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Investing on a Higher Level? Check Out Boulder’s Startups

Venture capitalists are running a high-altitude finance drama up in Colorado high country.

U.S. Route 36 from Denver to Boulder isn’t just another well-trafficked path for commuters going between two points on the Colorado map. It is also the state’s startup corridor, increasingly marking this 25-mile stretch as one of the most vibrant hotbeds of innovation outside of Silicon Valley and New England. Venture investors in the past five years have poured $4 billion into Colorado’s tech and life sciences startups built with top talent coming out of private and public-sector institutions in these parts.

And the state has just logged its best quarter in seven years. Investors from across the nation made 34 deals in the first quarter in Colorado’s venture-backed startups totaling $332 million, up from $234 million in the year-ago quarter, according to Dow Jones VentureSource. Recent deals include a $14 million Series B round for MJ Freeway, a Roger McNamee-backed provider of “seeds to sales” business software catering to the cannabis industry. Sphero Inc., which makes robotic-ball toys that can be controlled on mobile devices, has hauled in more than $100 million from Boulder’s Foundry Group and other investors. Denver-based Galvanize, which runs accelerator and coder-education programs in several cities, raised $45 million last year with out-of-state ABS Capital Partners and others.

“I think we’re an example of a growing trend of markets outside of the coasts producing great companies,” said Foundry co-founder Seth Levine.

In many ways, investor love for the Denver-Boulder area isn’t a new phenomenon. The deal-making pace has largely remained steady year in, year out, says Kyle Lefkoff, who came to Boulder in 1985 for the rock climbing and stayed to found early-stage firm Boulder Ventures.

Many U.S. venture-backed companies bemoan the trials of raising capital the farther they are outside hot spots like San Francisco or Boston. Boulder-area startups have bucked that trend because they’re operating on a different level. Literally and figuratively.

“People who can go anywhere in their career but want balance in their life come to Boulder,” said Mr. Lefkoff, an experienced alpine guide. “The base level of achievement is higher than it is on either coast. The standard is higher.”

And like other tech centers that have won over VCs, the Boulder area is richly endowed with intellectual capital. It owes much to the prestigious CU, a.k.a. the University of Colorado, and a string of the federal research labs such as the National Institute of Standards and Technology and the National Center for Atmospheric Research, both dramatically set against Boulder’s famed sandstone Flatirons jutting out of the Front Range.

But perhaps most important, Boulderites enjoy the distinct pleasure of going to work (and play) every day in Boulder, elevation 5,340 and population 100,000, give or take 20,000 or so when CU is on break. With the iconic sweep of the Flatirons never far from sight, people in these parts represent a cross-section of university students and employees, professionals in tech and life sciences, trust-fund babies, and a whole bunch of elite-level athletes crazy about the outdoors. Put them all together and you get good living and plenty of startup activity in one of the most prolific places in the nation.

By Alexander Davis

Venture Capital News Editor

The Wall Street Journal

*This article was posted with express written consent from the author.*