DENVER — A Denver-based venture-capital firm that has invested in Boulder Valley and Northern Colorado companies has launched a new venture fund focused on early-stage startups in Colorado and other states.
Stout Street Capital, founded in 2017, is raising a $20 million fund that will focus on the Rocky Mountain region and the Midwest, with 30 percent to 40 percent focused on Colorado companies. It will be the company’s second fund, with the first having invested in 27 companies.
“Colorado is a tremendous market for startups but is severely underserved when it comes to venture capital money,” Stout Street Capital managing partner Clay Gordon said in a prepared statement. “Most venture capitalists focus their attention on large cities like San Francisco, New York, and Chicago and don’t spend time evaluating companies in smaller cities in the middle of the country. We want to change this reality by funding companies in our backyard, while simultaneously developing an investor friendly ecosystem that attracts more venture capital dollars into Colorado and Midwest cities.”
Stout Street Capital invests in early-stage startups that focus on driving bottom-line growth in existing markets. The company targets revenue-producing startups valued under $10 million raising a seed or Series A round, focusing on industries such as advanced materials, artificial intelligence, mobile applications, robotics and software.
Over the past year, Stout Street Capital has invested $3.5 million of its initial fund into 27 companies of various sizes. The company intends to invest a total of $5 million by the end of 2018.
Boulder Valley and Northern Colorado companies in Stout Street’s portfolio include Prieto Battery Inc. and The Food Corridor Inc., both in Fort Collins; Bitsbox, Boulder; and Threat X Inc., Louisville.
“Our philosophy is to provide our portfolio companies with more than just capital. Through our strategic partnerships with over 30 venture capital firms in the middle of the country and other strategic investments, we are trying to empower and enable the potential of entrepreneurs across the Rocky Mountains and Midwest and unlock the opportunities that exist in these overlooked cities,” Gordon said. “We have developed a great pipeline of investment opportunities and believe there is tremendous opportunity for a second fund.”
Stout Street Capital hopes to raise $20 million by the spring of 2019, with $5 million already committed.