NFC 2019 LP Update - $182M to date invested in NFC's MT Portfolio Companies

On June 28th, NFC held its 2019 Annual Meeting. Thank you to all of our LPs for their continued support. Their faith and trust in our firm is truly impacting our state, creating tremendous opportunities for early stage companies.

We always enjoy the opportunity to update our LPs on our strategy, investment activity, portfolio performance, and outlook. Moreover, we know that the LPs enjoy hearing directly from our NFC portfolio executives, and we were thankful to have senior leadership from TwinThread, Quiq, Submittable, and our newest NFC Founder (investment to be announced in the coming weeks!) present live at the Rialto in Bozeman.

To kickoff our update, our visionary founder Will Price revisited a post from over four years ago that celebrated our firm’s first close:

Based in Bozeman, Next Frontier Capital’s focus is to partner with mission-driven, talented entrepreneurs to build Montana technology companies of impact, utility and value. Montana is characterized by a tradition of entrepreneurship, high university and commercial research activity, quality venture investment candidates, and yet is severely undercapitalized. We believe the ramp in venture allocation to Utah and Colorado is indicative of Montana’s potential and future. The Fund’s Initial Closing is a testament to the potential of Montana’s future, the creativity and grit of her entrepreneurs, and a recognition by our Limited Partners that Montana is a worthy destination for venture capital.

As a result of our pioneering efforts, here we are - four years later: two funds, twenty-one investments, new GPs and LPs, dozens of entrepreneurs, and many solid working relationships with trusted national co-investors.  The entire team at Next Frontier Capital is humbled and wowed by the progress we’ve made thanks to the amazing people who have accompanied us on this exciting journey.

Since NFC’s inception in March of 2015, the total number of VC dollars invested in our MT portfolio alone is $182M— that’s 27% more than the sum total of Montana’s previous 20 years of Venture investment activity.

Preparing for our annual meeting always raises penetrating questions and produces powerful insights for our firm. 

What have we learned over the past 12 months about our portfolio companies  through their successes, as well as challenges? What is our updated model for interpreting investment opportunities in our environment and how should we evolve our process for considering the impressive prospects that we see everyday?  How is our investment and portfolio management strategy and market position developing over time? How are our investments performing? Where are we improving in our mission, and how is the start-up ecosystem being impacted as the result of our efforts? 

In this post, we write to share some high level thoughts we brought to the LP meeting after reflecting on the past year’s investments; as well as the trends we are observing in Montana, and more generally in the Northern Rocky Mountain West (MT, CO, UT, ID).

The State of Venture in Montana and the Northern Rockies

Our core mission continues to be providing access to capital for founders in Montana and the Northern Rockies - and the past year has affirmed that key trends are in our favor. Venture capital is increasingly becoming a national game. The steady rise in the number of “mega funds” and the over $128.5B of VC dry powder currently in the venture market means that funds across the US are more likely than ever to invest outside their home regions in an enduring quest for qualified deal-flow.

When NFC closed our first fund in 2015, we firmly embraced the underlying assumption that leveraging a “boots on the ground” strategy was necessary for sourcing and supporting founders in our state.  Our hypothesis was that we would be able to leverage this strategy to attract tier one VC firms as both syndicate and follow-on investors in Montana. It’s no longer a field of dreams topic of discussion; we can now confidently and definitively answer - yes, we built it, and they did come [and will invest]. The Montana-based portion of our portfolio (14 names) includes a variety of top tier national co-investors including but not limited to:

  • Foundry Group (Boulder)

  • Summit Partners (Boston)

  • Venrock Capital (Palo Alto)

  • Millennium Technology Value Partners (New York)

  • Bessemer Venture Partners (Menlo Park)

  • True Ventures (San Francisco)

  • Chernin Group (Los Angeles)

  • Revolution/ Rise of the Rest (Washington, DC)

The trend of Montana attracting national investors goes beyond our portfolio as well. Investments like the 2018 Goldman Sachs-led 25M financing of Livingston, MT based PFL signals a broader shift towards firms being staffed to execute nationally. We talk regularly with VCs and partners down-stream of our firm who want to invest in companies operating in our state. This is a movement we don’t expect to slow down; we expect it to accelerate as our portfolio matures and helps organically re-define what’s possible from a growth and success perspective in our state.

