A $172 million investment in Colorado Springs-based Cherwell Software by private equity giant KKR generated a record quarter for venture capital funding in Colorado Springs, according to a report released Wednesday.
The April deal, which ranked as the largest in Colorado and 16th-largest nationwide in the quarterly MoneyTree Report, gave KKR a majority interest in Cherwell and bought out most of Insight Venture Partners’ stake in the company. KKR acquired a $50 million stake in Cherwell early last year, while Insight had pumped $25 million into the company in 2012.
The Cherwell deal was nearly triple the size of the previous largest local venture investment — $60 million received by Springs-based email provider USA.Net in March 2000. The transaction also puts the Springs on track for the second best year for venture capital after 2000, when startups landed $179.1 million, according to the report sponsored by accounting giant PricewaterhouseCoopers and CB Insights.
Local venture investments would already be at record levels if the report had included $8.6 million invested in January in FoodMaven by members of the Walton family, founders of retail giant Walmart, and other investors. FoodMaven is a Springs-based startup that tries to reduce food waste by buying surplus food from grocery stores and distributors and selling it at a discount to restaurants, institutional kitchens and food preparation businesses.
The Cherwell transaction represented more than a third of the $447.9 million invested in 41 Colorado deals during the second quarter, more than double the amount invested in the second quarter of 2017 and the highest quarterly total since the first quarter of 2017. The statewide total for the first half of the year is up 5.8 percent from last year, to $801.6 million, or about $370 million less than the total for all of 2017.
“Colorado is following the national trend — we are seeing a lot of diversity in deals ranging from software to consumer goods to agriculture. It is not just pure technology and transcends industries so the state is not dependent on just one industry,” said Rob Ward, a PricewaterhouseCoopers audit partner in Denver.
Nationwide, venture investments were up 19.5 percent to nearly $23 billion, the highest quarterly total since the final three months of 2000. The total included 44 other deals of at least $100 million, topped by a $600 million investment in ride-sharing giant Lyft by KKR and seven venture or pension funds.
Venture investments for the first half of the year totaled $45.4 billion, up 31.6 percent from the first half of last year.