Venture capital in Colo. on rise

Colorado companies outpaced those in the rest of the country in raising venture-capital money last year, enjoying the state’s first annual boost since the heady days of 2000, according to the MoneyTree Survey released Monday.

By Aldo Svaldi
Denver Post Business Writer

http://www.denverpost.com/Stories/0,1413,36~33~1917051,00.html

"Venture folks are looking for reasons to say yes instead of looking for reasons to say maybe," said Jim Conboy, chairman of the Colorado Venture Capital Association and a partner with Wolf Ventures in Denver.

Nationally, venture-capital funding declined 15 percent from $21.4 billion in 2002 to $18.2 billion during 2003, according to the MoneyTree Survey.

In Colorado, venture funding rose 11.9 percent over the same period, from $555 million to $620.9 million, according to the survey. This occurred even though fewer deals were funded in the state: 70 in 2003 vs. 86 in 2002.

The MoneyTree Survey is compiled quarterly by PricewaterhouseCoopers, Thomson Venture Economics and the National Venture Capital Association.

The pace and direction of venture-capital funding can provide clues to emerging industries and where future growth may come in the economy.

Software companies in Colorado received the most funding during the fourth quarter, $30.9 million. Industrial/energy companies followed with $22.7 million.

Continuing a trend underway since 2000, venture capitalists favored mature companies over startups.

Expansion-stage companies received nearly $2 out of every $3 venture dollars for the year in Colorado, compared with just over $1 out of $5 for startups.

Venture capitalists want companies that have survived the trench warfare of the past two years and are ready to break out, Conboy said. "When the economy is turning around, the companies best positioned are those that have been working at it a couple of years."

Nationally, venture funding jumped 11.4 percent to $4.9 billion during the last three months of the year, the best quarterly showing in 18 months.

Colorado’s venture-capital spigot, however, tightened as 2003 came to a close. Funding fell 16.5 percent to $108.4 million during the fourth quarter vs. the third quarter, while the number of venture deals rose to 19 from 16.

"It is difficult to draw any kind of conclusion from any one quarter of investment," said Matt Kosmicki, a Denver-based technology partner at PricewaterhouseCoopers. "A lot of it has to do with timing."

Colorado companies receiving the most funding in the final three months of the year include:

Bill Barrett Corp., a Denver-based petroleum exploration company, raised $12.9 million.

CreekPath Systems Inc. of Longmont, a developer of a software platform for data-storage services, raised $16.4 million.

ZettaCore Inc., a Denver developer of molecular electronics designed to replace memory chips and semiconductors, received $17.7 million.

Although venture funding remains tough to find, ZettaCore had to turn down bidders in its latest round, said Brian Cree, vice president of finance at the firm. ZettaCore went with Kleiner Perkins Caufield & Byers, a Silicon Valley venture firm famous for funding Amazon.com and Netscape.