Educating and Connecting Investors and Entrepreneurs. Rockies Venture Club is an Angel Group whose mission is to advance economic development in the Rocky Mountain Region by actively connecting investors with the most promising entrepreneurial companies.
“New Space” is what we’re talking about. It’s not your granddaddy’s aerospace that was government controlled, cost billions of dollars and was top secret national imperative sort of stuff. Rockies Venture Club is pursuing its first Aerospace Investing program May 7th in hopes of raising our awareness of this booming “new” category of angel investing.
Yes, aerospace does include billion dollar projects, but now, more than ever, there are micro opportunities that angel investors can make a significant impact on. Another way of looking at this is that outfits like SpaceX are so significantly reducing the cost of getting payloads into space, that startups can now put their projects into space for relatively low cost. Getting a satellite launched now can be as little as $250,000 today with SpaceX vs. millions of dollars just a few years ago. Mic Black, an Australian entrepreneur from Queensland recently launched a meat pie into space for under $50,000, showing that low cost space projects are not just a pie in the sky idea by showing that he could launch a pie into the sky for much less than it cost Elon Musk to launch a Tesla into outer space.
On a more serious note, the low cost of getting projects into space opens up myriad possibilities for entrepreneurs that have not previously existed. This is reminiscent of those who sold the picks and shovels during the gold rush era. Entrepreneurs may not be building billion dollar space projects, but they are providing solutions to the thousands of problems that new space programs present.
One with a creative mind can see many possibilities – and challenging implementations:
Space “as infrastructure”;
Space mining for rare minerals or those not available on earth;
Productive World policy for Space Usage – and Sanctioning bodies, Weapons in Space Policy (US SASC), International Space Law (Ownership, Rights, etc.) beyond Maritime type Law;
Solar Energy in space transported back to earth (something akin to wireless??);
Robotics for Space (Truly, Humans don’t do well in Space via current capabilities);
Deep Space Travel and Exploration;
The long-term future of Space colonization (so complex);
Chemistry/Biology in Space and New Product and Health Solutions;
3D Printing, and Manufacturing in zero-G;
Govt/Private Economics for Space endeavors;
So, what does this have to do with angel investors?
Angels and VCs are rapidly jumping on the space bandwagon. There are thousands of startups working on small parts of the space ecosystem and some of them have big solutions that they have creatively broken into smaller tranches with achievable milestones that can be funded with $1 million or less. Space-specific angel groups have formed such as Space Angels, EBAN Space, GEN Space, Seraphim Capital and more. Angels and VCs poured more than $3.25 Billion into space in 2018, a 29% increase over the previous year. With a large number of corporate entities rapidly acquiring new technologies developed by startups, there is an active exit environment which is crucial for angels and VCs. International competition for space is also driving the speed of growth in this sector. Europe, China, Australia and other countries are growing their space entrepreneurship programs to keep competitive.
There are about 534 venture capital funds that have invested in space since 2009 with 114 of those making their first investment in 2018. This is a place that angels should be investigating and getting in on the ground floor.
With 2019 in full swing, we at Rockies Venture Club want to, first and foremost, wish everyone a happy new year. With everyone back from the snow and the holidays, we thought we would start the year off strong.
Blockchain had a red hot year in 2019. For many, the technology is synonymous with cryptocurrencies after 2018’s tumultuous Bitcoin rollercoaster. As a result, blockchain is nothing but buzzword nonsense to a lot of folks.
Built as a technology to make things trustworthy, blockchain makes things ‘immutable‘. As such, blockchain is here to stay.
The top of the list? Voting, healthcare, and financial services, along with supply chain management, are all in the running to receive top impact from a technology designed to make trust easier.
Other industries that might see major shake ups land all across the board. For example, utilities may be able to switch out smart meters for sensors that utilize IoT and blockchain technologies.
Ohio decided that it would adopt the future with its major cities adopting major blockchain policy. McKinsey forecasted the impact by industry of blockchain (which investors may want to check out here to know when blockchain is an important part of an investment, or just a buzzword).
Read Ethan Harden’s outlook here to get the full picture.
As the gift giving season is now in full swing, everyone has something different on their holiday wish list. Here are a few holiday gift ideas from RVC‘s portfolio companies so you can get your friends and family the perfect gift while supporting our local economy and startup community.
Bitsbox: The smartest way to introduce curious kids to coding. Crazyfun coding projects with new concepts sent directly to your door every month!
EnVision Meditation: Do you know someone that is already planning their New Year’s Resolution? Help them visualize success in 2019 with EnVision Meditation. In just ten minutes a day, EnVision brings you more confidence, self awareness and the ability to be more intentional about your life through guided meditations utilizing visualization to help you be at your best each day.
