Venture capitalists, often the financiers for nascent businesses, in 2005 favored more mature “late-stage” companies in Colorado’s biotechnology, technology and software sectors, according to a venture-capital survey to be released today.
The MoneyTree Survey, which largely mirrors another venture- capital survey released Monday by accounting firm Ernst & Young, identified 75 Colorado deals totaling $612 million in 2005, up from $413 million in 2004.
Tuesday’s report, released by accounting giant PricewaterhouseCoopers, showed 16 deals for $115 million during the fourth quarter, up from $93 million during 2004’s fourth quarter.
Despite the surge, 2005’s figures are still below those in 2003, when Colorado companies raised $633 million, the largest amount since 2001’s $1.3 billion.
The biggest beneficiaries in 2005 were late-stage companies.
Venture capitalists preferred businesses they believed were poised to deliver returns sooner rather than later, said Matt Kosmicki, technology partner at PricewaterhouseCoopers in Denver.
He noted that Colorado has emerged as a biotech hub, as current or former workers at the University of Colorado Health Sciences Center on the Fitzsimons campus in Aurora have gone on to start companies.
It’s the same thing for the technology sector, where workers have branched from established firms to launch their own.
“It’s very positive for the state,” Kosmicki said.
He added that nascent telecommunications companies had a harder time in 2005 securing financing, with just 2.6 percent, or $16.1 million, of all venture money going to those firms.
Statewide, 36.6 percent of all venture capital went to software companies; 16.7 percent to biotech firms; and 14.2 percent to companies focused on computers and peripherals.
Nationally, venture capitalists in 2005 committed $21.7 billion through 2,939 deals, slightly above 2004’s $21.6 billion.
What’s hot for 2006?
Advances in mobile computing will make companies developing technology for hand-held devices attractive, analysts say.
Likewise, firms focused on breakthroughs for the treatment of chronic and life-threatening diseases will also land financing, said Mark Heesen, president of the National Venture Capital Association.
“Just as venture-capital dollars were heavily directed at changing the way we work in the 1990s, many of the investments made today will change the way we play and live our lives,” Heesen said.
Staff writer Will Shanley can be reached at 303-820-1260 or wshanley@denverpost.com.
