In summer 2022, in the wake of the murder of George Floyd and the political unrest that followed, Denver did something unusual.
The city set aside 1% percent of marijuana tax revenue from 2022 until 2025, totaling roughly $15 million, to support — sometimes in the form of direct investments — minority and women-owned businesses.
As a result, Denver taxpayers now own a small stake in a company that rates media outlets based on political bias and a website that helps people make small investments in the oil and gas industry.
The tax dollars were supposed to be transferred from the city’s Herman Malone Fund, which is managed by the office of Denver Economic Development and Opportunity (DEDO). A DEDO spokesperson declined to comment on the lawsuit.
10 companies in year one, per redacted annual report
DEMI Fund’s contract with the city states that, of the $15 million committed by the city, $6 million would be invested directly into startups owned by women or minorities, giving taxpayers an ownership stake in them, according to a copy of the contract obtained by BusinessDen through a records request.
Another $6.67 million of the $15 million was intended to provide “ecosystem” support, per the contract, which could come in the form of direct grants to businesses or giving money to other organizations that help startups.
The remaining approximately $2.5 million was to go to administrative expenses ($633,514), professional services ($1.27 million), marketing ($250,000) and personnel ($285,000).
To date, the city has disbursed $6.9 million to the DEMI Fund, according to the fund’s lawsuit. That figure should be more in the $10 million range, according to Denver’s contract with the fund.
Those businesses are:
• Ad Fontes, which says its media bias chart will help advertisers support quality journalism
• Interview IA, which said its screens and reviews potential employees for an easier hiring process
• Gritly, which offers training and hiring programs to help match employees and employers
• PetroFunders, a website for entry-level oil and gas investors
• B-Konnected, a website that helps people find and retain housing
• Bondadosa, a food delivery company
• Sistahbiz Global Network, which offers business planning services for black women entrepreneurs
• ICONI, an outdoor apparel brand
• Impacto, a business consultant company
• One Purse, whose finance software lets people transfer money internationally
According to the report, the year one tax dollars also provided ecosystem services to 30 businesses.
The DEMI Fund — which stands for Domestic Emerging Market Investments Fund — has other investors, including Bank of America and Xcel Energy. But the city’s dollars are treated somewhat differently, partially to ensure they’re going only to companies actually in Denver. According to the annual report, the overall fund has invested $36.1 million.
Denver’s contract with the DEMI Fund specifies that DEMI Fund “will provide DEDO with annual reports and constant access to Contractor’s data system.”
But two city departments — DEDO and the Department of Finance — responded to BusinessDen’s public records request for all reports related to the fund in recent weeks by claiming they had none.
The contract also stated a DEDO employee would sit on the DEMI Fund Board of Advisors. Michael Bevis, director of entrepreneurship and innovation at DEDO, held that position until January.
Bevis agreed to a BusinessDen interview in January, but canceled it an hour beforehand and did not respond to subsequent requests to reschedule. He also did not respond to requests to comment for this story.
Shoots: “No one inside the city knows about venture capital”
She often struggled to get timely payments, but in August payments stopped completely. By November, according to the lawsuit, Denver owed DEMI Fund $282,495. She sent additional six-figure invoices for reimbursement in subsequent months.
Impact Charitable didn’t respond to a request for comment from BusinessDen.
Attorney’s Laurin D. Quiat and Thomas A. Donaho with Baker & Hostetler are representing DEMI in the suit.
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This story was reported by our partner BusinessDen.
