The Rockies Impact Fund seeks to invest in Primary Impact companies where the core product/service being developed will yield positive social or environmental Impact. As a venture fund, Rockies Impact Fund is looking to help early-stage companies reach a point of scale where their Impact can scale as an output of the business’ success. Rockies Impact Fund will invest solely in for-profit companies.
The Fund will consider investments in companies that fit into any of the United Nations’ 17 Sustainable Development Goals (SDGs), but it anticipates that the main areas of concentration will be in the following:
The Fund will be diversified with a likely portfolio of between 20 and 30 companies. No single investment will comprise more than 10% of the committed capital of the Fund. The average initial investment in portfolio companies is anticipated to be between $250,000 and $500,000, depending on the final amount of committed capital in the Fund.
Rockies Impact Fund leverages a strong network and deal flow from Colorado and surrounding states. The Fund anticipates 50% or more of the portfolio to be in this region, but it is not exclusive to the Rocky Mountain region. Rockies Impact Fund will co-invest with other funds or Angel groups from around the U.S.
Company Stage of Development
The Fund shall invest in seed and early stage companies that have significant traction to justify their valuation. Most companies should be anticipating revenues within six months, if not already there. The most common use of funds invested in portfolio companies will be to finalize technology and to take the product or solution to market within a short period of time. Most companies will have raised pre-seed funding in a “friends and family” round in order to get to where they are at the time of the Fund’s investment.
The Fund will generally invest in C Corps. The Fund will typically not invest in LLC or S Corps in order to avoid ordinary income tax liabilities for pass through profits.
The Fund will not invest in public companies, fossil fuels, oil and gas exploration, or real estate.
Companies to be selected by Rockies Impact Fund share these common characteristics:
- Team: the teams will be experienced, connected and have demonstrated an ability to execute and work effectively together. The Fund will focus primarily on the team because it is generally understood that no company executes its plan as stated in its initial pitch and the Fund will look for the leadership, wisdom and experience to pivot and adjust to opportunities and threats that present themselves.
- Mission: Mission-driven, for-profit businesses that fall within the Fund’s target impact categories.
- Disruptive or Innovative Product: The Fund will look for companies with a product or service that is unique and presents a clear value proposition for its customers. There should be sufficient barriers to entry either through trade secrets, patents or significant market adoption in order to gain and maintain their market.
- Large or growing market: Rockies Impact Fund companies are to be projecting growth typically at the rate of 100% every year. They need to be in a sufficiently large or dynamic market that this rate of growth can continue for several years and provide promise of future growth for potential acquirers.
- Traction: Since the Fund does not invest in ideas alone, the portfolio company will need to be able to demonstrate “traction”. They need to have overcome major obstacles that clearly demonstrates their ability to execute. Furthermore, they should have positive momentum that Fund management can see throughout the process of working with them.
- Profit Potential: Companies need to have a high profit margin and understand the costs of multi-tier distribution and all of the fully loaded costs. While some companies will focus on growth as a pathway to exit, others will need to focus on a solid bottom line.
- Scalable: The products and markets need to be able to grow quickly and to have rapidly increasing margins as the company grows. This excludes most service businesses and many businesses that address the SMB market and require a high-touch sale.
- Market Timing: The Fund shall seek out opportunities that are neither too early into the market, requiring an evangelist approach, nor too late into the market where there are many competitors and little differentiation.
- Exit: The Rockies Impact Fund focuses on companies that understand the importance of the exit and the role it plays in returning capital to investors. The Fund will look for an exit scenario with multiple bidding acquisition prospects, with high multiples of EBITDA or sales, and with a relatively short timeline, typically between three and five years. The Fund will focus on companies who understand that the exit is a “commencement” to faster growth through the resources that being public or being acquired can bring. The Fund’s manager will actively coach the companies towards developing relationships early in their lifecycle that will lead to favorable exit opportunities.