Utah Companies to Bid for Capital Investment

Year after year, Utah companies continue to receive only a fraction of the money venture capital companies invest nationwide.

BY LESLEY MITCHELL
THE SALT LAKE TRIBUNE

Brad Bertoch believes much of that dismal record has to do with the state’s comparably low-tech image among the predominantly California-based venture capital crowd.

"There’s still this perception that you can’t find good deals here," said Bertoch of the Wayne Brown Institute, http://www.venturecapital.org/ a nonprofit organization aimed at helping technology companies find financial resources to grow. "There’s also this distance issue — the belief that it is too much of a hassle to try and manage a deal in Utah."

Bertoch tries to dispel those notions at the annual Investors Choice conference, which will be staged today and Wednesday by the institute in Park City.

This year, 26 companies, including 15 from Utah, will make presentations in which they collectively will ask for about $100 million from more than three-dozen venture capital companies nationwide. The gathering also will feature presentations by two successful Utah companies — Sonic Innovations and Altiris — that have received venture capital money, Bertoch said.

The conference features a variety of companies designed to appeal to a wide range of investors, including the standard technology companies, medical development companies and even some comparably low-tech entities such as Frontline Phonics, which sells a system designed to teach children how to read. Some companies have already received venture capital funds while others are looking for their first investments.

Ashok Khandkar will ask for his first venture capital investment of $5 million to help expand his 3-year-old company, Amedica Corp. in Salt Lake City.

Amedica is developing hip, knee, shoulder and elbow replacements designed to be more durable than traditional products used in surgery.

"Patients have increasingly been coming in for second surgeries because the replacements have worn out," Khandkar said. "We’ve been able to show in the laboratory that our implants last three times as long as the best technology available now."

Amedica, which has three full-time and eight part-time employees, late last year received approval from the U.S. Food and Drug Administration to sell an accessory used in a hip replacement surgery.

Khandkar said he is confident he will receive some funding. Up until now, he and partner Aaron Hoffman, an orthopedic surgeon at the University of Utah Medical Center, have funded their company through their own money and grants they received from the federal government.

Many of the presenting companies, however, probably will receive no funding. Venture capital companies burned by the technology crash of the late-1990s continue to carefully watch their cash, causing overall investment to plummet.

Utah companies received just less than $95 million in venture capital funding last year, down from $223 million in 2001 and a peak of $706 million in 2000, according to the MoneyTree Survey compiled by PricewaterhouseCoopers and Venture Economics for the National Venture Capital Association.

Twenty-six venture capital deals were completed in Utah last year, down from 43 in 2001 and 64 in 2000, according to the report.

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http://www.sltrib.com/2003/Feb/02112003/business/business.asp