What we’ve observed as a result of this trend towards national interest is an even greater than expected need for up-stream, earlier stage investments in the Northern Rockies.  Most national firms still rely on financial metrics to normalize their risk across geographies. This means companies without well-characterized customer metrics and go-to-market strategies who have generated less than ~$2M in cumulative revenue have difficulty attracting the attention of national investors willing to lead a Series A. Getting to these minimum thresholds, especially in nascent geographies, such as Montana, often requires $2-4M of total paid in capital and a few rounds of funding (2.1 avg number of rounds raised prior to first early-stage deal according to PitchBook in 2018).  This vacuum of opportunity is exactly where Next Frontier is excited to work with the best prospects in our region to get to minimum thresholds in order to achieve escape velocity towards a national firm leading their Series A/B.

We aim to be the preeminent fund in Montana and the Northern Rockies to help companies progress from seed through Series A by leading strategically syndicated rounds in the $2-4M range.

By executing on this mission, we help companies attain the resources and total PIC required to meet the minimum thresholds of national tier one follow-on investors.

This positions us as a trusted local syndicate partner, and we can then market NFC deals nationally for Series A and Series B financing. Seed capital remains scarce in our region, which is why our role filling the gap between local start-ups and national visibility is so important. We are excited about the consistent flow of opportunity to work with amazing founders and funds in our region and to help them take their companies through their Series A raises and beyond.

Montana Investment Potential

Now more than ever, NFC is driving early stage investment in the Northern Rockies, especially in Montana. The changing venture and local demographic trends from last week’s post by NFC Associate, Katie Ellig, are helping to further accelerate increases in Montana investment. As you can see in the table below, per capita VC funding has nearly doubled in Montana over the past four years, bringing us ahead of Arizona and closely challenging Nevada. Per capita VC funding in the state is growing significantly faster than anywhere else in the Rocky Mountain region, and we are thrilled to be driving this trend. 

Population Data Source:

Population Data Source:

In 2019, PWC reported that the total VC dollars invested over a 20-year period (1995 to 2015) in Montana was $143M. Since March of 2015 when NFC was founded, the total number of VC dollars invested in our MT portfolio companies surpasses the previous 20 year total by nearly $40M ($182M as of June 28, 2019). The total paid-in-capital in our entire NFC portfolio (Montana and non-Montana companies) is approaching $0.25B over a 4.5 year period, and 2019 marks the third year running we are the most active VC in the state according to CB Insights. 

CB Insights, 2019 - The United States of Venture Capital

Additionally, our deals are dramatically increasing the availability of capital for Montana founders. On average, each NFC dollar invested in a Montana company has brought an additional $7.99 in co-investor capital to companies with offices in our State. And these numbers don’t even take into account the key roles that outside strategic investors are playing in our Montana portfolio; investors including Amgen, BMW i Ventures, Toyota Research Institute, and FLIR.

Of course, the next logical question is “so what if you are able to get MT companies funded, the real question is will there ever be any liquidity in these investments?” After all, you can count on one hand the number of publicly traded companies headquartered in Montana (five, and three of them are banks). Historical acquisitions have been equally bleak. Montana’s one previously well-known feather in the cap was the 2011 RightNow acquisition by Oracle. However, the frequency and likelihood of M&A activity has rapidly changed over the past 12 months. NFC alone has had two acquisitions across both funds—Ataata and Blackmore. Montana also boasts three major acquisitions by publicly traded companies outside of our portfolio during the same time period: Elixiter, Bozeman (Acquired October 2018 by Perficient, NASDAQ: PRFT); Advanced Technology Group, Missoula (Acquired September 2018 by Cognizant, NASDAQ: CTSH); and Wisetail, Bozeman (Acquired by Alchemy Systems in 2017, Alchemy acquired Aug 2018 by Intertek Group LON: ITRK). The increase in major acquisitions is another trend we don’t expect to change anytime soon, and it only further supports our confidence in Montana’s growth as a strong start-up ecosystem beginning to draw national attention. 

