Market conditions at the end of 2021 in venture were fast approaching exuberance. Median pre-money valuations for the types of companies we typically invest in (US B2B and IT) increased from $27 million in 2020 to $40 million in September of 2021. The median late stage VC backed company is now a unicorn, with a valuation of $1.1 billion. VC firms are raising record sized funds and deploying capital at furious paces. VC funding in Q3 of last year was double the Q3 2020 total. Importantly, these conditions are not exclusive to coastal venture markets; we see similar trends in the Intermountain West today. But even with record amounts of venture capital being raised and deployed, up and down the Rockies, companies are facing challenges raising rounds compared to their coastal peers.
We recently conducted an analysis of venture funding across the United States and found venture funding per capita in the Intermountain West has been and still is a small fraction of venture funding in coastal states. This creates significant headwinds for Intermountain West (IMW) companies during the journey to growth capital. In 2021, venture-backed companies in the IMW (B2B and IT) raised 83 percent of what their coastal counterparts raised at the Series Seed and just 78 percent of what their coastal counterparts raised at the Series A. Chronic underfunding puts IMW companies and founders on an uneven playing field, which requires scrappy capital efficiency in order to compete with their better funded coastal peers. Growth firms deploying capital demand companies meet the same milestones to secure funding regardless of geography, putting IMW companies at a systematic disadvantage.
This is exactly the challenge we have been addressing in Montana since 2015. Since NFC’s founding, the ability of Montana founders to raise venture capital has fundamentally changed. Montana is fast approaching the one billion dollar milestone of total VC dollars invested and more national firms than ever are interested in Montana companies. Importantly, for every $1 NFC has invested in its Montana portfolio since its founding, $9.52 of outside capital has been invested in our Montana portfolio companies. We are deeply proud of the impact NFC has had on the accessibility of capital in our home state.
We believe regional VC firms will continue to play an important role expanding capital availability in other IMW states. Entrepreneurs in Idaho, Wyoming, Nevada, New Mexico, and Arizona face many of the same challenges as founders do in Montana, and NFC will look across the region to find and back the best entrepreneurs in the Rockies.
We continue to be amazed by the capable and visionary founders and entrepreneurs already in, and moving to our region. Companies such as OnX, TwinThread, Biosqueeze, Optera, Advisr and many others in our portfolio are having an impact on a national and global scale. While the COVID-19 pandemic has been difficult in many ways, it has also accelerated the inflow of financial and human capital into the Intermountain West, providing the inputs for continued creation of innovative and impactful companies.
We maintain a robust confidence in the Intermountain West as a stellar place to live, work, and invest. All of us at NFC are humbled by the quality of people we work with and the impactful missions and values of the companies and individuals in our orbits. It is a privilege to play this important role as a regional VC firm, and we look forward to continuing to unlock the potential of entrepreneurs across the Intermountain West.
Will, Richard, Les, Kirsten, and Garrett
BLUF (Bottom Line Up Front):
Please help us congratulate NFC’s Kirsten Suddath in her promotion to General Partner. We are so happy to have her on our team. Kirsten and family plan to return to CO in mid-2022 where she will lead our Boulder office.
NFC is looking to bring on a Vice President of Finance and Operations. For more information, please see the job description on our website.
We continue to be excited by the quality of companies we are given the opportunity to work with. Below are a few of the new portfolio names we’ve funded and are excited to announce.
More Portfolio Company NewsPORTFOLIO UPDATES
Venture In the Rockies Newsletter (Will Price):
Found In The Rockies (with Les Craig):
Recent Firm/Partner Mentions:
From "The NFC Blog"
CAREER OPPORTUNITIES IN OUR NETWORK
Next Frontier Capital is currently hiring for a Vice President of Finance and Operations.
Our portfolio companies are also growing and hiring for over 100 different roles! You can see all these opportunities and more on our NFC Job Board.
Until summer, Will, Kirsten, Richard, Les, Garrett + the NFC team