When GCVF was conceived in 2017, we seemed a bit crazy.

Originally appeared in TechCrunch. Coauthored with David Teten, Founder at Versatile VC (https://versatilevc.com/). More of his writing can be found at Teten.com.

Originally appeared in TechCrunch. Coauthored with David Teten, Founder at Versatile VC (https://versatilevc.com/). Read more of his work at Teten.com.

81% of entrepreneurs are unserved by traditional capital markets.

According to the Kauffman Foundation, 1% of companies in America raise venture capital and 18% use bank loans.

Sure, some companies will never need any outside funding–true bootstrappers. And more power to them. The rest are stuck, unfunded, in Capital Purgatory. The “debt-equity chasm.”

We’re betting there are a lot of founders within the 81% who would do some pretty amazing things if they had access to risk capital.

We, the Greater Colorado Venture Fund, have found these founders in all corners of our state.

We’re not the first people to think of how to fund the 81% of companies in the debt-equity chasm.

Mezzanine financing often utilizes a combination of funding mechanisms for mid-market companies. Impact investors have been creatively providing risk capital to companies for years. Investors and founders will be problem-solving to get the right capital to the right ideas forever.

From the health crisis to the financial crisis to the looming mental health crisis, we’re facing unprecedented times with these three crisis happening all at once. While I think a lot of amazing efforts are addressing the first two, I’m becoming increasingly more concerned about the latter.

Recently we realized that, along with most investors, we didn’t have a clear set of standard terms and reps that were easily sharable for founders we work with. By the time we get to final diligence and papering a deal, we like to have addressed the following items, and there is nothing worse than spending several cycles going back and forth on what are fairly common items in our business. That is the last thing either party wants!

From day one, GCVF’s mission has been to generate venture returns outside of metro environments using sustainable, repeatable, and profitable investment models. This will lead to growth, job creation, and opportunity for founders and communities regardless of geographical location.

About a year ago, we held the Alternative Capital Summit in Denver, CO. The event birthed helpful direction for the plight of the 81% of founders who are left behind by the debt-equity paradigm.

Startup Valuations are an elusive dance where you learn a lot about founders and other investors. More often than not, the valuation conversation is a pretty straight forward one, but in the cases it’s not, it can easily create a lot of anxiety and headaches or even needlessly kill deals.

For many companies, capitalizing on an opportunity requires outside capital. However, many startups don’t have the collateral or operating history to secure debt.

In order for new risk capital structures to become common practice, we need to create a common way of discussing them.

The old and still predominant risk capital landscape is an equity monopoly.

Sand Hill Road was built on the backs of a subset of a subset of companies who were a fit for venture capital–and then executed brilliantly. These are magnificent success stories that provided magnificent, deserved returns for their investors and employees.

Unfortunately, all current day methodologies, classes, events, frameworks, and vocabulary in the startup world are created to perpetuate this one specific paradigm for funding, growing, and exiting .1% of companies. As a result, countless startups have sold equity to raise funds when it is not a fit for the business they aimed to build.