A SEASONED GLOBAL VENTURE CAPITAL FIRM, STEERING THE TRAJECTORY OF HARD TECH COMPANIES

Over the past decade, hard tech has emerged as a new wave of technology within innovation and scientific advancement. Driven by the frontiers of science and bold entrepreneurs, this phenomenon has captured the attention of global venture capital investors who have recognized the incredible potential of hard-tech entities.

Introducing Cottonwood Technology Fund, an early-stage venture capital firm that makes impact investments in Key Enabling Technologies (Hard Science). Established in 2009, the firm aims to be just as fruitful as a cottonwood tree, the fastest-growing, most versatile, and prolific tree in the United States.

Dave Blivin, Founder and Managing Director of Cottonwood Technology Fund, has played a major role in elevating the firm to a higher latitude.

The Genesis of Cottonwood Technology Fund

Every large corporation today has a venture group that externally sources most of its innovation. By finding disruptive innovation early in regions not in the mainstream, Cottonwood Technology Fund has become a valued partner to top corporations in the key industries of photonics and optics, advanced materials and chemistry, energy, quantum, robotics, and health sciences. Dave Blivin recalls the early days and shares: “We began this journey in New Mexico, home to two national laboratories, numerous prestigious research universities, and other hubs for innovation, such as the Air Force Research Lab. So we knew IP-based innovation would be our strong suit. When you add the rest of the surrounding states and northwest Europe (where we expanded in 2014), there are billions in innovation investment annually, with virtually no one else willing to discover these disruptive ideas and support them in their early stages.”

What Makes Cottonwood Stand Out in the Venture Capital Landscape?

Cottonwood Technology Fund looks for disruptive hard tech innovations that, if successfully developed for market entry and scale, have the potential to establish new industry standards in their respective industries because of their distinctive approaches and benefits.

What sets Cottonwood Technology Fund apart is its willingness to invest $2 million, even pre-prototype, in these companies to help prove that it can and will work.

Another distinctive factor of Cottonwood is that the team understands the need to bring in a business person from the beginning to position the company to attract potential customers and raise the next round. With $2M, that’s a realistic use of funds versus typical $250/500K seed/pre-seed rounds at the early stage.

Embracing Investment Opportunities in Different Regions

Cottonwood Technology Fund uniquely focuses on the Southwest United States and Northern Europe. Both regions have exceptional innovation centers, particularly in their focus areas. Investors in Europe are generally more patient and prefer to invest later. However, European governments have recognized that and provide more in grants and subsidies at the early stages than in the US, but these typically still take some matching dollars. So, the company often gets more non-dilutive capital in Europe to better leverage its capital and offset some of its ability to attract other investors early.

Prioritizing Opportunities among Diverse Landscapes

Mr. Blivin and his team are opportunistic in their regions but tend to focus on areas where they have strong corporate relationships. These corporations support Cottonwood’s diligence even though the companies are initially too young for them. The corporate venture groups then often invest at the next phase in these companies once they have a prototype or proof of concept that their engineers can test and validate.

Addressing Pressing Global Challenges

ROI is the Cottonwood Technology Fund’s primary investment criterion across all industries. Given the disruptive potential they see in the companies, if they succeed in breaking into the market, their disruptive potential will ultimately have a major positive impact on those industries. The same holds for their investments in climate technology and the energy transition.

A Distinctive Approach to Support Portfolio Companies

Cottonwood Technology Fund is involved on the board of every company they invest; in fact, they are still on the boards of every company, even those past their C rounds who have raised over $200 million in total. According to Mr. Blivin, “It is because of the value-add and positive impact we have had along the way in mentorship, network access, and strategic guidance, including helping pull together later rounds in most cases.”

So management advocates for continued involvement of the Cottonwood partners, and new investors value their historical contributions and continued insights due to their long history with the companies. This is something of which the team at Cottonwood Technology Fund is proud.

Industry Evolution: Mr. Blivin’s Take On Emerging Technologies

The speed of light is needed more with the escalating volumes of data being driven by AI, video streaming, and others. On a broader scale, nanotechnology develops new materials with properties distinct from those of the underlying materials. Understanding and applying these unique properties will continue evolving with significant impact. Cottonwood has also recently started investing in emerging quantum technologies and has an investment in fusion.

Moving Forward

There are compelling innovation hubs and compelling innovation in almost every city, state, and nation globally. Of course, that means there’s a world of great ideas outside of Silicon Valley and Boston’s Route 128. But they most often are licensed to big corporations, where they often disappear, or they are never found or supported in the early phases since there isn’t enough funding or experienced management in close proximity to these ideas.

Cottonwood Technology Fund currently focuses on two regions, but there are many opportunities to share its distinct approach and expertise with other areas. The Netherlands was the first to seek to open an office there, and it has been quite successful in growing Cottonwood’s investor base, business network, and deal flow. The firm is now in similar discussions with other regions. That could be the next step toward expanding Cottonwood’s impact.

Words of Wisdom

The visionary leader shares his insight with all young minds aspiring to bring about a change in hard tech.

He says, “Entrepreneurs should understand that it’s not just about proving the technology works; it’s about building a real company over a long horizon that can become a global industry leader. Thus, their primary goal must be to triumph against the biggest corporations worldwide. That means they can’t be hung up on titles, control, dilution, etc. To win, all of these will evolve, and if they win, it will be because they were focused on winning, whatever it takes. We want to support them in doing that, but it won’t work unless everyone believes from the outset that we share the same vision and knowledge of the goal and what it will take to succeed.”