In business lingo, a unicorn is that rare, privately held startup that has achieved a valuation exceeding $1 billion.
Recently, nearly a half dozen companies in the Boulder Valley have reached that lofty status, following in the footsteps of older companies that previously reached that valuation mark after starting here, such as Level 3 Inc., StorageTek Inc. and the Zayo Group.
A trio of Louisville-based companies, JumpCloud Inc., Sovos Brands Holdings Inc., and Solid Power Inc.; and two based in Boulder, SomaLogic Inc. and Uplight Inc., are considered the newest unicorns in the venture-capital world.
The term “unicorn” was coined in 2013 by venture capitalist Aileen Lee, founder of Cowboy Ventures, a seed-stage venture-capital fund in Palo Alto, Calif. According to Investopedia, there are only 800 unicorns in the world.
Venture capitalists determine the value of a business by analyzing its management team, the composition of its capital structure, the prospect of future earnings and the market value of its assets, among other metrics.
There are various strategies used to achieve this high valuation: acquiring companies; being acquired or a combination of both; mergers, or, sheer persistence. But, a common thread among the region’s newest unicorns has been their ability to raise venture capital to enable growth.
SomaLogic is a protein biomarker discovery and clinical diagnostics company headquartered in Boulder. It took almost two decades of innovative research and investment to reach unicorn status, but today SomaLogic operates the SomaScan Platform, a new technology that makes protein measurement as straightforward as DNA measurement.
Founded in 2000 by University of Colorado Boulder professor Larry Gold, SomaLogic has a valuation north of $2 billion after an initial public offering in September.
Gold recently removed himself from SomaLogic’s board of directors and is heavily involved in the company’s research and development group. SomaLogic has approximately 200 employees worldwide.
The company’s SomaScan Platform can uncover a deeper understanding of the real-time molecular bases of health and disease than is possible through genomic or other protein technologies.
Roy Smythe, SomaLogic’s CEO since November 2018, calls SomaLogic “a 21-year-old overnight success story.” Smythe said it took 15 years to develop the SomaScan Platform.
Although the first draft of the human genome was also announced in 2000, SomaLogic embarked on a different path than everyone else, focusing instead on the much-harder challenge of measuring changes in the body’s proteins in relation to disease and health. The result of taking that tack is that SomaLogic’s tests provide information that can lead to precise diagnoses by doctors.
SomaLogic began making money when it started selling its life-science tools to contract researchers. When SomaLogic began developing its SomaSignal tests, respected investors began taking notice. These diagnostic tests use complex protein measurements and computationally extract precise health information. The company began selling SomaSignal tests to individuals and their health providers, a potentially much larger market than just researchers.
The company is demonstrating its diagnostic tests in a few doctors’ offices in Colorado, as well as other parts of the country.
Smythe said SomaLogic had a valuation of $350 million in 2020 and went to $1.2 billion after a funding round of $121 million led by New York-based Casdin Capital LLC just prior to SomaLogic’s IPO. SomaLogic began trading on Nasdaq in September after merging with the special-purpose acquisition company CM Life Sciences II Inc., driving its valuation past $2 billion.
Smythe said SomaLogic eventually would have reached the $1 billion valuation milestone with just its foundational tools, but the combination of those tools used by researchers and now the promise of the SomaSignal diagnostic tests for health systems accelerated interest among investors that drove up the valuation.
“Who the investors are matters,” Smythe said. “Smart money follows smart money. … Investors take note of other investors who did their due diligence and will then follow.”
Joining Casdin Capital in the crossover round were Farallon Capital Management, Foresite Capital, funds and accounts advised by T. Rowe Price Associates Inc., Blue Water Life Science Advisors, Madryn Asset Management, Fiscus Ventures and Reimagined Ventures (affiliates of Magnetar Capital), Monashee Investment Management, Mossrock Capital, Soleus Capital and others.
Smythe said the crossover round (the last one before going public) provides an “uptick in valuation with the money the round provides, and a perception bounce based on who invests adding a premium to the valuation. … The IPO then provides an extra kick.”
It’s now a juggernaut protein platform.”
Solid Power Inc.
Solid Power reached the lofty valuation of $1.2 billion and unicorn status when it announced in November that it had agreed to merge with Decarbonization Plus Acquisition Corp. III (Nasdaq: DCRC), for the purpose of going public.
After completing the merger, Solid Power officially went public Thursday, trading under the ticker symbol SLDP.
The valuation took into account Solid Power’s management team, led by co-founder and chief executive Doug Campbell, the company’s capital structure, plus current sales and projected sales of its solid-state batteries designed for electrical vehicles.
The solid-state batteries are an alternative to lithium-ion batteries used in electric vehicles, competing directly with China, which controls about 80% of the lithium-ion market.
The company was started as a spin-out business of the University of Colorado Boulder in 2012.
