Bootstrapping got Denver-based Schoolrunner only so far.
Three years after its 2012 founding, Schoolrunner had its student data management software in 72 schools, covering 50,000 students.
Seeing the potential to put the software in the hands of more teachers — and, ideally, bettering education in the process — founder Charlie Coglianese hoped to broaden Schoolrunner’s reach.
But Coglianese was wary that traditional venture investment might force his firm into a pattern of unwieldy growth and simplify the technology offerings in the name of greater returns.
Schoolrunner ultimately found a different kind of backer: The Colorado Impact Fund, a newly launched private equity with a social and environmental bent.
Last month, Schoolrunner and Boulder’s Bhakti Chai were the first companies to receive investments — $1.5 million and $3 million, respectively — from the fund formed to invest in growing Colorado companies that also promise positive social and environmental impacts.
“We really aligned in terms of our values,” Coglianese said.Venture capital firms are “are only interested if you can be the next Uber. They’re
looking for a home run and we weren’t out to be a home run.”
At least not yet.
Colorado Impact Fund officials say they hope financial capital from locally based investors combined with intellectual capital from local advisers can help companies like Schoolrunner stay and grow in Colorado.
“Our whole purpose is to help these companies scale their businesses,” said Jim P. Kelley, Colorado Impact Fund founder and co-founder of Denver-based Vestar Capital Partners.
The $62.9 million fund was formed last year after a call from Gov. John Hickenlooper to boost the state’s entrepreneurial ecosystem and economy.
The Colorado Impact Fund’s operations are housed in the LoDo office of Vestar, which manages the fund on a pro bono basis.
Since the fund’s founding, Kelley and a four-person crew have pored through hundreds of companies and traveled across the state to speak with entrepreneurs in growth industries such as health, natural products, education, natural resources and economic development.
“We really want this to be the Colorado Impact Fund and not the Denver/Boulder Impact Fund,” Kelley said.
Colorado Impact Fund officials are expected to soon announce more portfolio companies. Considering the total size of the fund and an expected funding range of $2 million to $6 million, the fund may have as many as 15 to 20 firms in its portfolio.
The fund also taps into the adviser cache of the Blackstone Entrepreneurs Network, a $4 million program launched last year by private-equity powerhouse The Blackstone Group.
“The (Colorado Impact Fund) is really trying to improve the thesis that you can get the same type of returns with impact investments,” said J.B. Holston, executive director of the Blackstone Entrepreneurs Network. “I think what’s particularly interesting about this one is they’re unabashed about trying to make a competitive rate of return while only investing in Colorado impact businesses.”
A survey released last year by J.P. Morgan and the Global Impact Investing Network showed that impact investors expected to invest $12.7 billion in 2014.
While the Blackstone network and Colorado Impact Fund are still early stage themselves, Holston said the adviser-heavy approach could create a “virtuous cycle” of entrepreneur activity.
“To me, these are all really critical parts of the effort to draw more attention to and draw more support for growth companies in Colorado,” he said.
Alicia Wallace: 303-954-1939, awallace@denverpost.com or twitter.com/aliciawallace