To Infinity and Beyond

Since November of 2017 we’ve interacted with 79 amazing early stage companies in MT, and 197 companies in the Northern Rockies. We couldn’t be more excited about the talent, humility, leadership, and drive of the founders we’ve met.  People like...Fletcher, Tony, Julie, Kris, Julien, Stew, Colleen, Erik, Jeff, Laura....and many more. If you haven’t heard of them yet - you most certainly will! We also couldn’t be more impressed by the quality of teams these leaders have assembled - teams doing very very hard things, and doing them better than anyone else.  Teams who are dominating national markets such as the MeatEater and OnX Maps.  Teams who are bringing about disruptive horizontal SaaS solutions to revolutionize efficiency, security, and speed for enterprise such Halp, Alpin, and Section. Teams with deep subject matter expertise and unparalleled vertical specificity who are focusing on efficiency and optimization such as Aumni, OptioSurgical, TwinThread, and PatientOne.  As we reflect on the founders and the people who we have not only invested in, but have interacted with over the past year it’s more impressive and more promising than any numbers or statistics we could throw on a chart or in an annual report. The people in Montana and in the Northern Rockies are what is fundamentally driving our opportunities and results. We’re humbled and thankful to be shoulder to shoulder with them everyday.

In 2019 and beyond, we can’t wait to experience more of the same energy and momentum. We’re also excited about the strong prospect of 2019 being [perhaps] the first time Montana surpasses a new venture capital milestone: >$100M in total annual VC dollars invested in the state. We think it’s not only possible, but highly likely given Montana’s current trajectory, only halfway through 2019.

We feel confident in our investment strategy, and our aspiration is to continue to be a founder-first fund.  It’s the most important element of our mission statement: to provide access to capital to founders; and when we decide to invest, we take our responsibility seriously to help them on their journey to create companies of impact, utility, and value. To date, across both our funds, nine companies have received follow-on funding and all 21 portfolio companies are still operating. We see this as support for our thesis that our founder-first focus will lead to success for our companies and continue to accelerate the development of a strong start-up ecosystem in the Northern Rockies. Our closing vision and our definitive mission statement to our LPs at our annual 2019 update was to be the preeminent seed to series A venture fund in Montana the Rocky Mountain West, and we look forward to the potential that this focus will unlock for early stage companies throughout the rest of 2019 and beyond. 

Richard, Will, and Les

“You’re from Montana? So...what do you do there?”

When I was younger, I could count on hearing this phrase whenever I traveled with my family. I used to laugh at my parents’ stories of people asking if they had electricity or rode horses to work because I couldn’t believe anyone would say those things seriously. But, as I got older and left Montana for college, those questions didn’t stop. 

I’m always surprised by these remarks, because I think it’s the combination of small towns, rich university life, and talented, forward thinking people that makes Montana such a special and dynamic place. I grew up surrounded by news of events like the Oracle acquisition, meeting people from all over the country who had come to take advantage of MSU’s top STEM programs, and having the parents of my classmates be renowned researchers, engineers, and business owners. As a result, I never doubted there were myriad opportunities here. What I’ve realized is Bozeman and Montana are growing and changing so rapidly that the stereotypes can’t keep up. To those on the outside, it might not be obvious, but if you’re paying attention, you know big changes are happening in Big Sky Country. 

The fact that the population of Bozeman increased by almost 10,000 between 2010 and 2018 may not seem significant to people from major cities. But to someone who was here in the 90s when the population was less than half of today’s, it’s clear Bozeman is quickly becoming a hub of activity in the Rocky Mountain West. While it comes as no surprise that Broomfield County (adjacent to Boulder and CU) is growing at 3.9x times the national average, Gallatin County  isn’t far behind at 2.7x. The Bozeman Micropolitan Area in particular was ranked as the fastest growing in the nation per the US Census Bureau in 2018, meaning that even though it isn’t as prominent as the Boulder area, it’s quickly making a name for itself.

