Cottonwood Technology Fund has announced the first close of its fourth investment fund, securing $25 million (€23 million) to support early-stage deep-tech startups. The fund targets hardware technologies across multiple industries, focusing on companies in the Southwest United States and Northwest Europe. The investment aims to bridge the gap in seed-stage funding for deep-tech companies, a sector often overlooked by traditional VC firms. Cottonwood has a history of backing groundbreaking technologies, and this latest fund continues its commitment to fostering innovation with a global impact.
Earlier funding rounds by Cottonwood focused on similar technology-driven ventures, with investments in companies specializing in photonics, nanotechnology, and clean energy solutions. Over the past decade, the fund has expanded its reach, leveraging its presence in both the U.S. and Europe to facilitate cross-continental technology transfers. Compared to previous funds, the fourth iteration maintains an emphasis on long-term growth, aiming to provide patient capital to startups that require extended development timelines before reaching commercialization.
What companies are supporting the fund?
Several investors have contributed to the Cottonwood Technology Fund IV, including Caterpillar Ventures, The Merrion Oil & Gas Family, Dutch regional investor NOM, and the Netherlands Enterprise Agency (RVO). More than 20 entrepreneurs and family offices have also provided financial backing. These investors recognize the need for early-stage capital in deep-tech sectors and aim to support startups working on transformative solutions.
Alain le Loux, a general partner leading Cottonwood’s European operations, emphasized the potential for innovation in Northwest Europe.
“There is an equally disruptive innovation in northwest Europe with an even greater need for seed-stage capital than the US,”
he stated. Le Loux also highlighted the strategic advantage of operating across two continents, facilitating the transfer of technology between the U.S. and Europe.
How will the fund be allocated?
Cottonwood Technology Fund IV is targeting an $80 million total fund size, with an initial $25 million secured. The capital will be deployed to build a diversified portfolio of early-stage B2B startups specializing in hardware-driven deep-tech industries. Investments will be focused on sectors such as quantum technologies, microelectronics, medical technology, and advanced materials.
The fund seeks to address major global challenges by supporting innovations that require longer development and commercialization timelines. Founder and managing partner Dave Blivin noted the shift in traditional venture firms toward software investments, leaving a funding gap for deep-tech startups.
“The shift of traditional venture firms to software technologies over the last 15 years leaves a large gap for hard tech support, particularly at the earliest stages. Yet this is where the greatest opportunity lies for long-term disruptive impact,”
Blivin explained. He also acknowledged the role of patient investors in sustaining these high-risk, high-reward ventures.
Cottonwood has previously backed companies such as Skorpios Technologies, Sarcos Robotics, BayoTech, and Sencure. The VC firm provides funding ranging from €500,000 to €3 million in the first round, supporting startups from pre-seed to early-stage growth. By continuing to focus on hardware-driven technologies, Cottonwood differentiates itself from many venture capital firms that prioritize software investments.
The latest fund reinforces Cottonwood’s strategy of investing in deep-tech startups with a global vision. While software startups often attract the most venture capital due to shorter development cycles, hardware and deep-tech startups require sustained support to bring their innovations to market. Investors in Cottonwood Technology Fund IV recognize the long-term value of such companies and are willing to provide the necessary capital to help them scale. As technological advancements in areas like quantum computing and clean energy gain traction, this fund aims to position its portfolio companies for future success.
