The way Chris Erickson tells it, the story of tech in Colorado goes like this: Big tech companies based in San Francisco or New York City open a second office in Denver. Talented workers relocate to the city to work at the new site. Ambitious individuals stay at these companies until they’re ready to leave and start their own startup. Once their venture launches, it eventually captures the eyes — and wallets — of late-stage venture capital companies, like Sequoia Capital. Then, the cycle repeats. On Tuesday, Erickson decided to get in on the fun.
His venture capital company, Range Ventures, announced a $23 million fund intended for investment in early stage startups based in Colorado. The venture firm is backed by nearly 100 limited partners, with participation from big local names like Crossfit CEO Eric Roza, who founded and eventually sold marketing analytics startup Datalogix for $1.2 billion. The cash comes amid a period of intense investor interest in Colorado tech.
“You’re going to see the ratio of unicorns outside the Bay Area change over the next decades, as talent moves out of the Bay Area and as venture capital continues to be invested outside of the Bay Area,” Erickson told Built In. “I think Denver is going to be the No. 1 beneficiary of that shift.”
Over the past three years, Erickson said the number of unicorn exits that have come out of Colorado has tripled to six, with big names like Ibotta, Guild Education and EverCommerce launching out of the state. Venture investment in the state jumped to a record-breaking $2.5 billion in 2019, up from $1.6 billion the year before.
Rather than slow investment in Colorado, many growth mode startups have looked to the COVID-19 pandemic as a sign that it was time to make the move.
“I'm having two to three conversations a week with folks that I know from either the Bay Area, or New York City, that are some flavor of: ‘Hey, I’m actually moving to Denver, I’ll be there in a week. Let’s catch up,’” Erickson said.
Low interest rates, high demand for digital services and a soaring stock market have left venture capitalists fighting to make deals across the country, according to the New York Times. But Colorado companies are really cashing in — the state’s low corporate tax rate, affordable cost of living, airport connectivity and existing startup ecosystem have long made the area attractive to tech. Palantir, Snapdocs and Marqeta have recently all named one or more of the above reasons for relocating their headquarters to Denver. But for Erickson, the connection to Colorado feels personal.
Erickson moved out to Denver a year ago with the aim of living closer to family and achieving greater work-life balance. His early morning commutes to work at proptech startup Apartment List and rush every night to pick up his two children from daycare made every day feel like one giant compromise. He started researching career opportunities in Colorado and, after learning about how quickly the tech industry had been changing over the past few years, decided to make the move. Now, with $23 million in his pocket, he aims to inject that same sense of optimism in the local tech community.
Range aims to make about 25 new investments over the next three years, investing an average of $750,000 in each startup. The company has already invested in four startups — video production startup Soona, proptech startup Nomad and adtech startup CometChat are all based in Colorado, while the Bay Area-based Healthnote came to Range through an old connection in San Francisco. Erickson said Range is open to startups operating in all industries, although they’re partial to new marketplaces and software-as-a-service companies.
Ultimately, he says he’s looking for founders who can act as the best salesperson for their product.
“If we get a deck or a pitch, and the founder says, ‘Oh I want to raise my seed round and then go get acquired, that’s not the right fit for us,” Erickson said. “We’re really looking for super ambitious founders that want to build a billion-dollar company.”
