Danielle Shoots speaks at a 2022 BusinessDen event. (BusinessDen file)
Two years after Denver hired a venture capital firm to invest a portion of tax dollars from marijuana sales in local companies, the two parties are going their separate ways.
The city announced last week that it had reached a settlement with DEMI Fund that ends a lawsuit the latter filed earlier this year.
As part of the agreement, Denver has agreed to pay nearly $800,000 that DEMI Fund has said was owed. DEMI founder Danielle Shoots previously told BusinessDen that her firm fronted this money to contractors when the city stopped transferring tax dollars to DEMI.
Denver and DEMI have also “agreed to end their contractual relationship,” the city said.
Shoots, who said in April she had resigned from DEMI, didn’t respond to requests for comment from BusinessDen. Mark Goodman, another DEMI executive, and an attorney representing the VC firm also didn’t respond.
The city set aside 1 percent of marijuana tax revenue from 2022 until 2025, which was expected to total roughly $15 million, to support minority and women-owned businesses. Sometimes that took the form of direct investments in companies, meaning Denver received an ownership stake in the firms.
Ten companies received investments with city dollars in DEMI’s first year from August 2022 to July 2023, according to an annual report Shoots previously provided to BusinessDen. Those companies included one that rates media outlets based on political bias and a website that helps people make small investments in the oil and gas industry.
Shoots didn’t provide a report detailing the current valuation of Denver’s investments in the firms despite repeated requests. BusinessDen found that DEM invested in at least one firm, Ad Fontes Media, that had no traditional physical presence in Denver, despite DEMI’s contract with the city specifying that companies receiving funds must be “physically located” within city limits.
Denver and DEMI released a joint statement on Friday, saying the two parties had “sought to try something new, enabling public investment in a venture capital vehicle with the goal of creating an evergreen investment fund for the benefit of Denver minority businesses, while also providing guidance, services and support for those same businesses and entrepreneurs.”
“Creating something new is not easy, and we appreciate the collaboration and creativity of DEMI Fund, Denver Economic Development & Opportunity (DEDO), and other partners for their efforts,” the statement continued.
Asked if the city planned to hire anyone new to take over the work from DEMI, DEDO spokeswoman Shelby Morse said that “future programming will be announced at a later date.”
Regarding why the city had stopped transferring tax dollars to DEMI and paying the company’s invoices, Morse said: “Under DEDO’s new leadership, DEDO wanted to better understand how DEMI Fund was administering the Herman Malone Fund. We were able to work with DEMI Fund this year to gain that understanding and work out an amicable resolution going forward.”
Danielle Shoots speaks at a 2022 BusinessDen event. (BusinessDen file)
Two years after Denver hired a venture capital firm to invest a portion of tax dollars from marijuana sales in local companies, the two parties are going their separate ways.
The city announced last week that it had reached a settlement with DEMI Fund that ends a lawsuit the latter filed earlier this year.
As part of the agreement, Denver has agreed to pay nearly $800,000 that DEMI Fund has said was owed. DEMI founder Danielle Shoots previously told BusinessDen that her firm fronted this money to contractors when the city stopped transferring tax dollars to DEMI.
Denver and DEMI have also “agreed to end their contractual relationship,” the city said.
Shoots, who said in April she had resigned from DEMI, didn’t respond to requests for comment from BusinessDen. Mark Goodman, another DEMI executive, and an attorney representing the VC firm also didn’t respond.
The city set aside 1 percent of marijuana tax revenue from 2022 until 2025, which was expected to total roughly $15 million, to support minority and women-owned businesses. Sometimes that took the form of direct investments in companies, meaning Denver received an ownership stake in the firms.
Ten companies received investments with city dollars in DEMI’s first year from August 2022 to July 2023, according to an annual report Shoots previously provided to BusinessDen. Those companies included one that rates media outlets based on political bias and a website that helps people make small investments in the oil and gas industry.
Shoots didn’t provide a report detailing the current valuation of Denver’s investments in the firms despite repeated requests. BusinessDen found that DEM invested in at least one firm, Ad Fontes Media, that had no traditional physical presence in Denver, despite DEMI’s contract with the city specifying that companies receiving funds must be “physically located” within city limits.
Denver and DEMI released a joint statement on Friday, saying the two parties had “sought to try something new, enabling public investment in a venture capital vehicle with the goal of creating an evergreen investment fund for the benefit of Denver minority businesses, while also providing guidance, services and support for those same businesses and entrepreneurs.”
“Creating something new is not easy, and we appreciate the collaboration and creativity of DEMI Fund, Denver Economic Development & Opportunity (DEDO), and other partners for their efforts,” the statement continued.
Asked if the city planned to hire anyone new to take over the work from DEMI, DEDO spokeswoman Shelby Morse said that “future programming will be announced at a later date.”
Regarding why the city had stopped transferring tax dollars to DEMI and paying the company’s invoices, Morse said: “Under DEDO’s new leadership, DEDO wanted to better understand how DEMI Fund was administering the Herman Malone Fund. We were able to work with DEMI Fund this year to gain that understanding and work out an amicable resolution going forward.”