There are a lot of changes for Springtime Ventures as it tries to deploy its newly closed second fund.
For one, the Denver-based firm is the only local fund in two of the state’s 10 unicorn companies, but it’s moving away from its initial focus on its home state of Colorado. He’s also now able to expand his team by raising three times as much money for Fund II, giving SpringTime enough money for its partners to finally pay themselves real salaries.
So far these changes have been positive. Springtime is announcing a $25 million seed fund to cut $400,000 to $600,000 checks to US-based seed-stage software companies. The fund was raised from 120 legal entity LPs mostly comprised of high net worth individuals.
This latest fund allows Springtime Management partners Matt Blomstedt and Rich Malloy to focus their advisory work full-time on investing and getting paid for it, something that annoys many first-time fund managers but isn’t talked about much of the time. The firm also added a principal and two additional partners.
The new capital pool will be invested in startups in fintech, insurance, healthcare, logistics and supply chain. While Fund I is mostly focused on companies in these same sectors, the concept of Fund II represents a departure from the company’s original focus: filling the funding void for startups in Colorado.
Blomstedt first got the idea for SpringTime after moving to Colorado in 2015 after working in the energy business in Texas, he told TechCrunch. He started attending happy hours to meet people in his new community and found many startup founders who all shared the same problem. Blomstedt saw an opportunity.
“At the time, there was no dedicated seed fund in Colorado and it was a consistent theme. [local founders] They had to go offshore or to Austin, Texas or Chicago to raise seed capital, Blomstedt said. “I started to feel pretty guilty about the opportunity and the need for a seed fund in Colorado.”
He decided to raise an endowment fund to support these startups. It was a slog to raise the initial funds, he said. The company has raised $8 million in investments in 35 companies, including future Colorado unicorns SonderMind (telehealth) and Veho (logistics).
While the money doesn’t stick to the original thesis of the support companies in the Centennial State, Blomstedt said most of his portfolio companies fall under this new strategy. The above two examples support that. Additionally, he thinks this difference will help them better leverage their LP network – 77% of Fund I’s LPs regrouped for the new approach.
“They send a flow of deals or help us evaluate deals, so we started to gravitate to those industries,” Blomstedt said. “It also made us better; with this focus and the network around us, we can make quick and accurate decisions in a short amount of time.”
He added that they can be added value to the company’s portfolio companies later on. Springtime also brought in a few partners for Fund II for the same reason. Now, after amassing two very different market conditions — Blomstedt says it took him the same amount of time to raise the first $22 million and the last couple million — it’s time to commit.