Felt: Make the holidays extra special for your loved ones by sending personal, handwritten cards for the modern world. Sealed, stamped and mailed — All from your iPhone.
mcSquares: mcSquares makes dry-erase collaboration products for businesses and educators. They will help you get organized, inspire team creativity, and cultivate group collaboration. Tablets and stickies are designed to facilitate learning and help teachers engage students.
Recoup Fitness: Recoup sells innovative hot and cold therapy products trusted and tested by professional athletes in all 4 major leagues. Great for the athlete in your family!
Rockies Venture Club Membership: RVC Memberships are perfect as a last minute stocking stuffer for the Investor or Entrepreneur in your family! As a member of the Rockies Venture Club you have a front row seat to the growing, developing, accelerating world of the Colorado Entrepreneurial Ecosystem. Over 100 events, workshops, and classes held each year. Help your loved ones move their business forward in the new year!
Sheets & Giggles: Try Sheets & Giggles absurdly soft and eco-friendly eucalyptus bed sheets. Last chance for guaranteed delivery by December 24. 15% off and free shipping for all orders in December!
Vortic Watch Co: Vortic Watch Company produces custom, handcrafted, 100 percent American-made mechanical watches that build on the legacy of classic railroad era watches.
With the Colorado Capital Conference right around the corner, we had Ethan put together an outlook on Colorado alone. The Give First ecosystem is rapidly advancing on the global scale for startups, with Colorado coming in 6th for startups nationwide. The report contains information ranging from the impact of our strong collegiate ecosystem and Colorado’s density of STEM sector specialists. Overall, this paints a great picture for Colorado investors. A high density of the young and ambitious combined with a high density of innovative, groundbreaking technologies to be commercialized sounds like a recipe for great investments to us. Other key takeaways? Namely, Colorado is one of the best places for female entrepreneurs. Hopefully this will translate to being a top location for female investors, too!
Inspiring both controversy and the imagination, like many innovation before them, drones were built first by the military, for the military. Interestingly, the technology that enables drones, and drives their proliferation, also comes from the military. The internet and social media have pushed drones into the mainstream consumer’s life, with vast numbers of people being reached by drone-driven content daily. Additionally, the Internet of Things has helped further the applications that make drones so useful today.
Where else do we see drones? Farmers, as it turns out, are pretty good customers of drones. From crop surveillance to precision agriculture, drones, like other autonomous vehicles, have revolutionized various processes for farmers.
More you ask? Well there are professional drone races with racers pocketing a cool 6 figures for their efforts. They deliver packages, although your pizza is probably going to take a while before it learns how to fly.
Learn more in Ethan Harden’s Drone Industry Outlook here.
According to the U.N. and the World Bank, the world population is set to reach just shy of 10 billion people by 2050. While a lot of focus has been put on the urban housing crunch that will create, as well as questions about employment in the face of growing populations and the rise of smart machines, a larger question looms: how do we feed that many people? With 795 million people reportedly not getting enough food in the world already, how do we feed 40% more people? And how do we do this while meeting our environmental goals?
A number of startups are sowing those seeds of innovation and disruption already. Aquapod is taking fish farms to a new level: they put fish farms in the ocean. Tortuga is building smarter farms for a hungrier future. Biopac’r builds machines that break down grass and all the chemicals sprayed on it, creating safe feed sources. Companies like the Rocky Mountain Micro Ranch are innovating the western diet with microlivestock: edible insects that use less land and less feed per pound than our meatier sources.
Now, the savvy investor has a unique opportunity to get ahead of the harvest, producing opportunities to reap what’s being sown. Seed companies need seed rounds, too, leading to the coming RVC AgTech Investing event. Our keynote speaker, Paul Hoff, is the COO of Agribotix, a company enabling a technique known as precision agriculture through the use of drones. Join us for an early evening (snacks and drinks included), learning more about what opportunities exist to harvest the rewards of feeding the future. If you need more information, you can read RVC’s Ethan Harden’s industry outlook on AgTech to better understand the bunches and bushels of opportunities out in the world.
