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Colorado Is Now #4 Ranked Destination for Early-Stage Venture Capital Investment

One of the cool perks of being on the National Venture Capital Association board of directors is that I get to see lots of interesting data on the venture capital industry.  The research staff, along with PriceWaterhouseCoopers  are constantly looking at trends and data that provide unique and useful insights into the ecosystem and publish under the MoneyTree brand.

Today, however, I got wind of some new MoneyTree data that pulled at my heart strings unlike any data that I had seen before.  In fact, I was all of astonished, proud, humbled and inspired.  The news?  In 2011, Colorado ranked 4th in the country behind California, Massachusetts and New York for seed/early stage dollars invested into startup companies in the state.  The state has grown in leaps and bounds with 63 firms investing $290 million into 41 companies in 2011 compared to 2006 when 41 firms invested $89 million into 32 startups.

Wow.  I knew that Colorado was kicking tail, but this was really amazing news.  It backs up what I’ve been telling people for a long time:  Colorado is a top five destination for VC investment and I think it’s only getting stronger.

So why is our nearly average populated state so decidedly above average when it comes to starting companies?  It’s combination of many things (great universities, Techstars, lots of engineers, well educated people, great mentors and active community leaders), but one thing really stands out:  our entrepreneurs.

I think Colorado is breeding and attracting a type of entrepreneur that is unique to venture investing.  While driven, smart and motivated as all entrepreneurs are, the Colorado population seem to always be acutely aware of their local communities and always make sure to give back and pay forward to future generations of company starters.  Its you folks, who are creating the amazing companies that investors are interested in.  So much so that we are now the fourth most popular destination for early-stage investing.

So congratulations Colorado.  Congratulations to all of the entrepreneurs who are creating great companies and great jobs while never forgetting about their communities.  I’m proud to be a small part in your collective worlds.

 

May 1st, 2012     Categories: Entrepreneurship, NVCA, TechStars, Venture Capital    
  • http://filtrbox.com/blog arinewman

    phenomenal news. very proud of our community!

  • http://tech.mn Jeff Pesek

    Jason,

    The PWC / NVCA MoneyTree Report data is…decent?

    I’m not sure what else to label something that appears to have the right intentions but is so consistently inaccurate & incomplete.

    For example, in Minnesota, we’ve identified significant more activity that is being picked up on by said report.  3-5 times more dealflow + dollars, quarter over quarter, especially in the early stages.

    Why?

    Unless there’s a real executable plan to increase the quality, it will continue to decrease in relevancy for those who know the inherent shortcomings & bias.   I wonder how much $ it costs to produce such mediocre results?

    I do not doubt that Colorado is high on the list, due to a lot of factors (+entrepreneurs), but it helps tremendously to have a big progressive fund (x2) like Foundry there. How much have you’ll put into the area between first and second fund?

    Anything you could do to help improve the PWC / NVCA MoneyTree Report would be great.

    Cheers,

    Jeff

    • jasonmendelson

      I think the report is more than decent. It’s not perfect, but in the private company world, it’s impossible to get perfect information. As a guy in the industry for 14 years now, I’d say it’s way better than any other report that I’ve seen. And I do think the summaries are definitely directionally correct. Now if MN and CO were within a very close number, could you argue that the rankings should be flipped? Sure, it’s not 100% accurate, but the numbers show significant differences between #3, #4 and #5, so I’m pretty confident the data, in the aggregate, is good.

      The only way to make the report better is to make sure “all districts are reporting” and that the info is getting to PWC. I’ve seen many companies forget to report, etc. and that information isn’t collected, so there isn’t really anything that I can do on my end.

      And thank you for the compliment. That’s nice to hear. As a former midwesterner, I’m always routing for my home region. Go MN!

      • http://tech.mn Jeff Pesek

        What’s better than VC’s who blog?  VC’s who actually respond…and quickly!

        I hear what you’re saying, just wish it was better.  The potential exists.

        Depending on how much the effort costs (I’m sure this is measured internally), I wonder what an improved collection mechanism would offer, both in terms of lowered costs and higher outcomes?

        Again, we’re doing it here…have been for a year now.  And it’s scalable.

        Let’s connect next time I’m in the hood, or if you’re in Minnesota sometime.  There’s a lot more going on that meets the eye ;)

        • jasonmendelson

          Deal. I always respond to constructive criticism that is thoughtful.

    • emilymendell

      Hey Jeff -

      I head communications for NVCA and sent these numbers to Jason.  As he puts forth below, the data is not perfect but likely one of the best sources available.  Still, I am concerned that you believe we are missing a substantial number of deals in MN — and would very much like to work with you to figure out why.  Perhaps there is some stealth investing going on in the earlier stages — or by definition we are not counting the same deals.  Or we could be missing  deals that aren’t reported.  Regardless, would like to be responsive to your concern. 
      Please email me at emendell@nvca.org and we can set up a time to chat.

  • http://profile.yahoo.com/GWJSXBVYDUE3DRC3NFYEVXTU7Q L V

    “but one thing really stands out: our entrepreneurs”
    Well, sure — but that’s a bit tautological.  The real question becomes why Colorado attracts such great entrepreneurs whereas (say) Ohio doesn’t.  I’m not sure that “Coloradoans are really in tune with their local community” quite does that question justice.  There are plenty of community-oriented places that haven’t spawned an entrepreneurial ecosystem.

    • jasonmendelson

      I think unless you are are here in CO and then invest all over the country, it’s hard to put in words what is different. But the amount of time and effort that the average entrepreneur in CO puts into his/her community feels to me to be much greater than anywhere else I see.

  • Tschesnok

    63 firms investing in 41 companies? Can someone explain this? Does this include trusts (angel money) or only real VC? Does this mean that startups are picking up many big names at the seed round? Why?

    • jasonmendelson

      These are just VC deals. Some have more than one in their early stages.

  • http://www.goodpeoplerun.com/ GoodPeopleRun

    “Colorado population seem to always be acutely aware of their local communities and always make sure to give back and pay forward to future generations of company starters.”
    I wouldn’t draw any fast conclusion but it seems that in some parts of the US too, people who are from the most remote places into the mountains have a tendency to support their local businesses.Living in the French Alps, I can strongly attest that such supportive way of thinking – creating a promising environment for entrepreneur that was once mandatory to sustain the economical life of the villages – is still alive. Only the activity has changed, moving from cheese making, to tourism development and now web startups. Well done CO!