Apr. 29–The money well is pumping again in Colorado, though fewer companies are seeing the green.
Venture capital investments in the state increased by 31 percent in the first quarter over the fourth quarter, according to the MoneyTree survey by PricewaterhouseCoopers, the National Venture Capital Association and Venture Economics.
Fourteen Colorado companies, many from the oil and gas and information technology sectors, raked in $152 million in funding in the first quarter. Seventeen firms secured $116 million in the fourth quarter.
Total investments were down 32 percent from the first quarter of 2002, when 22 companies received $223 million.
“At the end of the fourth quarter, we probably hit bottom,” said Matt Kosmicki, technology partner at PricewaterhouseCoopers in Denver. “If we’re not at bottom, then we’re close. It’s good news because you only have one way to go, and that’s up.”
Still, venture funding is nowhere near the levels it reached years ago during the dot-com craze, when quarterly investment totals in the state usually surpassed $400 million. The well dried up in recent years as venture capital firms, burned by the fallout of tech firms, tightened their wallets and raised their standards for investments.
“A trend you see across the country is that many of the VCs are looking to companies that are actually shipping products,” said Don Williams, a venture capital advisory group leader for Ernst & Young.
For example, Boulder-based data storage company LeftHand Networks, which secured $20 million in funding, released its first product in late 2001. The company is using the latest round of financing to expand sales operations.
Another data storage company with products available, ManagedStorage International, received $22 million in venture capital. Oil and gas exploration company Bill Barrett Corp. led the first-quarter investments, landing $25 million in new financing.
Nationally, investments continued a downward trend. A total of 623 companies received $3.8 billion in funding in the first quarter, down from the 726 companies that garnered $4.3 billion in the fourth quarter.
Despite the national drop, Williams believes the worst is over for the venture capital market.
“The quarter numbers may fluctuate for quite some time, but I think we have reached the bottom,” he said.
–Denver Post business writer Jennifer Beauprez contributed to this report.
SHAKING THE MONEY TREE: Colorado companies that received venture capital funding in the first quarter, according to a MoneyTree survey:
Antero Resources Corp.
Headquarters: Denver
Industry: Industrial/energy
Amount: $17.8 million
Bill Barrett Corp.
Headquarters: Denver
Industry: Industrial/energy
Amount: $25.2 million
Chaparral Network Storage
Headquarters: Longmont
Industry: Semiconductors
Amount: $8.2 million
Federation Inc.
Headquarters: Englewood
Industry: Software
Amount: $300,000
Ischemia Technologies Inc.
Headquarters: Arvada
Industry: Medical devices and equipment
Amount: $8.4 million
Lefthand Networks Inc.
Headquarters: Boulder
Industry: IT services
Amount: $20 million
ManagedStorage Int’l.
Headquarters: Broomfield
Industry: IT services
Amount: $22 million
NextAction Inc.
Headquarters: Westminster
Industry: Business products and services
Amount: $4 million
Photonic Bridges Inc.
Headquarters: Broomfield
Industry: Networking and equipment
Amount: $23 million
PinSecurity.com Inc.
Headquarters: Niwot
Industry: Consumer products and services
Amount: $550,000
Pure Matrix
Headquarters: Westminster
Industry: Telecommunications
Amount: $50,000
Sage Circle Group
Headquarters: Broomfield
Industry: Business products and services
Amount: $350,000
SomaLogic Inc.
Headquarters: Boulder
Industry: Biotechnology
Amount: $11.5 million
Virtela Communications
Headquarters: Greenwood Village
Industry: Telecommunications
Amount: $11 million
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(c) 2003, The Denver Post. Distributed by Knight Ridder/Tribune Business News.