What does sequencing the wheat genome have in common with corn that makes its own nitrogen, geodesic spheres for fish, and figuring out just what in meat makes meat taste meaty? They’re all agricultural and food technologies, or AgTech, the wave of innovative concepts with the goal of feeding the world for the years to come. From precision agriculture and crop engineering to tiny robots that pick strawberries, AgTech solutions bridge the gap between the rapidly expanding tech sector and the hard earned knowledge of generations of farmers. You’ll hear the scientists behind parts of this movement say things that may sound extremely strange, such as calling cows “obsolete food technology“, while others are breeding so called “supercows” and investing in the future of cowtech. To be frank, it’s about time, considering that the major breakthroughs in ‘modern’ farm science, up until about 10 years ago, have been Round Up, artificial fertilizers, and autonomous tractors. So what’s, quite literally, in store for the future? Will our produce be grown above our supermarkets and be picked by robots as we make selections on tablets? Perhaps scientists will learn how to grow bread in a petri dish, although petri dishes are more likely to make animals obsolete before wheat. From software to vehicles to the future of seeds, read the outlook here for more info.
Ascent360 provides cloud-based software that enables highly targeted, multi-channel communications direct to prospects and customers. Our secure, scalable software aggregates all inbound data including promotional, transactional (PoS/eCommerce), product registration, etc. via a web-service feed. ascent360.com
Cherryvale Farms is a fast-growing natural foods brand with thirteen products across three product lines: baking mixes, microwave mug cake mixes and whole grain snack bars. Proudly plant-based, Cherryvale Farms products are free from animal ingredients, boast clean nutrition labels and feature family-friendly flavors. Stocked in nearly 4,000 stores nationwide, the brand sees strong YoY, same-store sales in top retailers like Whole Foods, Sprouts and divisions of Kroger, while continuing to innovate with delicious, novel plant-based foods. cherryvalefarms.com
FitBot- Personal training is moving online and trainers are struggling to take advantage of this massive emerging opportunity. The percentage of trainers offering remote training services has grown from 10% to 33% in the past 7 years. Fitbot has already helped thousands of trainers save time and make more money through remote training, and with 300,000 trainers in the US and 1 million globally, we’re just getting started. thefitbot.com
iEldra has developed a Smart Activity Monitoring (SAM) platform uses non-invasive sensors to track a person’s Activities of Daily Living (ADLs). These sensors provide input to our proprietary SAM software to establish individualized, typical levels of daily activity. We call this a “routine” for each person being monitored in their individual home. This “routine” becomes the benchmark for establishing when the person may need assistance from family, friends or caregivers who may receive the alerts. iEldra.com
Tersa Inc. was born out of a hatred for traditional laundry methods like ironing, machine washing and dry cleaning. We saw the need for a supplement so that we could spend less time washing, and more time living. We create high end garment steamers designed for affluent professionals and marketed to their favorite hotel destinations. We offer the first automated garment steamer as well as traditional hand held models to fit into any room. tersasteam.com
Upsuite is an online B2B marketplace that makes it easy for corporate teams to find the best coworking spaces. Unlike other alternatives, Upsuite provides complete verified inventory in local markets so that teams can find, compare, share, and tour spaces. Our vision is to empower teams to do their best work together. upsuite.com
Zay Products- It’s no wonder why 130 million downhill skiers around the world look forward to taking their boots off at days end. Ski boot companies have failed to address key fundamental elements of their design and produce a cold, stiff and un-comfortable ski boot. Zay has a patented solution that will change the way skiers, from recreational to elite, think about their boots. Join the revolution as it spreads from the US to Europe and on to the explosive Chinese market. zayproducts.com
What’s it like to run a company that can raise $17M in a flash? We recently asked P2Binvestor’s Krista Morgan just that after they closed a huge round in a combination of equity and debt.
“It’s just another day,” she said. However, you might find her in a different state on a day she lands a meeting with a major potential partner. “I oddly celebrate my victories when they start instead of when they close,” she told us. We sat down with Krista to learn a little bit about her journey with one of the Rocky Mountain Ecosystem’s favorite startups.
You’ve dodged going to a traditional VC almost altogether. Round after round you’ve found a hot opportunity with Angel groups and individual investors. What inspired you to take this unique investment approach?
We were informed this path to raising capital wasn’t intentional at all. Like many female entrepreneurs, Krista tried to raise a traditional Series A round, but was repeatedly turned away. Now with 8 rounds of funding totaling over $33M, the lending platform has brought in numerous private investors, plus New Resource Bank and Amalgamated Bank as financing partners, to mobilize swaths of capital into flexible lines of credit for growing companies. So far, the return to Angel investors for debt or equity financing has proven to be the right move in Krista’s eyes. While the raises have been fairly modest, Krista has proven the capabilities of intelligent capital strategy.
In light of your own difficulties, how do you feel about the statistics that shows female founders receive almost no venture dollars, yet have proven to be a 12x better investment than all-male teams?
