Rosier venture capital picture

ITU Ventures unveils $120 million fund at Beaver Creek meeting

James Paton, Rocky Mountain News

Saturday, February 25, 2006

BEAVER CREEK – At least one venture capitalist eyeing Colorado has attracted a lot more money to put to work.

And that's a heartening sign for startups in the state.

ITU Ventures has a new $120 million fund and says roughly a quarter of that cash ultimately could flow into the hands of grateful up-and-coming companies in Colorado.

XAware, a Colorado outfit that already has received an investment from Los Angeles-based ITU Ventures, was on display at the annual Venture Capital in the Rockies conference in Beaver Creek. And ITU's Andrew Murray, a principal in Denver, was roaming the hallways of the rustic Ritz-Carlton Bachelor Gulch checking out more potential Colorado gems.

Murray's presence in Colorado isn't simply because he likes the area. Having someone planted close to promising companies is a key for ITU and other firms.

"I wouldn't have been in LoDo if there weren't good opportunities here," said Murray, whose office is on Wazee Street.

ITU's managing partner, Chad Brownstein, who couldn't make it to the gathering, said in a phone interview about one out of four companies in the current portfolio is in Colorado.

"And I wouldn't be surprised if we committed 25 percent of the new fund (or $30 million) to the state," he said.

ITU is searching for winners in the health sciences arena, among other spots, and continuing its focus on the university research scene, particularly the University of Colorado, he said.

"We're spending a considerable amount of time walking the halls there," Brownstein said.

On the research front, Colorado State University and the University of Denver have made progress, too, he said. ITU also is keeping an eye on an opportunity at the Colorado School of Mines.

One of ITU's investments, PowerSicel, grew out of CU and was acquired more than a year ago by Advanced Power Technology in a successful outcome for the venture firm.

Another investor at the mountain meeting, Brian Wallace of Access Venture Partners, said his firm has "targeted" a new $50 million fund. Access Venture says it has offices in Westminster, Silicon Valley and Austin, Texas, "three of the most active technology markets in the country," and has invested in more than 60 tech companies.

Just because venture capitalists have extra cash from institutions doesn't mean they'll turn into free-wheeling spenders, however.

Venture capital activity has rebounded, giving the Beaver Creek conference-goers plenty of reasons for optimism, though observers describe a more modest scene after the giddy highs and depressing lows of recent years.

"The money is out there," said Charlie Sander, chief executive of Confio, a Bolder-based software company.

"But there's still some conservatism as far as funding startups. They want to see traction, customer validation.

"They want to see you resolving a problem."

patonj@RockyMountainNews.com or 303-892-2544