Following a year-long trial, Denver-based Rockies Venture Club will continue its efforts to prop up the Pikes Peak region’s angel investment community, including support to locally based High Altitude Investors as a branch of the RVC.
Through its RVC affiliation, Colorado Springs joins a statewide network of angel investors and entrepreneurs with branches in Boulder, Denver and Fort Collins, as well as smaller groupings on the Western Slope.
According to RVC Executive Director Peter Adams, the trial that began last summer uncovered both strengths and weaknesses within the local investment ecosystem.
‘Do the math’
RVC is the oldest angel investor club in the country, Adams said. The group was established in 1985, and Adams has been with the organization since late 2011. He said the RVC provides its branch partners with logistical and educational support.
The model allows smaller startup and venture capital ecosystems, such as those in Colorado Springs and Fort Collins, to benefit from a “syndicate of all these angel groups,” he said.
Most Colorado investors will make two to three deals a year at anywhere from $10,000-$50,000 per deal, according to Adams. But Colorado Springs in isolation doesn’t have enough angel investors to make a significant impact. Of the 800 who receive RVC investor updates, about 30 are in the Pikes Peak region, he said.
“You can do the math,” Adams said. “We need a lot of people to fund these Colorado companies — we have about 75 startups pitching statewide and we fund about 15 a year.”
Last month, the RVC started an ambassador program in the Springs to help coalesce individuals and investor groups. Patrick Bultema, executive director of innovation at Colorado College, is one of six local ambassadors. He said the partnership with the club adds clout to local investment efforts.
“High Altitude Investors attempted to create an angel investment club, but it was effectively a networking club,” he said. “High Altitude Investors’ intent was very positive, the problem was, a little more needs to happen to make this angel investing thing work well.”
“We have the inventive capacity and the entrepreneurial propensity.”
– Patrick Bultema
Education is the key
“It’s frustrating mobilizing investors [in Colorado Springs],” Adams said. “… At some point, they get tapped out.”
Adams said the venture club recruits investors through education.
“We have an angel accelerator academy that teaches how to value a startup realistically, how to do your due diligence, exit strategies, how to evaluate a pitch and uncover what’s real and what isn’t,” he said.
The RVC has also facilitated, for the past year, panel discussions and pitch nights every other month in Colorado Springs.
“The Springs is doing some great stuff,” Adams said. “Peak Startup, for instance, has been active a long time, but a lot of things are happening on islands. The idea was to get 10 people to sit on a panel from different organizations and say, ‘This is what we’re doing.’”
Adams said the last local event, a June 22 collaboration between High Altitude Investors and Denver’s Rockies Venture Club, uncovered both synergies and redundancies.
“It’s been tricky getting people aligned so far,” he added. “These [joint events] seem like a big step forward.”
In the past, only accredited investors were allowed to attend local startup angel events. RVC has a more inclusive approach, Adams said.
“In the Springs, it was awkward because we had pitches open to the public. That’s new,” he said. “If you went to an HAI meeting three years ago, it was only accredited investors. Opening them to the public means you’ll often see competitors pitch in front of each other. But another part of RVC’s philosophy is to be more inclusive and bring in the community so they can see where the bar is set and how good the pitches are, see the competition and the deals investors like.”
The ongoing and growing relationship between Colorado Springs investors and RVC is “a really positive development,” Bultema said. “It gets us to a place where we have a best-in-class angel club we can be proud of. It will mean more effective and better financing for startups in the Springs, but also exposes the city to angels around the state and beyond. It creates a richer network of angels.”
Diversify or die
Expanding angel investment opportunities “is the only chance we have,” Bultema said of diversifying the region’s economy. “Fifty-five percent of our economy is defense related. It will get cut. It’s not if, but when and how much. We have to have diversification and not all of our eggs in the defense column.”
Bultema said, when he moved here in 1992, there was a more robust startup community. He said bringing it back is essential to avoid a marginalized economy.
“It’s not like it’s optional, and we can opt out and focus on manufacturing,” he said. “We have lots of people pumping out innovation here,” he continued. “We have the inventive capacity and the entrepreneurial propensity. We just have some gaps.”
Bultema said an example of those gaps is an under-leveraged sports and fitness economy.
Bultema said Boulder has a healthy sports and fitness economy, “but not the fraction of resources as in the Springs. We have the largest Olympic Training Center [in the country]; the [U.S. Olympic Committee] is headquartered here; we have dozens of governing bodies — on and on. But we haven’t leveraged it beyond saying we’re Olympic City USA. That and $4 will buy you a cup of coffee.”
The Pikes Peak region also has a marketing problem, Bultema said.
“As more folks from Boulder and Denver engage in the Springs, I hear over and over that this is such a cool place and they had no idea. It’s as pretty as Boulder and the houses are one-third the price,” he said. “It’s not just that we’re cheaper, but the nature of the opportunities here and the aesthetics for a sports startup are so much better than Denver, where you have to drive an hour to get to the mountains.”
And while competition makes everyone stronger, so does collaboration, Bultema said.
“It’s not us versus Boulder,” he said, “but rather us, Boulder and Denver becoming the hottest startup areas in the country.”
[su_box title=”Rocky Mountain Venture Club” box_color=”#005ac3″]The next RVC event in Colorado Springs will begin at 4 p.m. Thursday, Aug. 11. There will be a one-hour, condensed Angel 101 overview from 4-5 p.m. (free) and then an open-to-the-public pitch event from 5-7:30pm (free for members; $10 for non-members).
For more information, visit rockiesventureclub.org[/su_box]