Recent Colorado Success Helps Grotech Ventures Close $225M Round

5/13/13Follow @MichaelXBD

Grotech Ventures, an early stage venture capital investment firm with offices in Denver and the Washington, D.C.-area, has closed a $225 million fund, the firm announced today.

The fund, named Grotech Ventures II, is the firm’s eighth and brings its total capital under management to $1.3 billion.

Grotech already has made 12 investments from the fund and will probably invest in more than 30 companies, said Joe Zell, its Denver-based partner. If recent trends continue, about a third of those are likely to be in Colorado, he said.

Grotech has invested in several prominent Boulder and Denver-area startups that either made good exits or look promising.

NexGen Storage, a Louisville, CO-based maker of data storage systems, was one of the exits. Fusion-io (NYSE: FIO) acquired NexGen in April for approximately $119 million in cash and stock.

Grotech also has invested in Boulder-based LogRhythm, which develops enterprise-class log management, log analysis, and event management systems. LogRhythm has raised $31.4 million.

The recent success helped create interest in the latest fund.

“Our last fund was a very successful fund, so we found very strong support from our existing LPs [limited partners] and attracted new LPs,” Zell said. The fund was oversubscribed by more than 10 percent.

Grotech Ventures was founded in 1984, but its presence in Colorado really started when Zell moved to the state about five or six years ago, he said.

The region was beginning its recovery from the early 2000s tech crash, and there were a lot of startups with good ideas that needed early stage investments. Grotech was able to make connections and good investments and establish a place in the tech community.

“This market really needed additional institutional investors that could do A and B rounds,” Zell said.

Two of Grotech’s early investments had successful exits in 2012. Aztek Networks, a telecom equipment maker, was bought by Genband, and Collective Intellect, a cloud-based social intelligence platform, was bought by Oracle. Both startups were based in Boulder and bought for an undisclosed price.

Local startups that Grotech has invested in over the past few years include Plink, TapInfluence (formerly known as BlogFrog), and Spot Right.

Zell said he foresees companies in the area continuing to gain ground.

“The whole Front Range is really getting much more active and much more effectively coordinated,” Zell said. “There’s clearly a resurgence in the area.”

Among Grotech’s prominent investments outside Colorado is Living Social, a social discount site based in Washington, D.C.

 

Michael Davidson is the editor of Xconomy Boulder/Denver. He covers startups, venture capital, clean tech, energy, aerospace, telecoms, and whatever else happens above 5,280 feet. Contact him at mdavidson@xconomy.com. Follow @MichaelXBD

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