Key Points:
- Venture capital funding in the Denver-Boulder market declined by 52% year-over-year to $1.6 billion in the third quarter of 2023.
- Leasing activity among tech companies in the area has declined significantly, with only 16% of leases signed in the metro area coming from tech companies.
Venture capital funding in the Denver-Boulder market declined by roughly 52% year-over-year through the third quarter of 2023 to $1.6 billion, according to new data from CBRE. This decline follows a strong year in 2022 when the state captured about $3.5 billion in VC funding. The decline in funding can be attributed to economic headwinds such as high interest rates and supply chain bottlenecks.
Despite the decline in overall VC funding, the report suggests that the market’s life sciences and aerospace sectors offer hope for a rebound. The report mentions that the adoption of artificial intelligence technologies in these sectors will contribute to their growth. AI is expected to be a primary catalyst for the rebound in VC funding, with Colorado AI companies seeing a nearly tenfold increase in funding since 2020 compared to the total from 2015-2019.
The Denver-Boulder area’s life sciences industry is considered one of the strongest in the country, thanks to a strong talent pipeline, low vacancy rates, and a burgeoning tech sector. On the other hand, the market’s aerospace sector has also seen significant growth, especially in new product categories like classified spaces as a service.
Overall VC funding in the US reached a five-year low, with VC funders taking more time to evaluate deals due to uncertain macroeconomic conditions. However, CBRE’s data suggests that the Denver market has runway to grow, particularly in the life sciences and aerospace sectors. Life sciences and aerospace companies combined received 41% of the total VC funding in the Denver-Boulder market through Q3, equaling the amount received by the tech sector. Specifically, life sciences companies saw a 186% increase in VC funding compared to the previous year, while aerospace and defense contractors saw a roughly sixfold increase.
CBRE’s data also suggests that early stage life sciences and aerospace startups are benefiting more from VC funding than established companies. About 55% of the VC funding received by companies in the Denver area went to early stage startups, compared to 40% in 2022.
