Denver startups rake in VC money

Local startup funding flooded the Denver-Aurora region in 2021, delivering 267 deals valued at a record-setting $4.3 billion — nearly 170% growth compared to the previous year — an Axios Denver analysis of Pitchbook data found.

Why it matters: Colorado continues to prove itself as a breeding ground for high-growth startups that could shake up some of the world's largest industries, and the Denver area is playing a pivotal role in the state's progress.

By the numbers: In the fourth quarter alone, Denver-Aurora saw $2.3 billion invested in 62 deals.

• Boulder startups saw $1.8 billion invested across 127 transactions, while Colorado Springs saw about $209 million over 10 deals.

State of play: The primary industries attracting venture capital money in the area include health care technology, artificial intelligence, fintech, aerospace and cybersecurity, the Axios Denver analysis found.

• Top investments range from early- to later-stage rounds, a sign Denver serves to benefit brand-new startups as well as growing companies.

What they're saying: "We've seen venture funding up across the board nationally … and the Colorado trend is reflective of that," Seth Levine, co-founder and partner at the Boulder-based Foundry Group, tells Axios.

The big picture: The venture capital industry successfully adjusted to the new normal, and even thrived, after an initial period of pandemic paralysis, Axios' Kia Kokalitchevav writes.

• Many feared the crisis would wreck large swaths of startups. Instead, 2020 birthed a new cohort of companies shaping how we live and work in entirely new ways — especially since they matured during a period of societal shifts.

Yes, but: Denver still lags far behind the Bay Area, New York, Boston and Los Angeles — the country's four largest markets for venture activity — when comparing overall financing.

• The top four markets control more than half of VC deals, and the Bay Area raked in one-third of all deal value in 2021.
• Denver deals made up roughly 2% of the country's overall transactions in 2021, Pitchbook data shows.

What to watch: "2022 will be an interesting year as we see markets and trends continue to accelerate — some as a result of COVID and the changes it has forced to the way that many of us work and live; some as a result of the 'horizontalization' of technology, as technology becomes more and more ubiquitous across markets and industries," Levine says.

Here are the top 10 VC deals closed across Denver and Aurora last year, according to Pitchbook:

• Sierra Space: 1.4 billion raised in series A funding
• SonderMind: $242 million raised in series C funding
• DispatchHealth: $200 million raised in series D
• Guild Education: $150 million raised in series E funding
• Strive Health: $140 million raised in series B funding
• Crusoe Energy Systems: $128 million raised in series B funding
• Liqid: $100 million raised in series C funding
• Pax8: $96 million raised in series F funding
• Accept.inc: $90 million raised in early stage funding
• Red Canary: $81 million raised in series C funding

This story first appeared in the Axios Denver newsletter, designed to help readers get smarter, faster on the most consequential news unfolding in their own backyard. Subscribe here.