But populations are increasing everywhere. So what makes the growth in Bozeman and Montana such a big deal? It’s backed by powerful economic activity. In 2018, Policom named Gallatin County the country’s strongest economy of its size for the second year in a row. A third of Montana job growth over the last five years was located in Gallatin Valley, and the Montana High Tech Business Alliance now boasts over 350 member technology firms across the state that were projected to add over 1,100 new jobs in 2018. On top of that, last March they reported that tech companies in Montana generated more than $2.3 billion in annual revenues in 2018 and were reported to be growing at rates nine times faster than the statewide economy.

On top of economic activity, Montana State University continues to attract some of the brightest minds from across the state and nation, boasting continuously growing enrollment every year since 2008. And when people graduate, they aren’t leaving. Montana’s high quality of life and exploding employment opportunities are allowing people to choose to stay right here.

The combination of economic growth and talented, educated people has Montana attracting major company operations and investment. Some of the most notable include SoFi, Classpass, Dataminr, FICO, Oracle, Boeing, Workiva, and Figure to name a few. And this doesn’t even count the multiple professional service partners across the state who work directly with companies such as Medallia, Qualtrics, Salesforce, and Marketo. Regarding talent, perhaps the industry’s leading technology recruiting firm, Riviera Partners, boasts a high performing office in Bozeman that complements their SF HQ. Lastly, there’s a strong crop of home-grown Montana technology companies such as Submittable, Quiq, LumenAd, Blackmore Sensors, Foundant, OnX Maps, and PFL that collectively employ hundreds of Montanans in high paying technology jobs.

This is important for NFC because it means Montana is becoming a place where entrepreneurs can find everything they need to thrive, and that major national investors are taking a closer look at local companies. Previously, a significant barrier for Montana entrepreneurs was a lack of access to capital, and a lack of visibility outside the state. This was one of the main reasons NFC was founded in 2015—to help start-ups obtain the seed to series A funding they need to get off the ground and gain the size, revenues, and business models required to catch the eyes of later stage investors. 

Over the past four years, we’ve seen capital come flooding in from Funds all over the country. And the trend of a growing population pursuing higher education and entering fast growing sectors like SaaS, hardware, and biotech looks like it’s only going to pick up speed. After taking a step back, it’s not hard to understand why. As more and more people discover the beauty and opportunity the state has to offer, individuals will continue to flock from all over to live, work, study, and raise their families in Montana. When people move, their ideas, past experiences and future passions come with them, positioning us in the center of what we see as a demographic storm ripe for the development of a stronger and stronger start-up and investment ecosystem. 

So yes, I’m from Montana. I have electricity, running water, and I only ride a horse to work when my tractor is out of gas. But in all seriousness, what do I do here? I’m the newest employee at Next Frontier Capital, and I’m energized by the opportunity to meet local founders and see what our firm does to help them grow and scale their innovative, high-potential companies on a daily basis. But let’s flip the question since you asked. What could you do here? The possibilities are endless, but one thing’s for sure. Montana is growing, and I know our companies are hiring :)

Why AI and Robotics offer hope, not peril.

Growing up in a blue collar town in the northwest corner of Pennsylvania, I dreamed a lot.  I was 10 years old when Terminator 2: Judgement Day debuted in theaters.  Already obsessed with Transformers, Star Wars,  He-Man, and GI Joe; T2 and Skynet quickly became a natural continuation of my childhood fantasies.  One of my favorite past-times was setting up battles on the “back porch”. I would regularly pit my plastic GI Joes against the evil metallic Transformers in an afternoon competition. A modest upbringing with daily adventures prompted by my neighborhood “Goonies” led me to not only fantasize in play, but to dream of a better life.  Most of my neighbors’ parents worked factory, construction, or mill jobs hosted by a familiar cast of rustbelt corporations such as GE Locomotive, Hammermill Paper, Lord Corporation, and even Zurn Industries - yes, the company that makes the flushing valves for most public urinals and toilets.

