The flow of venture-capital money to biotechnology companies outpaced the dollars raised by software startups during the third quarter, marking the first time that has happened, according to a venture- capital survey to be released today.
The attraction to biotech firms is driven, at least in part, by rising medical costs and an aging U.S. population, experts said.
“I don’t think software is dying; it’s just that biotech is growing,” said Bob Puls, a partner in Denver with PricewaterhouseCoopers, the accounting firm that issued the MoneyTree Report.
Biotechnology and medical-device companies nationwide raised $1.8 billion on 177 deals during the three months ended Sept. 30, the report showed.
That compares with $1.09 billion raised by software companies in 186 deals, the fewest number of transactions for the industry since 1996.
The MoneyTree Report, which largely mirrors another venture-capital survey released Monday by accounting firm Ernst & Young, showed that venture funds invested $6.2 billion in 797 deals nationwide.
The Ernst & Young study reported that nascent companies raised $6.36 billion in 611 deals.
Regarding Colorado, the MoneyTree study showed that 22 local companies raised $209 million. That represented the biggest three-month haul for the state since 2003.
Colorado was lifted by Adam Aircraft Industries, the Centennial Airport-based airplane developer that raised $93 million in August.
Software companies in Colorado raised $24 million in eight deals. Local biotechnology firms raised $7.8 million in three deals, the report showed.
The successful initial public offerings of Westminster-based Myogen Inc. and Boulder-based Pharmion Corp. in 2003 spurred interest in local biotech firms, said Mark Lupa, a partner with Boulder’s High Country Venture.
“There is a greater breadth and higher quality of companies out there than even a few years ago,” said Lupa, whose firm invests in biotech companies.
Staff writer Will Shanley can be reached at 303-954-1260 or wshanley@denverpost.com.
