Summary:
Denver's DEMI Fund failed to provide a proper audited financial statement, instead submitting a vague and incomplete document
$1.48 million of taxpayer money was invested in startups, but the fund's reporting lacks transparency on where the money went
Justin Borus of Ibex Investors called the fund's accounting "laughable" and "highly unusual"
Ad Fontes Media, a portfolio company, hasn’t heard from DEMI since February and no longer has oversight from its public backers
The Colorado Venture Capital Authority also ended its relationship with DEMI, the first such early termination in its history
Denver's Venture Capital Misstep: A Deep Dive
Denver's foray into venture capital investing has hit a snag, with the DEMI Fund, a VC firm backed by taxpayer dollars, failing to meet basic accounting standards. The fund, which was supposed to support women and minority-owned startups, has been criticized for its lack of transparency and poor financial reporting.
The Breakdown
- DEMI Fund was contracted to manage $15 million of Denver's marijuana sales tax revenue over three years.
- The fund sued the city after payments stopped, leading to a settlement where DEMI was paid for outstanding invoices but no additional funds were disbursed.
- A required audited financial statement was not submitted; instead, a vague document valuing investments by industry categories was provided, with some valuations as low as $5.
Investor Outrage
Justin Borus of Ibex Investors called the submitted document "laughable", stating it lacked the detail expected even from an eighth-grade intern. The document did not name the companies invested in, making it impossible to assess the $1.48 million of taxpayer money invested.
Portfolio Companies Left in the Dark
One of the invested companies, Ad Fontes Media, revealed they haven’t heard from DEMI since February. Despite being part of a $4 million funding round, DEMI has stopped attending board meetings, leaving the company without oversight from its public backers.
State Involvement Ends Prematurely
The Colorado Venture Capital Authority also cut ties with DEMI in July 2024, marking the first early termination in the authority’s history. DEMI had received $1.7 million from the state but invested only $970,544.
Founder’s Takeaway
Danielle Shoots, DEMI’s founder, has stepped away from the fund and criticized the mismatch between government transparency and VC secrecy. She believes taxpayer money should not be spent this way.
DEMI Fund founder Danielle Shoots speaks at an event in 2023.
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