Interested in investing in early-stage venture capital? Curious why investors are backing earlier stage startups – especially in Colorado? 

We discussed the investment opportunity with experts on every side of the table. Here’s a recap of the convo between:

Here are the high level points:

Why invest in tech startups in general? Why early stage?

Get a front row seat to outsized returns: you can see a lot of real explosion and growth. You can also see a lot of toughness and downside, and it’s quite a roller coaster ride. It’s a great asset class to invest in because you feel like you’re really close to the game versus public markets. From a returns perspective, early stage venture and angel can offer outsized returns. It is also really hard to get a seat at the table at later stages, options become limited.

Technology touches everything: Everything is getting digitized -and there are still a lot of sectors left for change. The Total Addressable Market (TAM) continues to grow.

Why invest in Colorado companies? Why now?

Talent pool & an increase in startups founded – There is a shift from the coasts – a lot of startups are relocating to Colorado. Not only is Colorado is a magnet for talent but the state directly supports the innovation economy, making it a hearty place to start companies. The Colorado market has experienced a maturation effect in recent years – companies exiting and exited talent forming new companies – directly contributing to an increase in quality startups founded in Denver & Boulder.

How do I evaluate a VC firm to invest in?

It all comes down to deal flow. New VC firms are multiplying annually – increasing competition within an already competitive investment space. When choosing whether to invest as an LP, the number one facet to vet a firm is the quality of the deal flow. Ask yourself: does the firm have the relationships needed to see the best deals?

Valuations & deals are increasingly competitive, why is investing in Colorado startups particularly attractive?

A lot of outside funding is coming in from Bay Area investors because Colorado provides outsized returns – it’s less expensive to build companies here and valuations are lower than the Coasts. A lot of the big funds hire scouts & principals in Colorado because the market has gotten so competitive and because it is imperative to invest earlier to get the returns and relationships necessary for fund impact.

Watch the conversation here:

Investing in early-stage venture: risk & returns