Innosphere, partners launching VC fund

FORT COLLINS — Tech-startup incubator Innosphere is spearheading the launch of a new outside venture-capital fund aimed at providing early-stage investment for select client companies of the incubator.

While the fund will be a separate entity from the nonprofit incubator, Innosphere CEO Mike Freeman said Friday that the incubator will have a financial stake in the fund. And Innosphere will make referrals to the fund.

Freeman said he can’t yet publicly name the three managing partners who will oversee the fund. More details, he said, will be available once the fund closes its initial raise later this month.

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In all, Freeman said the fund will raise up to $7 million. It will seek to make early-stage investments of between $250,000 and $500,000 in Innosphere companies. He said the plan is for the fund to begin deploying capital by the end of the year and have the entire fund deployed within four to four-and-a-half years.

“We think that’s going to be important for startups applying to the Innosphere nonprofit program,” Freeman said. “We’re really filling an important gap in financing for the companies that do get funded.”

One of Innosphere’s core services already is helping client companies gain access to capital. Some startups enter the incubator still having a lot of work to do on their business plans before they are ready to get funded. Others, though, are ready much sooner but still might have to spend six to nine months of their time in the program raising outside funding. Freeman said having a fund with ties to Innosphere could help significantly narrow that fundraising window for the latter group of companies so that they can more quickly focus on hitting growth milestones.

“That’s good for everybody,” Freeman said.

Innosphere worked with Colorado Enterprise Fund in 2013 on a similar effort to help client startups gain access to early capital. That venture formed a $1 million pool administered by CEF from which Innosphere clients can loan money before their businesses are at a stage where banks will grant them loans.