Getting Low In Colorado: Startup Funding Is Far Off Its Peak

There are many contexts in which the words 鈥渉igh鈥� and 鈥淐olorado鈥� might be used in the same sentence, ranging from the towering peaks of the Rocky Mountains to the state鈥檚 pioneering cannabis scene.

One area in which those two words decidedly do not go together, however, is in a discussion of 2023 venture funding tallies.

So far this year, investment to startups in the state is on track to hit a multiyear low. While funding is also down both in North America and globally, the decline in Colorado is more pronounced than those averages.

So far this year, Centennial State startups have pulled in less than $1.7 billion across all stages, per data. Overall in 2023, funding is down 60% from the same period last year, when close to $4 billion went to startups statewide.

For a longer-term view, we chart out investment tallies for the past six calendar years below:

Late-stage drought

Much of the decline stems from a drop in late-stage dealmaking. There were just 10 rounds at Series C and beyond this year聽1 in Colorado, bringing in around $650 million. In the prior two years, meanwhile, we saw $4.2 billion across 46 such deals.

Big rounds have also fallen off a Rockies-grade cliff. So far this year, there have been just two rounds of $100 million or up: a $166 million Series C for kidney care provider and a $100 million Series D for spacetech startup .

By contrast, in 2021 and 2022, there were a total of 32 rounds of $100 million and up. A single company 鈥� space transportation startup 鈥� picked up in a November 2021 Series A.

Pronounced late-stage declines aren鈥檛 unique to Colorado. Across the global startup funding ecosystem, late-stage dealmaking has seen a more pronounced drop than other stages, as pre-IPO rounds dried up and public market declines stoked write-downs in private company valuations.

Early stage also lower, while seed looks stronger

However, things aren鈥檛 looking up in Colorado鈥檚 early-stage scene either. So far this year, just over half a billion dollars has gone to Series A and Series B deals statewide per 附近上门 data, compared to nearly $1.8 billion in all of 2022.

Seed investment, meanwhile, has held up better, with $235 million in disclosed deals, on track to come in a bit above last year鈥檚 statewide total.

A blip, or a protracted trend?

Funding tallies fluctuate, so for now it鈥檚 probably wise to avoid reading too much into Colorado鈥檚 not-so-great recent numbers. Given the tightened funding environment, a lot of later-stage startups that can wait to raise their next round are choosing to do so. Fundraising could kick into much higher gear should the macro environment improve.

From a startup buzziness standpoint, a case could be made that Colorado鈥檚 tech hubs are losing a bit of steam. Today, Colorado鈥檚 population is estimated at around 5.8 million. But although the state ranked as one of the most popular destinations to move to in the 1990s, 2000s, and 2010s, the state鈥檚 population growth rate in the past couple years.

This includes the state鈥檚 two main startup hubs: Denver and Boulder. Real estate platform recently among the top 10 cities with the largest net outflow 鈥� meaning more home searchers were looking to leave than enter it. The Boulder area鈥檚 population has also , with housing affordability a primary culprit.

Still, it鈥檚 not as if these issues are limited to Colorado. The leading startup hubs 鈥� San Francisco, Boston and New York 鈥� aren鈥檛 known for their cheap rents. And for glass-half-full types, there鈥檚 still a strong argument that given Colorado鈥檚 many assets 鈥� including its scenic beauty, top-notch universities and plentiful tech talent 鈥� startup funding won鈥檛 stay down long.

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