Five ways to invest in Colorado startups

By: Elizabeth Kraus Sunday May 5, 2013 2 comments Tags: angel investing, Elizabeth Kraus, Fund for Innovation, investing

By Elizabeth Kraus

For InnovatioNews

Colorado is becoming a hotbed of startup activity that ranges from life-saving technologies that identify sniper fire or fight tumors with nanotechnology, to companies that  make life easier by solving problems like the never ending task of organizing your contacts.

As an angel investor who invests in early stage Colorado companies, I am consistently humbled by the fascinating entrepreneurs I have the privilege to meet. It's very possible that the next Google or Facebook is brewing in a Colorado basement near you, but how can you get a piece of this startup pie?

Here are five ways to invest in Colorado startups:

For accredited investors:


If you meet the SEC investor accreditation requirements, you can:

1)    Invest directly as an angel investor. Angel investors are individuals who invest directly in companies through a private placement offering. This is what I do and here is why I love it. Angel investing can be extremely lucrative, but it is also risky and time consuming and therefore, shouldn't be entered into lightly. If you are an accredited investor interested in angel investments, I would suggest finding an active angel investor to mentor you (contact me at ekraus at impactangelgroup dot com if you need to find a mentor) or reaching out to a local angel group like the Impact Angel Group or the Rockies Venture Club.

2)    Invest in startup funds. You can also empower an experienced angel investor to make investments for you by joining a private equity fund. Due to SEC regulations, I cannot publicly share which private equity funds are open to investors, but if you'd like to verify your accreditation status, I would be happy to talk to anyone interested in these types of funds.

For ALL Investors:

If you don't meet accreditation standards, there are still plenty of ways to invest in Colorado startups. Any investor can:

3)    Work for equity. Most startups need more than money. If you have business or technology experience that could contribute to startup success, you may consider working for equity. To find an opportunity to do so, fill out this startup match survey.

4)    Join a community bank. Community banks play an important role in financing and supporting the local economy. By banking with a community, rather than a national bank, you can make sure that the majority of your money will be invested locally.

5)    Donate to the Fund for Innovation. Although it's a donation rather than an investment, it's a killer tax break that also supports Colorado startups. Because the Fund for Innovation is located in a Colorado Enterprise Tax Zone, donors enjoy an additional 25% tax break above and beyond the normal donation tax credit.

Investing in Colorado startups can be a great way to support businesses in your backyard, experience the exciting world of entrepreneurship and if done intelligently, provide a substantial financial return.

Do you have any more thoughts on how people can invest in Colorado startups? If so, please leave a comment.