Range Fuels' $130 million Q1 VC funding is tops in nation

By James Paton, Rocky Mountain News (Contact)

Published April 18, 2008 at 7:30 p.m.

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Range Fuels, based in Broomfield, attracted the largest venture capital investment in the nation during the first quarter, raising $130 million.

The biofuel company's deal, the largest Colorado has seen in years, is key as the state seeks to become an alternative energy and clean-technology hub.

Colorado had a good story to tell as venture funding across the country slowed along with the economy.

Aurora-based Taligen Therapeutics also said recently that it expected to secure $65 million in financing. That represents the third-biggest round of funding in the country, said Michael Rosenbach, a venture capital expert and Ernst & Young partner in Denver.

In other mega-deals in recent years, FreeWave Technologies reeled in $113 million last year, and Webroot Software netted $108 million in 2005. Both are based in Boulder.

The fact that companies in different sectors, software, biotechnology and alternative energy, have captured large amounts of venture dollars is a good sign for Colorado, Rosenbach said.

"Downturns are difficult if you don't have a diverse economy," he said.

The news at Range Fuels, coupled with ConocoPhillips' plans to transform a Louisville site into a center to research hydrogen fuel cells, solar and wind power and clean diesel fuel, help raise the state's profile.

Range Fuels, whose deal was announced this month, and Taligen stood out in the first quarter, but several other Colorado companies received hefty sums. SomaLogic, Lanx and IntelliDx, all medical-device companies, reported deals of $35 million, $25 million and $22 million, respectively.

Colorado, largely because of Range Fuels, lured almost $300 million, posting its best quarter in about seven years, according to the report by PricewaterhouseCoopers and the National Venture Capital Association. With that sum, the state surpassed the Washington, D.C., and Philadelphia areas as well as the Midwest region.

Roughly $126 million in venture capital flowed into Colorado companies in the fourth quarter, while $104 million went to the state in the first quarter of 2007, the report released today showed.

Bob Puls, a PricewaterhouseCoopers partner in Denver, called the Colorado results "healthy diversification for the Denver-Boulder corridor, which has long been dominated by the data storage and software industries."

Another study showed funding for Colorado companies climbed sharply from previous periods. The state received $260 million in the first quarter, according to Dow Jones and VentureSource.

Still, Colorado is a minor market compared with places such as Silicon Valley. More than a third of the venture dollars in the country, or $2.59 billion, ended up in the hands of Silicon Valley companies.

Colorado's funding in the first three months of 2008 rose at a time when the U.S. economy slowed and venture capital investments across the country slipped to $7.1 billion from $7.8 billion in the fourth quarter.

Range Fuels, backed by Sun Microsystems co- founder Vinod Khosla, has said it will use the money to complete a cellulosic ethanol plant under construction near Soperton, Ga. Passport Capital of San Francisco, BlueMountain, Leaf Clean Energy Co. and PCG Clean Energy & Technology Fund are among other investors. The company's plant is expected to turn wood waste into motor fuel.

The Department of Energy, which gave Range Fuels $76 million in grants, expects cellulosic ethanol, or ethanol derived from forest byproducts, agricultural wastes or energy crops such as switchgrass, to be as cheap to produce as corn ethanol by 2012.

patonj@RockyMountainNews.com or 303-954-2544

Noteworthy Colorado deals in first quarter

Range Fuels, Broomfield $130 million

SomaLogic, Boulder $35 million

Lanx, Broomfield $25 million

IntelliDx, Boulder $21.5 million

Pharmaca Integrative Pharmacy, Boulder $12 million

Tendril Networks, Boulder $12 million

XAware, Colorado Springs $7.4 million

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