Venture capital jumped in city, state

Venture capital investments in Colorado and Colorado Springs surged during the first quarter even as such funding declined nationwide.

Venture capital investments in the city and state defied the first nationwide drop in venture investments since 2005, according to reports issued Friday by Dow Jones VentureSource and Thomson Financial, PricewaterhouseCoopers and the National Venture Capital Association.

The gains in Colorado Springs and statewide came from large deals - Colorado Springs-based software developer XAware Inc. landed $7.41 million in January as the only local venture capital investment. Broomfieldbased Range Fuels Inc. and Aurora-based Taligen Therapeutics Inc. took in 75 percent of the statewide total.

XAware's investment represented the most invested locally in any quarter in more than four years.

The Dow Jones Venture-Source report said statewide venture investments during the quarter totaled $259.6 million in 13 deals, more than double the total from 2007's first quarter, nearly four times the previous quarter's total and the second-highest quarter since 2001.

The big deals reflect a shift in focus by venture capital funds to capital intensive industries like biotechnology and renewable energy, said Mike Rosenbach, who heads Ernst & Young's venture capital practice in Denver and reviewed the Dow Jones VentureSource report.

"Colorado started the year strong by raising nearly half as much in venture investments during the first quarter as in all of last year," Rosenbach said.

The MoneyTree Report from Thomson, PricewaterhouseCoopers and the venture group included more deals and said venture investments statewide totaled $297.7 million in 26 deals, or nearly triple similar amounts invested a year earlier and the previous quarter.

"Even if you take out the big deals, Colorado is still doing very well" in landing venture capital, said Bob Puls, a PricewaterhouseCoopers partner in Denver. "With the interest in renewable energy in Colorado, it wouldn't be surprising to see more of these deals."

Both reports also said venture investments slowed nationwide. Dow Jones VentureSource reported a 9 percent drop from the previous quarter and 7 percent decline from a year ago to $6.8 billion in the first quarter. MoneyTree Report reflected similar declines to a $7.1 billion total.

"Despite the current economic downturn in the United States, venture capitalists are still putting money to work," said Mark Heesen, president of National Venture Capital Association. "We do not expect to see significant declines in investment levels during the coming year."

CONTACT THE WRITER: 636-0234 or wayneh@gazette.com