Considering investing in an early-stage venture capital fund? Want to learn more about who invests in venture capital funds and how vc funds work?

If you’re looking to learn more about this private investment vehicle, how VC funds compare to public markets and why investors are backing earlier stage startups – especially in markets outside of the Bay Area – this panel is for you.

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

(If you’re looking for a rudimentary overview on the basics, this blog outlines who, when and what of venture capital).

Here are the high level points we discussed:

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

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 becoming digitized -and there are still a lot of sectors left for change. The Total Addressable Market (TAM) continues to grow for most sectors.

Why invest in Colorado tech 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 when vetting a firm is the quality of the deal flow. Ask yourself: does the firm have the relationships needed to see the best deals?

Review the benchmarks: If you’re considering investing in a vc firm that has raised previous funds, ask for a comprehensive comparison on how their previous funds have performed compared to other funds with the same ‘vintage’ (year that the fund was raised).

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: