Venture Capital

Virtual venture capital deals are shaping Vermont’s startup scene


Last year’s forced transition to remote work and virtual meetings has altered how venture capital deals are done, and that might bode well for Vermont’s investment environment, a leader of the state’s largest venture capital firm said at a forum last week.

Vermont’s a small market with a correspondingly modest investment community, and entrepreneurs looking for $5 million in capital or more have typically needed to go outside of the state.

Working with out-of-state investors has become considerably easier now that people have become accustomed to communicating virtually, said Cairn Cross, co-founder of FreshTracks Capital, at a Zoom event put on by the Vermont Community Foundation.

Pre-Covid, the due diligence required of investors involved a multitude of expensive and time-consuming flights and meetings. This year, “there are a lot of anecdotal examples of fairly large firms doing a complete digital diligence process and literally writing large checks without having ever sat down physically across the table or visited a company headquarters or things like that,” Cross said.

“There is a real inflow of capital in Vermont,” Cross said. “You typically don’t do $10 million in greater financings without having some of the money come from outside of the state.”

Entrepreneur Alan Newman said most of the companies in Vermont that are looking for investment are seeking $1 million to $3 million, an amount that is too small for out-of-state investors.

“That’s a really small price range to do due diligence in,” Newman said. “To be active in Vermont funding, you have to find a way to do due diligence less expensively, and clearly leaving out travel is probably a net positive.”

A decade of investment growth

Vermont had $100 million in 31 venture capital deals from 2010 to 2020, with an average investment of $2.3 million in the past five years, although the numbers varied widely over the decade. 

There were three times as many deals in 2020 as in 2010.

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Nationally, the total value of the investments in those years increased by a factor of five, and the number per year doubled, Cross said.  

FreshTracks participated in about one-third of the deals, said Cross. The 20-year-old firm is the largest venture capital participant in the state. Two decades ago, Fresh Tracks was a proportionately larger player overall, participating in half or more of those deals annually.

The change shows a Vermont investing environment that is maturing and growing, “which is positive overall,” he said.  

Cross said he was surprised by the flurry of investment activity in 2020, though he said with the numbers as small as they are in Vermont, one year isn’t a trend. Of the 31 deals, 20 were equity and 11 were debt.

But “if you had asked me in March last year what is this going to do to the venture investment, I would have said, ‘Investors don’t like things to be uncertain, so I expect it will be a kind of crappy year,’” he said of the Covid-19 pandemic. “Instead it turned out to be, I would argue, the best year ever.” While in 2010 there were some very large deals, in 2020 there was a high number of small deals, which Cross thinks is better for the economy overall.

“One company getting $100 million is not as good for Vermont as 50 companies getting $2 million,” he said. “It’s better if it’s spread out.”

Female founders make headway

Nationally, about 20% of the deals in the last decade, with about 14% of the dollar value, went to female company founders. That’s four-fold growth over the last decade.

In Vermont, seven out of the 31 companies with capital investment in the last decade had at least one female founder. Those companies raised about $17 million.

“A long way to go here, but these numbers are significant,” he said.

One of those female-founded companies is the Burlington-based Mamava, which makes private pods for women to breastfeed children in public places such as sports stadiums and airports. Walmart in August announced plans to install Mamava lactation suites in more than 100 stores.

Mamava has completed four rounds of capital raises since 2015, the two latest in December 2019 and January 2020, said Brian Wannop, Mamava’s chief financial officer. Fresh Tracks, the Vermont-based JH Capital, and some Vermont-based angel investors all participated in that capital raise, Wannoch said. He added Cross’ presentation reflected what Wannop has seen in the marketplace.

“Covid in the first couple of weeks was quite scary and everything shut down, but after people got over the initial month or two,” activity started back up again, said Wannop, who is working remotely as he travels through the West in an RV with his family and another family. He was speaking from a campground in San Antonio on Tuesday.

“It has probably made people more willing to invest maybe a bit outside of their comfort zone in terms of maybe not having to meet with people face to face, in terms of being in a physical office, touching and feeling the product,” Wannop said. “And so that opens the opportunity, as companies are looking for investors, to be a bit broader in the outreach and try to access capital that otherwise they wouldn’t be interested in in a bit of a more remote market like Vermont.”

Increased interest in local investing might also be making a difference, said Janice St. Onge, who manages the Vermont Sustainable Jobs Fund Flexible Capital Fund, a for-profit, mission-based fund that has invested more than $5 million in 16 companies over the past decade.

“Over the last 20 years, investment structures have become more creative,” said St. Onge, who co-founded the Vermont Women’s Investor Network. “There has been more interest in people wanting to invest locally in their communities, more opportunities for them to become educated on how to do that, more intermediaries to make it easy for someone to make that first step.”

Entrepreneurship in small towns

About two-thirds of the venture capital deals over the past decade happened in the state’s most populous region, Chittenden County and the surrounding area.

Of the 31 companies that won investment in the last decade, 10 are based in more rural areas, including High Mowing Seeds in Wolcott, Shacksbury Cider in Vergennes, Farmers to You in Middlesex, and For the Biome in Dummerston. The Spartan Race in Rutland County, MamaSezz, a prepared meal company in Brattleboro, Ceres Greens in Barre, and Osprey Media also saw VC deals in those years. 

The companies in Chittenden County area included Dealerpolicy, the former Peck Electric (now iSun), Benchmark Space Systems, Faraday, BETA, and Liquid Measurement Systems.

“If you are a software company, I suspect it will be harder to raise money outside of Chittenden County,” said Cross. He expects that to change as broadband access improves and remote work becomes more generally accepted.

The Chittenden County area benefits from hosting spin-offs from successful technology companies like and IDX. It’s also home to the University of Vermont and Champlain College. Cities with universities typically see proportionately high technological growth and innovation.

“I think it’s more of a microcosm in terms of what the country is experiencing, with talent and resources shifting more to the urban areas versus the rural areas,” said Wannop.

Active Vermont investment firms/syndicates:

J.H. Capital
BT Innovation Fund
Vermont Community Foundation
Vermont Seed Capital Fund
VSJF Flexible Capital Fund
FreshTracks Capital 

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