“Are they, though?” she retorted. “I would argue that statistic is flawed. The only women who get venture funding are the best connected, and probably the best entrepreneurs. If we only fund the best, of course the results are going to be better on average.”
Krista believes that, in funding parity and equality of opportunity, we will likely see equality of outcome. Some female founders will go on to run tomorrow’s innovative giants, but many will fail and learn important lessons. As an investor in the Women’s Investor Network, Krista is aligned with WIN in pursuing a future of more experienced female entrepreneurs who can be investors in good faith.
“I’d love to be able to raise a ton of capital and just flood the market,” she told us. “A lot of the people who moved into our space moved too fast or broke too many things.” Krista notes that, as a founder, she has a lot more reason to stick around than many other CEOs. Careful capital raising means her stake in the company’s success is still substantial. Unlike some of the second movers, P2Bi’s lights are still on and shining bright. This can be an important lesson for those looking to follow the Facebook motto “move fast and break things”.
P2Binvestor is going into its seventh year. What’s next for loans, for P2Bi, and for you, Krista?
“What’s next for P2Bi is what’s next for me,” she told us. “I’ve got to hit my goal on number of bank partners for the year while continuing to grow our client base.” One could argue Krista is as driven as ever in her pursuit to make P2Binvestor a household name in the lending space. We asked her about who she is now compared to when she started the company. “Krista in 2012 was tequila, dogs, and searching,” she said. “Krista in 2018 is tequila, dogs, and P2Bi.” Today might just be “another day” according to P2Binvestor’s CEO and co-founder, but her drive and determination is gradually moving the company towards bigger things in the future of fintech.
P2Binvestor has worked with RVC since 2014. RVC has participated in 5 of P2Bi’s raises and have been glad to watch them grow in an industry that helps mobilize capital. P2Bi helps pre-banking companies secure asset backed loans to help them reach their goals by working with banks and accredited investors. P2Bi has grown to $32.5M in valuation since their Seed round in 2014.
We all know a handful of busts in the venture capital world. Whether the lesson to be learned is for the entrepreneur or the investor, every failure is a learning opportunity. Bigfoot wrote an article in May about some of these lessons.
Closing a venture round is the dream, right? As Founders, it’s how we know we’ve arrived, primed for our Techcrunch cover.
This transforming event is why we pull our aspirational all-nighters, scour CrunchBase for the latest capital raise news, and espouse mighty, world-altering visions.
After all, with that first, third, or fifth round of venture funding, we’re well on our way to the Unicorn Club!
Let’s start with remembering what a unicorn is: a privately held startup valued at over $1 billion.
So, how does one get into the club? Well, it’s generally based on the amount of venture capital you’ve raised.
A billion dollar private market valuation shakes out from the private market investors that need to justify a valuation in order to make their investment.
Unicorns are a rarity in statistics and reality.
Unicorns are a rarity in statistics and reality.
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The venture capital game is binary and with this amount of VC behind you, the path is to either get huge or die trying.
Unicorns die when they have to move beyond raising money and actually build a sustainable business.
Framed this way, our obsession takes on an unhealthy connotation.
Turns out, no amount of capital solves fundamental flaws in a business that, when unresolved, drive it to the graveyard.
Let’s look at two cautionary tales of one-time high fliers that recently flamed out and see what lessons we, as Founders, investors, or employees can learn from their falls from grace.
Let’s start off with a bang. There may be no better recent cautionary tale than Theranos, a one-time DECACORN. That’s right, this company (or shadow of a company) reached a peak valuation of TEN BILLION DOLLARS. Now, the company and its CEO and President have been charged with massive fraud by the SEC.
$1.4B in funding from over 10 rounds
Two private equity rounds totaling $547B, a secondary market sale of $582B
Investor Lemming Effect, based on a hope, a prayer, and a promise of revolutionary technology that was never developed and deployed
Shut Down Date: Potentially within next 2 months if cannot get lifeline capital
Time to Shut Down: 4.5 years post first private equity fundraise, 14 years post-founding
Lessons to Learn
For years, Theranos promised revolutionary technology that would simplify and speed up the blood testing process. It’s admirable to tackle a big, hairy problem, but it turns out that radically improving chemistry is really challenging and takes forever. Remember this as you: 1) consider problems you want to tackle and 2) consider adding complexity (more people, more process, more product features, more capital) to your business.
Be suspicious of vague communications
Specifics and details matter, especially when dealing with a highly-specific problem set, such as blood testing. We’re not talking about provisioning servers and pushing CRM code to a repo here. Stakeholders must hold those in executive positions responsible to implement and act under a framework of governance and fiduciary responsibility. Eschewing this responsibility is a major red flag.
