New venture capital company to offer angel funding

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Chris Franz, an admitted serial entrepreneur who has started a dozen companies, recently founded another one, Wavelength Ventures, which will provide funding for tech startups.

Wavelength Ventures is a venture capital company that seeks to fill a void in the region by matching angel investors with promising startup tech businesses. Franz said he has approximately 80 potential investors.

“I’d say we’ll invest in somewhere between 15 and 25 companies, from $50,000 to $150,000 each,” Franz said. “Our target is to have about $2.5 million.”

He doesn’t anticipate making any investments until August 2018. Coincidentally, that’s the anticipated timeline for the first companies to graduate from the Exponential Impact Accelerator Program and make their pitches to investors.

“We’re trying to bring in top tech companies from all over the world, about 20 for our Launch Week, and we’ll invite 10 to the accelerator program,” said EI CEO Vance Brown, who also is interim CEO of the National Cybersecurity Center. “Our goal is to have those companies move to Colorado Springs, or at least to Colorado.”

Franz said his fund would not exclusively be for companies that are part of the accelerator program.

“We’ll look at every single company that comes through the accelerator, but we’ll look at lots of other Colorado Springs companies,” said Franz, who is chief development officer for Exponential Impact and vice chairman of Peak Startup. “From my perspective, this is a community giveback. It’s designed to help folks locally; I want to help both investors and new companies.”

Franz has experience in managing venture capital funds, such as Atrium and First Capital, a company that he started two years ago in Denver.

Lisa Tessarowicz, CEO of Epicentral Coworking and a local angel investor, said Franz is filling a void.

“I think our angel investment community is not well organized, and we need a place to come together and hear about the opportunity to fund promising startups,” she said. “We may not have the most mature angel community, but Chris can help with that with his experience. I think the timing is right because all we have now is kind of an unofficial phone tree, and that’s not good for investors or startups. We’ve got a lot of talented entrepreneurs and this can connect them with local investors.”

Initial investments

Wavelength will start with angel funding, which Franz said “is very early investing and in small amounts over a variety of companies.”

That’s an earlier and smaller stage of investing than what is offered by PV Ventures, a Springs company started in 2010 by Bill Miller. The firm typically invests in seed rounds in the $500,000 to $1.5 million range, said Aaron Stachel, a principal for PV who joined the company in 2013.

“We typically do not invest in angel rounds designed to fund initial development,” he said via email. “We invest when companies have built a product and are about to [or have just] started selling it. … Our aim is to be in the last round prior to a company’s first institutional Series A, which can be in the $3-$7 [million] range and led by bigger firms.”

Stachel said PV Ventures would consider funding companies that go through Exponential Impact’s accelerator program.

Franz, who plans to add a seed fund to Wavelength Ventures sometime in 2018, said the Pikes Peak region should have about 750 angel investors, or about 0.1 percent of the population.

“We have 20 or 30 that are active, and probably hundreds that have written one check to a friend or someone they met,” Franz said. “I expect more activity [in the future] because Colorado Springs is definitely breaking through in the startup ecosystem. That will help the economic development of our area, and I want a diverse economy and high-paying jobs.”

Franz and Tessarowicz have both been angel investors in the Pikes Peak region, and each knows the risks involved with startup companies.

“It’s great to have these funds coming available because startups are risky investments,” Tessarowicz said. “Out of 10 startups, the odds are that one will do great, two will break even and the others will go bust. That’s why we need a fund like [Wavelength Ventures].”

The idea, Tessarowicz said, is that the fund would invest in all 10 of those startups, so that all investors would potentially make money from the one startup that becomes successful, and lessen the risk of their investment.

“And with Chris’ fund, you’d only have to do paperwork once instead of for all 10 of those companies,” Tessarowicz said. “Investing in a fund should make people more comfortable, like investing in a mutual fund where only one has to hit.”