There are a lot of changes afoot for SpringTime Ventures as it looks to deploy its freshly closed second fund.
For one, the Denver-based firm is pivoting away from its original focus on its home state of Colorado, despite being the only local fund in two of the state's 10 unicorn companies. It's also now able to expand its team thanks to raising three times as much money for Fund II, giving SpringTime enough cash on hand to allow its partners to finally pay themselves a real salary.
So far, these changes have proved positive. SpringTime is announcing a $25 million second fund to cut checks ranging from $400,000 to $600,000 into U.S.-based seed-stage software companies. The fund was raised from an LP base of 120 entities that largely consisted of high-net-worth individuals.
This latest fund allows SpringTime managing partners Matt Blomstedt and Rich Maloy to ditch their consulting work to focus on investing full-time, and actually get paid for doing so, overcoming a financial hurdle that plagues many first-time fund managers but isn't spoken about often. The firm was also able to add a principal and two partners.
The new pool of capital will be invested across startups in sectors including fintech, insurtech, healthcare, logistics and supply chain. While Fund I largely was deployed into companies across these same sectors, Fund II's thesis represents a deviation from where the firm first focused: filling a funding void for startups in Colorado.
Blomstedt told TechCrunch that he originally got the idea for SpringTime after moving to Colorado in 2015 after a career in the energy business in Texas. He started attending happy hours to get to know people in his new community and met a bunch of startup founders who all shared the same problem. Blomstedt saw an opportunity.
"At the time, there just wasn't a dedicated seed fund really in Colorado and the consistent theme was [local founders] were having to go to the coast or maybe to Austin, Texas, or Chicago to raise seed capital," Blomstedt said. "I started to become pretty convicted in kind of an opportunity and the need for a seed fund in Colorado."
He decided to raise a proof-of-concept fund to back these startups. The first fund was a slog to raise, he said. He garnered $8 million, which the firm invested in 35 companies, including future Colorado unicorns SonderMind (telehealth) and Veho (logistics).
While the fund isn't sticking to its original thesis of backing companies in the Centennial State, Blomstedt said that most of their existing portfolio companies would fall under this new strategy anyway. The above two examples back that up. Plus, he thinks this distinction will help them better leverage their LP network — 77% of Fund I's LPs reupped for the new approach.
"They send deal flow or they help us evaluate deals, so we started just kind of gravitating toward those industries," Blomstedt said. "It also just made us better; we can make quicker, sound decisions in a much shorter period of time by having this focus and this network around us."
He added that they can be a value add later to the firm's portfolio companies. SpringTime also brought on a handful of operating partners for Fund II for the same reason. Now, after raising across two very different market conditions — Blomstedt said it took about the same time to raise the first $22 million and the final couple million — it's time to deploy.