My sister and I play out a “winner takes the universe” battle in Erie, PA circa 1987

My sister and I play out a “winner takes the universe” battle in Erie, PA circa 1987

Looking back now, I realize why I didn’t aspire to the path of working in a Pennsylvania factory. My ticket out of Erie in 1999 was to attend the US Military Academy at West Point. What transpired at West Point was a Post-911 calling to re-live those GI battles from my childhood. I was commissioned as an Infantry Officer in 2003, but ultimately ended up gravitating back towards my passion for technology when I separated from the military and co-founded a cyber security company. It wasn’t until I returned to Pennsylvania nearly 30 years after my action figures went the way of a garage sale that I realized what an important metaphor they represent.

What will be the impact of robotics and artificial intelligence on our workforce over the next decade and how will that change our societal definitions of work, learning, and life?

The reason for my return to Pennsylvania in 2019, and the unlikely source of inspiration to explore this topic?  A conference focused on venture and early stage technology in the heartland of America: “Blueprint York”, hosted by VentureBeat.  The topic? A favorite flavor from my childhood: Skynet and the Transformers, aka AI and Robotics. My greatest revelation at the conference was that the next decade is a very real time to pay attention to AI and robotics, because they are actually on the brink of coming to places like Erie, Pittsburgh, York, and perhaps even Montana - the state I now call home.  However, the robots are not coming to battle with or against our real-life GI Joes, they’re coming to do something much bigger.

The robots are coming to take our jobs.  

One of my favorite quotes from the mainstage at BluePrint York came from AI and Robotics visionary and fellow Veteran, John McElligott.  With an optimistic dystopian tone, John proclaimed, “I don’t believe robots will take people’s jobs, but the [unfortunate] problem is that lots of people are doing robots’ jobs.”  Robot jobs involve primary tasks which are some combination of complex, computational, monotonous, and dangerous.  What primary industries will robotics have the greatest impact on over the next decade? A lot. Transportation, legal, insurance, restaurants, hospitality, law enforcement, Ecommerce, financial services, and security.

But there’s no difference between the AI-robotics wave and similar technology waves that came before...or is there?

Many reasonable counter arguments against McElligott’s uncomfortably humorous statement were raised throughout the conference. There was lots of sentiment that the coming wave of robotics and AI and their proliferation into economic processes are no different than past technology waves, in that they will boost productivity which will create opportunities for increased spending and investment, which will lead directly to new job creation. I challenge this assumption because the past rounds of technological advancement were largely related to automating mechanical processes – even though some jobs went way, they mostly shifted to more supervisory and analytical jobs - new jobs that required human thought and decision making. The major difference between the industrial, computer, and internet revolutions and now is that during the AI and robotics revolution we will be automating cognition, not just mechanism. This shift creates a very real potential that humans will be displaced completely from many everyday jobs.

Simmer down. It will happen much slower and with much less of a visible effect than we expect...or will it?

There were also counterarguments raised that the perception and speed of robots and AI replacing humans is far worse than what will actually happen.  Even McElligott made that point that AI ultimately allows humans to be more efficient and to make better decisions, therefore the conversation should instead focus on augmentation not automation. I agree that augmentation will allow smaller scrappier towns with clusters of historical manufacturing excellence – gearhead towns like York, PA –  to punch above their weight. Towns that recognize this opportunity to successfully leverage AI as “the new oil” (resource) and “the new soil” (foundation) to grow successful global businesses.  One of the key differentiators for smaller towns in the heartland who are capable of achieving this end will be self-awareness: making efficient use of local clusters of academic excellence and industry expertise in order to leverage their unfair advantages in combination with AI and robots to scale.  

