A Los Angeles venture fund company has moved into Colorado in search of marketable technologies on college campuses.
ITU Ventures has opened a two- person office in Denver, with at least $40 million to contribute to the hottest ideas.
The company has already funded six businesses from laboratories within a pool of schools from the Colorado School of Mines, University of Colorado system and Colorado State University system, said Chad Brownstein, managing partner.
“In Colorado, there is a negative sentiment toward early stage entrepreneurship,” Brownstein said. “ITU is unique because we’re bridging the gaps between the university community and the venture capital community and the corporate community. We build businesses and sell them out of the university landscape.”
For instance, the company funded XAware out of CU in Colorado Springs. It’s a software company that creates a platform for old, non-communicating computer systems to interact. Some large companies, like Qwest, have 20-30 such “legacy” systems, Brownstein said.
Today, XAware has 30 employees.
“ITU has the Colorado focus, and I think they tend to work harder (than other VC firms), and they’re more aggressive once they find a company with the right management team with the right technology,” said Bill Miller, chief executive officer for XAware. “In today’s market, ITU is a better investor than most. They’re willing to make bets in areas that other people aren’t.”
Venture capital has virtually dried up, especially for high-tech firms, in the past couple of years. Nationally, venture capital firms handed out $3.84 billion in the first three months, the lowest amount for that period in more than five years. In Colorado, 14 companies received $152 million in the first three months this year, down 32 percent from the same quarter last year.
ITU (www.itu.com) focuses its search for gems in engineering schools, specializing in “semiconductor and communications core technologies,” said Andrew Murray, principal at ITU. Most of the businesses are created by faculty members, Brownstein said, with some graduate students typically involved.
ITU has over $80 million “under management” – invested or ready for investment – said Brownstein.
Technologies don’t necessarily have to originate in a university laboratory to qualify for ITU’s attention. The company fields calls from inventors regarding homegrown technologies – then creates a connection with one of its partner colleges.
“We’re able to integrate any new opportunity into a university environment,” Brownstein said. “ITU is willing to take on all comers as far as business ideas. We’ll assess it and we’ll say, for instance, ‘We know StorageTek is working on this kind of functionality and there is research being done at CSU. Let’s see how we combine your test product with research being done at CSU.’ You can back yourself into an opportunity, as long as there is significant potential. Leveraging the university landscape is key in our business methodology.”
Bart Van Zeghbroeck, professor of electrical engineering at the University of Colorado, got his advanced wireless components business going in November 2001 with seed money of “less than $1 million” from ITU, he said. Now he is looking for another round of funding, and he hopes to get ITU involved.
“It’s been a good relationship,” he said.