Set realistic expectations
It feels like Elizabeth Holmes and Theranos set themselves up for failure. Why couldn’t they have come out of the gates setting reasonable expectations around their technology and build up to being the massive market disruptor they and their investors envisioned themselves becoming? Maybe they did and just failed in executing, or maybe they promised the moon, took a lot of money from other people and delivered nothing. Let’s remember to underpromise and overdeliver.
A WiFi-connected juicing system
The people need JUICE! The people must not have to clean on their cleanse! Who are these people and how did they ever justify a peak valuation exceeding a quarter of a billion dollars?
Juicero made it almost five years, taking about three and a half of those to get their product to market. Ultimately, they ended up in the venture capital graveyard.
$70M Series B (3/31/2016) and $28M Series C (4/1/2016)
All capital raised before the product went to market
Shut Down Date: 9/1/2017
Time to Shut Down: 17 months after Series C
Lessons to Learn
Don’t be a solution in search of a problem
Part of Juicero’s product appeal was it’s single serving juice packets that made juicing simple and required no clean up. Sure, cleaning juicers sucks. But, is it really a top of mind problem for a significant portion of the population? To generate an equivalent amount of revenue to the capital it raised, Juicero needed to sell ~72,000 juicers to people who were going to consume 3 $8 juice packs/week for a year. Turns out, that market’s likely not out there.
You must match price to perceived value
Juicero’s pricing scheme required an upfront $400 a juicer (reduced from the launch price of $700) and ongoing spend of $8 per juice pack. That’s a significant capital investment into juicing, which feels possible for the 1%. When people discovered they could extract the juice from the pack without the machine, the company’s days were numbered. Good news for Soylent I suppose!
True differentiation and improvement are necessary to disrupt
Stripped of its sleek design and wifi compatibility, at its core, Juicero was a cold press juicer (excuse me: a “cold-pressed juicing system”) just like any other. In reality, it was a status symbol, a talking point. It was a Concorde in a market that didn’t really need it. Thus, it was not a sustainable business.
Hubris is blinding
Please read “A Note from Juicero’s New CEO” four months pre-shutdown. I understand that many of us Americans have a problem with our relationship with food often going for convenience, pleasure, and price to quench our hunger pangs. Now, I have no clue how to solve this. But my first and best thought would likely not be a $400 juicer.
Ok, Imzy was nowhere close to a unicorn, but, hey, they’re an early-stage venture-backed company whose shut down we decided to analyze. Imzy made it about a year and a half, making it to a beta launch. Ultimately, they ended up in the venture capital graveyard.
Imzy was unable to find its footing in the online community space. The Founders came out of Reddit and idealized a nicer Internet. To their credit, they realized somewhat quickly that their desire to provide a troll-free utopia for the sharing of ideas and passions was just not something a massive amount of people were going to flock to.
Imzy was a vitamin. Strive not to be one too
Yes, this is cliche, but it’s true. The Founders had an idea for an itch they wanted to scratch. The CEO was an entrepreneur who sold his previous company to Reddit. So, chances are, he dreamed up a problem while at Reddit and just couldn’t bear not willing it into existence. That’s admirable, but also dangerous. Turns out people will put up with some stuff they don’t like (i.e., trolls and profanity) if the core experience is satisfying their need.
B2C communities are incredibly hard businesses to build
This is not a surprising shut down. Scaling an online community from scratch is no joke, just ask the Founders and investors behind App.net, Orkut, Secret, So.cl and what was that other one? Oh yeah, MySpace.
This was not meant to be a slam piece. There’s no shortage of those already out there.
These companies are in the spotlight, with bright lights shining on their flaws, unfortunately for them. Fortunately for us, that scrutiny gives us the opportunity to gain new levels of understanding of both how incredibly hard it is to build a market-changing business and what it takes to keep your startup surviving and thriving.
You need to be more than just passionate, smart, and idealistic.
You need more substance than loads of capital supporting your effort.
Then, you need to build a product that a market truly understands, needs, and values above and beyond the competitive set.
You need to price and package that product appropriately, making it the obvious choice for customers
This article was originally published by our friends over at Bigfoot Capital on their blog. Bigfoot Capital provides growth capital for SaaS businesses that have achieved initial revenue scale ($30K-$150K MRR) by selling to SMBs. Our ongoing capital investments range from $150k-$750k to support efficient growth and help Founders retain the lion’s share of their equity and upside. Beyond capital, we have built relationships with specialized services firms across sales and marketing, product development, and operations to help you scale beyond your current human resources. Want to learn more? Visit www.bigfootcap.com or schedule a time to chat.