Venture capital eludes Colorado Springs companies in 2nd quarter

By: Gazette and news services
July 19, 2013 Updated: July 19, 2013 at 5:30 pm

After receiving funding for two consecutive quarters, Colorado Springs missed out on venture-capital investments in the second quarter, according to a quarterly survey.

Computer storage manufacturer X-IO secured $2 million in the first quarter and Cherwell Software landed $25 million in the fourth quarter of 2012, ending a nearly four-year drought of such funding for local startups.

Statewide and nationally, venture capital investments were off, according to the MoneyTree Report from PricewaterhouseCoopers and the National Venture Capital Association.

In Colorado, such investments during the April-to-June quarter fell 33.3 percent from a year earlier to $110.4 million in 21 deals. Still, that is up 40 percent from the previous quarter.

"We are starting to see people regain confidence in the venture-capital area," said Keith Parsons, a partner with PricewaterhouseCoopers in Denver. "We have to start moving some of this money we have."

An improving economy is boosting confidence, and several successful initial public offerings this year are freeing up funds to reinvest in earlier-stage firms.

More than half of the funding during the quarter went to just two companies. Broomfield-based Accera Inc., a biotech firm developing treatments for central-nervous-system disorders, received $35 million, and Westminster-based DataLogix Inc., which uses consumer data to boost the effectiveness of ads, got $25 million.

Nationwide, investments in startups fell 9.1 percent to $6.67 billion in 913 deals. Venture funding in the first half of the year was down 7.1 percent to $12.7 billion. Funding for biotechnology companies and consumer products and services startups increased. The biggest category, software, saw a decline in the dollar amount invested as well as the number of deals completed.

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