Our Approach in Seed Stage

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.

 

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Regional focus

Southwest USA (Arizona, Colorado, New Mexico, Texas, Oklahoma, Utah) and Northwest Europe (primarily Netherlands and Germany).

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Sector focus

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.

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Ticket size

1M – 3M USD/EUR in the first investment round. Cottonwood reserves funds for follow-on rounds.

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Stage

Pre-seed, seed, early-stage.

We invite patent-based deep tech startups in the (pre-)seed stage to send us their pitch deck.

Please submit your pitch deck here

Criteria:

  • 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?

Seed

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).

Support

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.

Follow-on funding

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.

Succeed

We have successfully built initial enterprise values by more than 2 billion with a 6.0x increase in portfolio value. As of 2024, we have made 26 investments, invested 100M, raised a total capital of over 1.3B and realized a 14x investment leverage.