Levering unfair advantages will be necessary to decrease the negative impact of AI and robotics on local economies.

One of my favorite local examples of an academic and industrial unfair advantage is in my own backyard. Bozeman, Montana is quietly known by many. It’s located in the middle of one of our nation’s most quaint college towns - Montana State University.  Bozeman is an hour from one of the US’s most bustling ski destinations - Big Sky. Bozeman is next door to a blue ribbon fly fishing paradise - the Madison River. Bozeman sits on top of a super volcano that happens to be adjacent to one of our nation’s most treasured National Parks - Yellowstone...the list goes on.  However, who would suspect amidst all of the classic headliners, that Bozeman should be known as a national cluster of excellence in the photonics and optics industries?  Infact, the Gallatin Valley is home to more photonics and optics companies per capita than any other county in the nation; not to mention, home to The Spectrum Lab and The Optical Technology Center - two national centers of research excellence.  It’s Bozeman’s unfair advantage – a hedge against the robots, a secret weapon to help Montana instigate job creation and growth in an AI and robotics driven future.

AI and Robotics will change the content of work.

There seemed to be an unspoken fear at BluePrint York that massive swaths of communities across the US will suddenly, someday soon, be unemployed.  But it’s not as if there is a fixed amount of work to do. The content and definition of work will certainly change and automation will continue to be complementary to the tasks that people do as the definition of work changes. Even if a crazy number of jobs go away, at a rapid pace, that doesn’t necessarily need to translate to a crazy percentage of unemployed people.  Why can’t policy makers and communities allow that shift to instead translate to positives: imagine a 20-40% shorter work week, extended paternity and maternity leave for new parents, or even flexibility for “re-treding” society (re-training, re-education, re-inspiring). Could music, literature, science, and technology become an even more emphatic portion of our lives, not just reserved for nights and weekends?  As the definition and content of work changes, employment models may need to change also; from long-term full-time employment to more short term responsive and selectable “1099-like” offerings.

The AI and robotics wave should guide how we re-think education, workforce training, and workforce transition.

There were skeptics at BluePrint York who warned that the real issue related to the wave of AI and robotics isn’t an onslaught of unemployment, but rather a mismatch of skills and training related to rapidly evolving workforce needs.  Perhaps there is some truth that employers, not employees should be most cautious about this wave. But why should a mismatch in workforce and needed skills create panic? Boundary pushing programs that are already rethinking workforce retraining will emerge as winners.  Programs such as Gallatin College’s 2-year photonics and laser technicians program and the Flatiron School’s coding academy that offers fully refundable tuition...if you don’t get hired within 6 months of graduation. Policy makers and academics will also need to become more flexible in how they think about education.  Instead of degree programs, academic institutions may need to establish more specific skills-based training programs. Focus will need to shift towards developing attitudes of life-long learning - teaching young adults flexibility, adaptability, and a level of comfort with change.

The greatest impact of AI and robotics has the least to do with robots taking our jobs, and the most to do with what will become of our planet.

Despite the fun and healthy discourse at BluePrint York, the aftermath of my reflection leads me to consider something that wasn’t even mentioned at the conference.  Why not turn any thoughts of panic into a more pressing attention on on how we will net-benefit from the pending arrival of AI and robotics. Consider the arrival of this new technology wave as a very tangible opportunity to redirect human initiative and effort to where it is needed most.  The industrial revolution led to the creation of a significant amount of leisure time, at the expense of our environment. We trimmed the average work week from 60 to 40 hours. With the added leisure time and increase in consumption and convenience, look what we did the planet! The “great pacific garbage patch” of plastic bottles located between Hawaii and California might be the best-worst mascot from this page of history.

Our most important work, isn’t related to the jobs that the robots will take.

