A drone photo of downtown Denver in March 2020. (Courtesy Guerilla Capturing)
After a downtick in deals following a 2021 boom, the startup scene is slowly returning to normal.
“That was probably the low of the trough,” said Alex Houghtalin, principal at Denver’s Access Venture Partners. “Now we’re starting to see things come back.”
As of December, fundraising around the country was on track to narrowly pass 2023’s mark of $86.3 billion, according to Pitchbook. But relative to history, the 2024 market was still down, Houghtalin said.
The exit market is lower than it has been in years, with Pitchbook reporting that 2024 Q3 total exit-value was at a five-year low, causing investors to be hesitant to give money to earlier-stage companies.
Kevin Gibson
“If (investors) are confident opportunities are out there in the high end of the chain, then they’ll invest in those early-stage companies,” said Kevin Gibson, a partner at KO Law, which has offices in Denver and Boulder. “But that wasn’t happening as much.”
Much of the existing funding is in the hands of larger firms, both said. In 2021, an average of 47 new funds were raised every month, according to Silicon Valley Bank. Halfway through 2024, that number sat at 13, down from 17 in 2023.
This has caused an increase in time needed to go from a seed to series A, Houghtalin said.
“We have seen some really strong series A rounds, and top performers will always be able to raise money,” she said. “But the median earner is having a tougher time”
The IPO market has largely been bare as well, both noted.
Going public is a lot more expensive than it used to be largely because of regulatory compliance and security laws, Gibson said. That prompted companies to raise more late-stage capital from 2019 through 2021.
“If a company was growing and wanted to raise a lot of capital, they’d IPO. But that’s changed in the last 5 to 10 years,” Gibson said.
The two remained optimistic about this year’s market, pointing to cloud software company Service Titan’s recent IPO as a potential stimulus. Denver couponing company Ibotta was another that went public last spring.
Some later-stage Colorado startups are taking advantage of these down conditions, Gibson said.
Havenly, a virtual interior design service based in Cherry Creek, acquired multiple e-commerce furnishing companies, Gibson told BusinessDen.
“We have some clients that have taken the opportunity to buy a few companies, companies who are kind of struggling to bolster their own company,” he said. One of the only other times he saw this was after the dot-com bubble burst in 2000, he said.
Adam Burrows
Adam Burrows, managing partner at Range Ventures in Denver, highlighted several other deals that showed the strength of Colorado’s ecosystem.
Crusoe, an AI data center company, recently announced a $600 million raise backed by Paypal founder Peter Thiel. AMP, a technology-driven trash sorter, raised over $90 million in November and announced a new Commerce City facility with Waste Connections, one of the country’s biggest waste manufacturers.
“I think the future is bright here in Colorado,” Burrows said. “Top national investors continue to come in and add to the rounds in our little slice of the world.”
Range has made nine investments this year out of its $39 million Fund II, which Burrows said took a year-and-a-half to raise and started around the time Silicon Valley Bank collapsed.
“It was challenging,” Burrows said of the raise, which closed this past fall. “Some were skittish about investing, but other people saw that this vintage is really an exceptional time because of cheaper entry prices, more determined and efficient founders, and this incredibly disruptive trend of AI.”
Eight of those companies have been Colorado tech startups, and Burrows and his team have deployed about a quarter of the capital so far. He mentioned Denver-based Magic School, an AI assistant for teachers, as an early breakout of the fund.
He, co-founder Chris Erickson and principal Hayfa Aboukier plan on investing another quarter of the fund this year. Burrows said he’s hopeful that 2025 will bring more IPOs and liquidity, citing Service Titan’s IPO and lower interest rates as potential catalysts.
Alex Houghtalin
Houghtalin’s Access also made more deals in 2024 than 2023, investing in several seed or pre-seed companies, she said. Because less capital is available, she said they have done fewer Series A investments in the last two years and also decided to not limit themselves to just Colorado startups with their most recent fund.
“The earlier we invest, the bigger opportunity we look for,” she said. “The sweet spot is post-product with early customer feedback, but we also dabble in early pre-product stage companies.”
She noted Access has gotten more narrow in its recent investing as well. It has mainly funded cybersecurity companies, a sector she thinks is only going to grow as an offshoot of the AI boom.
“As the market for VC gets more challenging, you want to look at where you as a firm have an advantage,” she said. “This allows us to source better companies, and then we can connect the right people to them so they can be successful.”
Houghtalin said that Colorado’s deep tech ecosystem, which encompasses robotics, quantum, space, data storage and other specialized operations, is something that will likely benefit from the AI boom. Job training models and assistants are also something she highlighted as a Centennial state specialty.
“There’re a lot of implications of the AI boom, so you don’t need to be investing just in AI models,” she said.
All three expect an uptick for a market that “punches above its weight class,” according to Gibson, the lawyer. He has seen an increase in activity towards the end of the year in 2024, which he anticipates will continue into next.
The presidential election ending is also another reason for optimism. Now that there’s no longer uncertainty about who will be in the Oval Office come January, the trio anticipates more action.
But none would firmly say what they expect one way or another based on politics.
“I would hope that it’ll be good,” Burrows said, noting how close tech entrepreneurs Elon Musk and David Sacks are with Trump. “But you never know when Trump is gonna have a falling out with one of these guys.”
