Our Approach in Seed Stage
Disruptive Capital for Disruptive Ideas
Cottonwood Technology Fund invests in patent-based, (pre-)seed and early stage hard science and deep tech startups.
Our team screens more than 800 pitch decks per year, but we only invests in average 3 new deep tech startups per year. We also lead many of our company’s next rounds by committing our reserves early.
Southwest USA (Arizona, Colorado, New Mexico, Texas, Oklahoma, Utah) and Northwest Europe (Netherlands, Belgium, Germany, Denmark, Finland, Sweden, Switzerland).
B2B Hard Science & Deep Tech (Hardware), e.g. Photonics, Optics, Micro- & Nanoelectronics, Advanced Materials, Nanotechnology, Sensor Technology, Health Sciences / Medtech, Climatetech / Energy Transition, Robotics & Advanced Manufacturing.
We do not invest in Consumer Products, Software, AI, Fintech, SaaS, Platforms, Apps, Crypto, Pharma/Drug Development.
1M – 3M USD/EUR in the first investment round. Cottonwood reserves funds for follow-on rounds.
Pre-seed, seed, early-stage.
We invite patent-based deep tech startups in the (pre-)seed stage to send us their pitch deck.
- Is the technology protected by patents and difficult to duplicate?
- Is the technology advancement significant/ disruptive?
- Is there a sizeable addressable market?
- Focus on B2B markets?
- Is the technology suitable for multiple markets and/or multiple product lines?
- Can we make high margins and do we foresee high exit possibilities?
- Cottonwood’s value-add: how do we leverage our network and is there additional value-add funding with industry-expertise available?
Cottonwood invests a larger amount in the first investment round than most VCs: 1M – 3M instead of 200K – 300K. This allows us to attract top management with industry experience and technology expertise to the startup and reach value inflection points (milestones).
Cottonwood is active on the board (“we roll up our sleeves”), providing guidance and attracting follow-on funding, strategic partners and corporate customers. Cottonwood has relevant top-level contacts with more than 80 corporates around the globe.
From the beginning, we help our startups with raising follow-on funding (on average 5M-10M in the B-round). After the B-round, we start preparing the C-round (15M-40M+). We have successfully raised a B-round for over 50% of our startups. In total Cottonwood portfolio companies have raised more than 1.1 Billion of additional capital.
We have successfully built initial enterprise values by more than 4 billion with a 6.0x increase in portfolio value. As of 2022, we have made 20 investments, invested more than 80M, raised a total capital of over 1.1B and realized a 14x investment leverage.