Thursday July 12, 2018 0 comments
DENVER -- Stout Street Capital, a Denver-based venture capital firm, announced it will raise a $20 million venture fund to invest in early-stage startups in Colorado and other states throughout the Midwest and Rockies region.
It will be Stout Street Capital’s second venture fund. The first fund has been invested in 27 startups across Colorado and the Midwest.
“Colorado is a tremendous market for startups but is severely underserved when it comes to venture capital money,” said Clay Gordon, Stout Street Capital managing partner.
“Most venture capitalists focus their attention on large cities like San Francisco, New York, and Chicago and don’t spend time evaluating companies in smaller cities in the middle of the country.
“We want to change this reality by funding companies in our backyard, while simultaneously developing an investor friendly ecosystem that attracts more venture capital dollars into Colorado and Midwest cities.”
Stout Street Capital invests in early-stage startups that focus on driving bottom line growth in existing markets. The company targets revenue-producing startups valued under $10 million raising a seed or Series A round.
They focus on technologies in industries such as: advanced materials, artificial intelligence, mobile applications, robotics, and software.
The company said it plans to invest approximately 30-40% of their new fund in Colorado-based companies.
Over the past 12 months, the company has deployed $3.5 million of their initial fund into 27 companies of various sizes. They aim to deploy a total of $5 million by the end of 2018 with the remaining capital reserved for follow-on investments in existing portfolio companies.
According to Crunchbase, a database of startup activity, funding, and investments, Stout Street Capital is the most active investor in Colorado over the past 12 months.
Of their initial investments, 30% are based in Colorado with the remaining 70% operating in mid-sized Midwestern cities.
Some of the companies in Stout Street’s portfolio include: PharmaJet (Golden), Cheddar Up (Englewood), Prieto Battery (Fort Collins), Felt (Telluride), The Food Corridor (Fort Collins), Bitsbox (Boulder), Rhodium Incident Management (Greenwood Village), and Threat X (Louisville).
“Our philosophy is to provide our portfolio companies with more than just capital,” said Gordon.
“Through our strategic partnerships with over 30 venture capital firms in the middle of the country and other strategic investments, we are trying to empower and enable the potential of entrepreneurs across the Rocky Mountains and Midwest and unlock the opportunities that exist in these overlooked cities.
“We have developed a great pipeline of investment opportunities and believe there is tremendous opportunity for a second fund.”
Stout Street Capital said it hopes to raise $20 million by Spring 2019. The firm already has $5 million committed and will raise the remaining fund by Q2 next year.