A drone photo of downtown Denver in March 2020. (Courtesy Guerilla Capturing)
After a downtick in deals following a 2021 boom, the startup scene is slowly returning to normal.
“That was probably the low of the trough,” said Alex Houghtalin, principal at Denver’s Access Venture Partners. “Now we’re starting to see things come back.”
As of December, fundraising around the country was on track to narrowly pass 2023’s mark of $86.3 billion, according to Pitchbook. But relative to history, the 2024 market was still down, Houghtalin said.
The exit market is lower than it has been in years, with Pitchbook reporting that 2024 Q3 total exit-value was at a five-year low, causing investors to be hesitant to give money to earlier-stage companies.
Kevin Gibson
“If (investors) are confident opportunities are out there in the high end of the chain, then they’ll invest in those early-stage companies,” said Kevin Gibson, a partner at KO Law, which has offices in Denver and Boulder. “But that wasn’t happening as much.”
Much of the existing funding is in the hands of larger firms, both said. In 2021, an average of 47 new funds were raised every month, according to Silicon Valley Bank. Halfway through 2024, that number sat at 13, down from 17 in 2023.
This has caused an increase in time needed to go from a seed to series A, Houghtalin said.
“We have seen some really strong series A rounds, and top performers will always be able to raise money,” she said. “But the median earner is having a tougher time”
The IPO market has largely been bare as well, both noted.
Going public is a lot more expensive than it used to be largely because of regulatory compliance and security laws, Gibson said. That prompted companies to raise more late-stage capital from 2019 through 2021.
“If a company was growing and wanted to raise a lot of capital, they’d IPO. But that’s changed in the last 5 to 10 years,” Gibson said.
The two remained optimistic about this year’s market, pointing to cloud software company Service Titan’s recent IPO as a potential stimulus. Denver couponing company Ibotta was another that went public last spring.
Some later-stage Colorado startups are taking advantage of these down conditions, Gibson said.
Havenly, a virtual interior design service based in Cherry Creek, acquired multiple e-commerce furnishing companies, Gibson told BusinessDen.
“We have some clients that have taken the opportunity to buy a few companies, companies who are kind of struggling to bolster their own company,” he said. One of the only other times he saw this was after the dot-com bubble burst in 2000, he said.
Adam Burrows
Adam Burrows, managing partner at Range Ventures in Denver, highlighted several other deals that showed the strength of Colorado’s ecosystem.
Crusoe, an AI data center company, recently announced a $600 million raise backed by Paypal founder Peter Thiel. AMP, a technology-driven trash sorter, raised over $90 million in November and announced a new Commerce City facility with Waste Connections, one of the country’s biggest waste manufacturers.
“I think the future is bright here in Colorado,” Burrows said. “Top national investors continue to come in and add to the rounds in our little slice of the world.”
Range has made nine investments this year out of its $39 million Fund II, which Burrows said took a year-and-a-half to raise and started around the time Silicon Valley Bank collapsed.
“It was challenging,” Burrows said of the raise, which closed this past fall. “Some were skittish about investing, but other people saw that this vintage is really an exceptional time because of cheaper entry prices, more determined and efficient founders, and this incredibly disruptive trend of AI.”
Eight of those companies have been Colorado tech startups, and Burrows and his team have deployed about a quarter of the capital so far. He mentioned Denver-based Magic School, an AI assistant for teachers, as an early breakout of the fund.
He, co-founder Chris Erickson and principal Hayfa Aboukier plan on investing another quarter of the fund this year. Burrows said he’s hopeful that 2025 will bring more IPOs and liquidity, citing Service Titan’s IPO and lower interest rates as potential catalysts.
Alex Houghtalin
Houghtalin’s Access also made more deals in 2024 than 2023, investing in several seed or pre-seed companies, she said. Because less capital is available, she said they have done fewer Series A investments in the last two years and also decided to not limit themselves to just Colorado startups with their most recent fund.
“The earlier we invest, the bigger opportunity we look for,” she said. “The sweet spot is post-product with early customer feedback, but we also dabble in early pre-product stage companies.”
She noted Access has gotten more narrow in its recent investing as well. It has mainly funded cybersecurity companies, a sector she thinks is only going to grow as an offshoot of the AI boom.
“As the market for VC gets more challenging, you want to look at where you as a firm have an advantage,” she said. “This allows us to source better companies, and then we can connect the right people to them so they can be successful.”
Houghtalin said that Colorado’s deep tech ecosystem, which encompasses robotics, quantum, space, data storage and other specialized operations, is something that will likely benefit from the AI boom. Job training models and assistants are also something she highlighted as a Centennial state specialty.
“There’re a lot of implications of the AI boom, so you don’t need to be investing just in AI models,” she said.
All three expect an uptick for a market that “punches above its weight class,” according to Gibson, the lawyer. He has seen an increase in activity towards the end of the year in 2024, which he anticipates will continue into next.
The presidential election ending is also another reason for optimism. Now that there’s no longer uncertainty about who will be in the Oval Office come January, the trio anticipates more action.
But none would firmly say what they expect one way or another based on politics.
“I would hope that it’ll be good,” Burrows said, noting how close tech entrepreneurs Elon Musk and David Sacks are with Trump. “But you never know when Trump is gonna have a falling out with one of these guys.”