Perhaps the most important job we have as a species during the pending AI and robotics revolution is to rewrite a future that in the current direction might not be that far away from the opening scene in Terminator 2: Judgement Day.  I’m referring to the image where polished chrome robots crush human skulls under foot while traversing across a black, smog infested and destroyed planet earth.  I believe we’re actually approaching that judgement day – not mankind vs. intelligent robots, but rather a judgment day with the planet. The greatest global impact of AI and robotics has nothing to do with unemployment, loss of jobs, changes in the workforce, or even changes in the definition of work, but rather the hope and potential to help us avoid an environmental catastrophe.  How do we clean up this planet and reverse the damage done during the previous three technological revolutions? We could start by leveraging our singular concern – humans lacking employment and subsequently purpose - and pointing people at solving the problem. Combine the surplus of human labor with the augmentation of robots and accelerate the effort with the net gain in human creativity, leadership, and ingenuity resulting from humans pivoting away from doing robot jobs.

The greatest threat to embracing an opportunity of hope is the concentration of capital, talent, opportunity, and the robots.

The only threat to achieving this end might be an unbalanced concentration of technology and power.  With three states in the country receiving over 75% of the annual venture investment, aren’t we negatively selecting that concentration of opportunity and technology already? Would not a further concentration of wealth and opportunity deride hope and eat away at the spirit and resolve in the heartland? I think a healthy national AI and robotics strategy is only optimized when we all work together, amongst the robots and between the coasts. Which is why investing in the heartland and encouraging the reinvention of communities through AI and robotics will help build community, create opportunities for all, and lead to a future of hope, not peril.  

“I’ll be back [for an unlikely conclusion].”

Growing up, the Transformers always won on my back porch.  If we approach the future of AI and robotics with a responsible eye towards opportunity and invest in the heartland while focusing any created surplus in human capital on the environment – I think this strategy leads to an unexpected victory.  It’s the grand finale that even a 10 year old boy from Erie, Pennsylvania couldn’t imagine: GI Joe embraces the coming wave of AI and robots and learns to work together with the Transformers to create a better world.

Image Credit:

Image Credit:

NFC Q1 Newsletter: 18 Investments to Date, $141m Total Invested in Our Companies, First Exit in 2018, and MT Continues to be Hot

Next Frontier is executing on our mission to partner with entrepreneurs to build Montana technology companies of impact, utility, and value, while adding Colorado and its vibrant ecosystem to our mandate.

Please find below an update on our portfolio and some exciting detail regarding MT's continued growth and development.

Fund II is off to an strong start with one exit to date and a portfolio of quality MT and CO companies, backed by some of the industry’s leading Funds. In 2018, Fund II made six new investments and, most notably, saw our first exit, Ataata (acquired by Mimecast). 2018 was also Les Craig’s first full year in the partnership and he is proving perhaps our best investment yet.

Over the life of the Firm, we’ve seen True, Venrock, Amgen, BMW i Ventures, Toyota, Millenium, Summit, Bessemer Venture Partners, Steve Case’s The Rise of the Rest Fund, The Chernin Group, and Foundry Group, among others, invest in NFC companies. The influx of capital into our companies to date, is making it possible for founders to build, fund, and scale industry leading companies in our market.  

Across Fund I and Fund II, NFC has attracted over $120M of syndicated investment and a total of $141M capital invested in our portfolio companies, including NFC’s paid-in-capital. This represents a co-investment ratio of $5.71 for every dollar that NFC has invested in our region.

Before NFC started,  MT attracted ~$4-5m per year, and we are proud to note that Pitchbook reported $83m in MT venture funding.

As a result of our activities to date, the Fund, for the second year in a row, was recognized by CB Insights as the most active investor in Montana over the last five years. 

We are executing on our mission and are positioned as the investor of choice in our market.


