement. "We’re doubling down on our thesis that founders, and those who want to join them, want to prioritize quality location and lifestyle to create both greater personal and economic outcomes for themselves and the communities they are a part of."
The $25 million fund was raised in collaboration with the Colorado Venture Authority, which is a political subdivision of the state that's governed by a board of directors. Its mission is to support Colorado entrepreneurs' access to venture capital.
The venture authority committed $11.2 million to the Greater Colorado Venture Fund. The Colorado Venture Authority first partnered with the investment company for its debut fund in 2018, when it committed $13.3 million.
“This exciting partnership builds upon our ongoing work to boost Colorado's strong economy, bring good-paying jobs to Coloradans in rural communities, and support small businesses,” Governor Jared Polis said in a statement Tuesday. “As a businessperson, I know that every dollar counts when building a business from the ground up which is why I'm proud of our bold work to support Colorado's innovative entrepreneurs.”
When selecting startups, the Greater Colorado Venture Fund will stick to early, seed-stage companies. Like with their first fund, managers expect their investments to average $500,000. All of the startups will be located in rural communities outside of the Front Range.
The startups that received capital from the investment company's first fund included SheFly, an outdoor clothing company for women based in Gunnison, and Agile Space Industries, a Durango-based startup developing in-space propulsion systems.
Fund managers pointed to their investment in Cloudrise, a cloud security startup based in Grand Junction, as a prime example of what the fund can achieve. The founders of Cloudrise, Rob Eggrebrecht and Hillary Laird, moved to Grand Junction in 2019 to start their business. The startup has since raised about $7 million in venture capital, according to PitchBook.
Eggrebrecht and Laird moved to Grand Junction seeking a better quality of life and a lower cost of living. They've been able to attract talent to the city and pull employees from an internship program they helped create at Colorado Mesa University.
“Our team has spent decades in the cybersecurity space, and our decision to build and grow Cloudrise from Grand Junction has created a wonderful advantage," Laird said in a statement. "We are able to attract top talent, keep costs reasonable, and enjoy an incredible quality of life that we’ve never had in our careers until now."
Cory Finney, a co-founder of the Greater Colorado Venture Fund, said he thinks the investment company and its partnership with the state can "provide a playbook" to be shared with the rest of the country about investing in rural startups.
