Colorado Venture Summit Pairs Top Entrepreneurs, Out-of-State VCs

6/23/14Follow @MichaelXBD

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straightforward than their peers in the Valley, where people are more liable to get caught up in hype.

“We find there’s a really good cultural fit for us where we make a lot of money and support entrepreneurs who are building stable companies that will last,” Majors said.

He conceded that might be because of Siemens’ unique corporate culture and the differing objectives between corporate and non-corporate VC firms. Siemens doesn’t need to see a 10x return on its investments, and its funds have a longer time horizon.

North Bridge Growth Equity, which is based in Boston, has not invested in Colorado, but it’s not for lack of trying, said Geraldine Alias, one of its principals.

Something she has noticed about Colorado entrepreneurs is that they’re a little behind when it comes to alternative ways of raising money. They tend to see it as a choice between bootstrapping and self-funding a so-called “lifestyle company” or throwing in with VCs looking for home runs and hundred-million dollar returns, she said.

“There are actually other ways you can raise capital, it’s not just a binary,” Alias said.

Her firm has a venture fund that looks for those home runs, but it also has a growth equity division that’s interested in other types of investments that don’t necessarily post as big of a return.

Colorado is on the map.

There’s a persistent belief in Colorado tech circles that the state doesn’t get its due when it comes to the quality of the companies and entrepreneurs it produces. The perception is there’s a lack of capital in the state, and investors from Silicon Valley or the East Coast just aren’t that into us.

It’s probably well past the time to change that view.

Scanning the list of companies that registered for the summit, it was easy to find ones, both startups and growth-phase companies, that had raised money from out-of-state investors. They range from local standard bearers like LogRhythm, Sympoz, and Denver-based Ping Identity to startups like Convercent and ProtectWise, which just raised a $14.1 million round despite still being in stealth mode.

There’s also an interesting trend that didn’t get mentioned at the summit’s two panels—Silicon Valley legends are finding their way to Colorado and are making investments or even starting companies here.

Earlier this year, renowned VC Jim Breyer invested in Westminster-based Datalogix, which also just raised a $45 million round, while Netscape founder Jim Clark participated in Denver-based Ibotta’s $20 million round. Byers and Clark are now board members of their respective companies.

But they’re latecomers compared to Sun Microsystems founder and CEO Scott McNealy. He is the co-founder and chair of Denver-based Wayin, which was started in 2011. Wayin just raised $12.1 million.

Finally, Wall Street giant Blackstone has set up an outpost here, making Colorado the second locale to be part of the Blackstone Entrepreneurs Network. Its nonprofit put forward $4 million to support the initiative.

Those data points suggest great companies are getting noticed, which is something people like Foundry Group managing director Brad Feld, who is Colorado’s biggest booster, have said for a while now. His view is that early stage VCs hunt everywhere for promising startups, and late-stage investors don’t care about geography. If the potential is here, the money will come.

If there is a place where money is tight, it’s for new companies and unproven entrepreneurs trying to raise angel or seed rounds. But that’s an issue for another day (or summit).

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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