NFC's portfolio is now 18 companies strong:

  1. SiteOne Therapeutics, Bozeman and San Francisco

  2. Submittable, Missoula

  3. Clearas, Missoula

  4. Quiq, Bozeman

  5. Orbital Shift, Missoula

  6. Phoenix Labs, Vancouver and Bozeman

  7. OppSource, Minneapolis and Bozeman

  8. Remix Labs, Redwood City

  9. Blackmore Sensors, Bozeman

  10. IronCore Labs, Boulder and Bozeman

  11. Ataata, DC Area and Bozeman

  12. onXMaps, Missoula and Bozeman

  13. TwinThread, Virginia and Bozeman

  14., Boulder

  15. The MeatEater, Bozeman

  16., Boulder

  17. OptioSurgical, Denver

  18. PatientOne, Missoula

Montana is Hot

Bozeman, Missoula, and Montana remain hot. For the second year in a row, Policon named Gallatin County (home to Bozeman) as the country's strongest economy of its size, see article here.

Bozeman International just announced a 9th straight year of record passenger traffic. The airport handled 1,340,857 passengers last year, an 11.8 percent increase from the year before, according to an airport news release. Annual passengers have almost doubled in the past 10 years and account for about 30 percent of all airline passengers coming in and out of Montana. During 2018, the airport expanded its year-round offerings to include daily, nonstop flights to Portland, San Francisco, and Los Angeles. Flights to Denver and Phoenix/Mesa also became year-round flights, and the airport started offering a number of seasonal daily flights.


MT Continues to Attract Major Company Operations and Investment
Companies investing in MT operations include the following: ClassPass, Perficient, Lexis-Nexis, FICO, Oracle, SoFi, Figure, Workiva, FLIR, Boeing, Applied Materials, Kampgrounds of America, Dataminr, Cognizant, and Intertek.

Notable recent Montana PE and M&A activity includes:

  • Elixiter, Bozeman (Acquired October 2018 by Perficient, NASDAQ: PRFT)

  • Advanced Technology Group, Missoula (Acquired September 2018 by Cognizant, NASDAQ: CTSH)

  • Wisetail, Bozeman (Acquired by Alchemy Systems in 2017, Alchemy acquired by Intertek Group LON: ITRK in August 2018)

  • Printing for Less, Livingston/ Bozeman ($25M Growth stage investment from Goldman Sachs, April 2018)

Nationally acclaimed professional service partnerships with top tier technology companies include the following: Medallia and Qualtrics (commonFont - Bozeman), SalesForce (Now it Matters - Bozeman), Marketo (Elixiter - Bozeman), and Oracle (Helix - Dillon).

Montana State University Innovation Campus

In the fall of 2017, Montana State University broke ground on the MSU Innovation Campus, a 42-acre research park. The Applied Research Lab has the potential to attract hundreds of millions of new research dollars to the MSU research enterprise, as well as encourage the commercialization of new technologies being developed in the photonics, optics, and microsatellite research clusters.

MT High Tech Sector: $1.7bn in Annual Revenues

Established startup clusters in SaaS, bio-tech, and photonics continued strong development in 2018. In March of 2018, the Montana High Tech Business Alliance reported that Montana hit a significant new milestone: tech companies generated more than $1.7 billion in annual revenues and were reported to be growing at rates nine times faster than the statewide economy, according to the University of Montana Bureau of Business and Economic Research. The Montana High Tech Business Alliance (MHTBA) now boasts over 320 member firms that where projected to add over 1,100 new jobs in 2018, an expected 18.5% increase. Jobs at businesses who are MHTBA members pay considerably more than jobs elsewhere in the Montana economy. The median annual salary at MHTBA businesses reported in 2018 was $63,000, more than twice the median salary per Montana worker as measured by the Census Bureau’s American Community Survey.

NVCA and Regional Venture Capital and Venture Capital University

In addition to our work in Montana and Colorado, we are also working with the NVCA and others to highlight the growth and impact of regional venture capital. Steve Case’s Rise of the Rest Fund, Drive Capital in Ohio, Arthur Ventures in North Dakota, and other regionally focused firms are working with NFC to build the case for regional venture as a source of both return to LPs and a critical driver of economic growth. Will chairs the NVCA Regional Capital Working Group and NFC plans to continue to work with our regional peers to help research, support, and highlight the national impact of investing in traditionally capital starved markets.

Come visit. We'd love to show you around Montana.