Campbell led the company through its early development and to its current phase of achieving the first step of producing these batteries at its production plant in Louisville.
A second production plant is ramping up in Thornton.
Campbell describes Solid Power’s rise as “dumb luck. … We were in the right place at the right time. The electrification of everything is happening.”
At the outset, “We had some compelling science and a concept for a value-added business,” Campbell said. “Our trajectory was typical: We needed to move fast, raise capital and start producing batteries.”
Since its inception, Solid Power has received $250 million in venture capital from approximately 20 investors.
Campbell said one key factor in Solid Power’s growth was when Ford Motor Co. and the BMW Group led a $130 million investment round in May. The two auto companies had previously supported Solid Power, but Campbell emphasized that it was a big deal when “BMW and Ford leaned in. That’s when, pun intended, the rubber hit the road.” The two auto giants also placed executives on Solid Power’s board of directors.
JumpCloud Inc., founded by David Campbell, Larry Middle and Rajat Bhargava, was recently valued at $2.56 billion following an investment round of $159 million.
The cloud-based directory platform for information technology professionals has raised $350 million since launching in 2012. JumpCloud, founded in 2012 was formally launched in 2013 at TechCrunch Disrupt Battlefield as an automated server-management tool. JumpCloud’s cloud-based directory-as-a-service platform is used to manage users’ identity, devices and access across things such as VPN, Wi-Fi, servers and workstations.
It also provides software that allows systems to enforce basic rules on the machines, to do basic auditing and to run basic commands remotely.
Sovos Brands Holdings Inc.
Todd Lachman is the founder, president and CEO of Sovos Brands Inc., which operates as a food and beverage company.
Lachman and the company’s chairman, William Johnson, had identified an opportunity within the broader food landscape to acquire and build a portfolio of brands with high-quality products that are in the early stages of growth.
Founded in 2017, the company, with investment backing by global private-equity firm Advent International, has acquired four early stage companies so far — Rao’s, Noosa, Birch Benders and Michael Angelo’s. The scaling of these brands has led the company to become the fastest-growing food company of scale in the United States, Lachman said.
Management and underwriters of Sovos aimed to sell 23.3 million shares in a preliminary price range between $14 and $16 per share, yet lackluster demand made that drop to $12 per share at the time of its initial public offering, according to Seeking Alpha.
The company still had outstanding shares after the offering on Sept. 27. At the time of the offering, its equity valuation was at $1.17 billion. This excluded a pro forma net debt load of around $535 million and a net debt position just below the half a billion mark. This values the company at around $1.67 billion on an enterprise basis, according to Seeking Alpha.
Lachman said the biggest challenge Sovos has faced has been, like many of its peers, the COVID-19 pandemic and the associated industrywide supply-chain challenges.
“We’ve been able to keep up with the market demand for products in large part due to flexible manufacturing practices and a dedicated focus on our customers and consumers,” Lachman said.
Uplight Inc. is an energy-technology firm formed by the merger of Tendril Inc. and Simple Energy Inc.
Although Uplight didn’t reveal the size of the investment, it says that the deal values the company at $1.5 billion — putting the company well into unicorn status. Founded in 2019, Uplight was formed when Tendril and Simple Energy merged, and then acquired FirstFuel, Ecotagious, EEme and EnergySavvy.
The latest investment round was co-led by French energy efficiency firm Schneider Electric and power distributor AES Corp. (NYSE: AES). The group of private-equity investors was led by sustainability-focused fund Huck Capital Management LLC.
Uplight’s suite of software gives utilities data about how customers consume energy in their homes and businesses, and then it offers ways to reduce their base power demand. It also provides a marketplace for consumers to find rebates and deals on energy-efficient appliances and electric vehicles.
It already counts major energy providers such as Xcel Energy Inc. (Nasdaq: XEL), ConEdison Inc. (NYSE: ED) and Duke Energy Inc. (NYSE: DUK) among its customer base of more than 80 energy providers.
In an earlier interview with BizWest, Chief Operating Officer Angela Tucci said the funding will be used to reinforce its core businesses by recruiting more utility customers and attracting more energy-efficient device makers into its consumer products business, along with an expansion from residential-focused efficiency services into the commercial-facing market.
“We can diversify from really a centricity in residential to much more in the commercial and industrial space… in ways that we couldn’t without this sort of backing, or at least not at this pace,” she said.
She also said the investment from Schneider, which she estimates has parts in a third of every building on the planet, positions the company to expand internationally.
However, the company is laying roots in Boulder. It currently employs about 200 people in Colorado with the majority in the city and plans to ramp up hiring.
Boulder-based Rubicon Technology Partners will retain a minority stake in Uplight with the new deal coming into effect. That firm was Uplight’s majority investor and led its creation after the merger of Tendril Networks Inc. and Simple Energy Inc. in 2019, along with several other acquisitions that led to what is now Uplight.