Investment Focus on Ventures in Colorado
Aravaipa focuses on companies that create disruptive technology with a global environmental impact. Impact Technology areas include transportation efficiency, building efficiency, water technologies, and smart agriculture. Each of these disruptive Impact Technologies has global impact potential through the internationalization uniquely available to technology plays.
Since inception in 2008, Aravaipa has argued that long term, capital-intensive Cleantech investments (solar generation, biofuel production, electric vehicle manufacturing, and wind generation) should be the domain of large corporations – the numerous VC-backed failures confirms this assessment. Aravaipa only invests in companies expecting to require less than an additional $10M in funding to reach profitability, so that Aravaipa can: (i) become the lead active investor with an initial investment of $250K to $1M, (ii) minimize the funding risk , and (iii) minimize the risk of excessive future dilution. Aravaipa expects to manage several funding rounds for its portfolio companies.
Aravaipa is in the business of Company Building:
a. We invest in early-stage companies who are already generating revenues or expect to do so rapidly. We do not invest in science projects.
b. We do not seek homeruns, but rather companies that have a strong likelihood of becoming very profitable $20-to-$200M sales companies. Our approach greatly reduces the risk of failure as we do not push companies to try to rapidly achieve improbable homeruns.
c. We seek companies addressing niche markets that offer higher profit margins; we avoid crowded markets or ones dominated by large corporations.
d. We prefer to invest in companies with recurring, repeat or OEM revenues.
e. Spin-Outs: Aravaipa looks to maximize value by spinning-out “Fallow” assets from its portfolio companies into new companies. The first was the composite accumulator technology developed by Lightning Hybrids as a necessary component of its hydraulic hybrid system, and now the foundation of Steelhead Composites. Our second is Clear Comfort Water, which has the worldwide exclusive license for the Silver Bullet Technology for pools, hot tubs and spas.
Closely Managed: Aravaipa’s tight geographic focus ensures that the Management Team works regularly and effectively with portfolio companies. Aravaipa Managers regularly take on operational roles in portfolio companies.
Synergies: beyond sharing accountants and lawyers, companies share suppliers and even buy from each other, i.e. Lightning Hybrids is a client of Steelhead Composites and Sundolier. Companies also share information on potential employees, i.e. the sales manager at Vision Chemicals first applied for the position at Sundolier.
Local Co-Investors: Aravaipa has built a community of Colorado Co-Investors that has been crucial to continued funding of portfolio companies. These include Factor [E], King Hill Capital, 9th Street Investments, Bohemian Companies, Greenline Ventures, and Aravaipa Investors making Sidecar investments.
State Support: The first state funding came as low-interest loans from the Colorado Energy Office to RavenBrick and Lightning Hybrids. In 2013, Colorado launched its Advanced Industries Accelerator grant program; in the first grant allocation, Sundolier, Lightning Hybrids and Steelhead Composites each received $500k.
Ample Opportunities: Colorado is a national leader in entrepreneurship and Cleantech. 2013 Kauffman Foundation research revealed that Colorado is THE leading US entrepreneurial hotbed: in their entrepreneurial density ranking for US metropolitan areas Boulder was ranked #1, Ft Collins #2, Denver #6, Colorado Springs #9. Colorado also leads in Cleantech research: NREL #3 and University of Colorado Boulder #6. Also, Colorado State University (CSU) is home to PowerHouse, the Engines and Energy Conversion Lab. Several incubators, including the Rocky Mountain Innosphere and the HUB, complete this eco-system.
Impact Technology Triangle: we are seeing clear evidence that the Denver-Boulder-Ft Collins triangle has become the Impact Technology Triangle of the USA.
IMPACT + FINANCIAL RETURN
Aravaipa is the rare fund that combines the values of Impact Investing with the excitement, financial potential and global impact of early-stage Technology. Aravaipa Investors can expect both the high financial returns of technology investments and the high social and environmental impact of Impact Investing.
Financial Return: Aravaipa invests in companies that are developing, manufacturing, and bringing to market advanced technologies. Like all good technology companies, these companies are expected to scale rapidly, profitably and globally – as opposed to most other types of businesses that have considerable geographic, capital or human barriers to profitable growth.
Environmental Impact: each of the Technologies we invest in will contribute to a more efficient use of the world’s limited resources – providing a profound environmental impact. Uniquely the Environmental Impact of Aravaipa is at the core of its products, ensuring long term Impact compliance.
Social Impact: Aravaipa “Impacts Globally, but Acts Locally.” Aravaipa companies not only create high quality jobs, train employees and work with local suppliers, but also locate factories in low-income areas of the State and work with community development leaders.
COLORADO CLEANTECH INDUSTRY
“Aravaipa’s value to the community comes not only from its investment focus of ‘only-Colorado, only-Cleantech’ , but also from Robert’s and Tim’s active engagement with the many companies in their investment portfolio. We’re really lucky to have them in Colorado.”