Venture capital funding slump may continue in Colorado in 2023
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Venture capital funding in Colorado in 2022 dropped by 17% from 2021, a downward trend industry leaders warn may continue this year.
Driving the news: Local venture capitalists on Wednesday joined a virtual panel discussion focusing on the most recent report on the state of local VC funding.
State of play: Most panelists agreed the industry will need to recalibrate as it faces a labor shortage and layoffs, and focus on new tech, like tools combating climate change, to ensure innovation continues.
What they're saying: "Despite the fact that funding was down last year, I think it will be down again this year," Brian Wallace of Access Ventures said during a panel discussion. "I would be shocked if it's not."
- The panelists said business-to-business software — used for things like accounting and productivity — will likely continue to develop locally.
Zoom out: The local slump was far less than the national average.
- Nationally, funding dropped by 35%, according to the report prepared by Access Ventures, a Colorado-based venture capital firm, and the state Office of Economic Development and International Trade.
- In Colorado, the 17% drop equated to $1 billion less in funding.
Yes, but: Local companies still raised $5.7 billion in 2022.
Between the lines: Chris Erickson of Denver-based Range Ventures said that while the overall outlook for the industry may seem gloomy, people are still moving to Colorado, which translates to more business activity.
- Similarly, Wallace said the industry should focus on the number of new companies created instead of capital raised.
Of note: The largest deal last year came from Denver-based bitcoin mining company Crusoe Energy Systems, which secured $505 million in total funding.
- The company uses natural gas to power mining activities, writes Axios Pro Rata's Dan Primack.
The intrigue: At least 37 Colorado-based companies last year founded by women or people of color raised a combined $1.2 billion, according to the report.
- Kirsten Suddath of Next Frontier Capital called this a "good step forward in the industry."
The latest: Panelists discussed how generative AI could impact the industry, saying that while there are exciting opportunities to use it, it may change or even replace jobs for certain business sectors.