Boulder Valley sets pace nationally for landing VC
Companies in the Boulder Valley received more venture-capital investment — $375.7 million — than any other region of its size in the nation in 2011 and the first quarter of 2012, according to PricewaterhouseCoopers LLP and the National Venture Capital Association, using data from news company Thomson Reuters.
Overall, the Boulder Valley received about $100 million more in venture-capital investment for the most recent five quarters than similar technology hub regions such as Chapel Hill, North Carolina, at $276 million; the Portland, Oregon/Vancouver, Washington, region at $271 million; and Baltimore at $165 million, according to Thomson Reuters data.
In the big picture, well-known technology cities such as Boston, New York and Oakland, California, received more venture capital investment, but less per capita than Boulder, according to Brian Lewandowski, a research associate at the Business Research Division of the Leeds School of Business at the University of Colorado at Boulder.
Companies in Boston received $3.5 billion in venture capital investment for the five quarters, according to the Thomson Reuters data. New York had $2.4 billion in venture capital investment; Oakland, California, had $1.7 billion in investment.
Per capita, the Boulder Valley ranks only behind San Jose, California, and San Francisco in terms of venture capital investment, based on calculations from the past five quarters by Lewandowski. He concluded that there is $1,275 in venture capital invested for each person living in the Boulder metropolitan statistical area, using the data and U.S. census statistics. In San Jose, California, it’s $1,623 for every resident. In San Francisco, it’s $2,908.
In the past five years, Boulder’s startup community has become so strong that it now draws investors from other technology-hub regions around the nation, said Emily Mendell, a spokeswoman for the National Venture Capital Association.
“It feeds on itself. Once you have a critical mass of startups … venture capitalists from the Silicon Valley find it’s worth their time to come to Boulder,” Mendell said.
Boulder County had a “perfect storm” environment for venture capital, even before The Foundry Group came to town, said George Deriso, a CU professor at the Leeds school and a former venture capitalist. The region’s long-time reputation as a hotbed of pharmaceutical and medical-device companies as well as aerospace companies all tend to require disproportionately large investments in early stages of the companies to reach their potential, Deriso said in an email.
CU’s vibrant research community, along with research at nearby universities, also plays a major role in attracting funding, Deriso said.
Successful startups in the region also have fostered more capital for more startups, said Scott Yates, founder of Blogmutt, a startup company that writes blog posts for other companies on a contract basis. For example, Blogmutt’s two lead investors are Jim Franklin, founder of SendGrid Inc., a Boulder company that aggregates vast numbers of emails, and Jon Nordmark, cofounder of eBags, an online retail sales company.
Yates said the two investors also served as mentors to him after he met Franklin at a Rockies Venture Club meeting a couple of years ago. The region’s collegial environment for entrepreneurs also fosters more entrepreneurialism, Yates said.
When it comes to new bioscience companies, Boulder is expected to see more attention after the recent opening of the new Jennie Smoly Caruthers Biotechnology building on the CU campus, said Kyle Lefkoff, a principal at Boulder Ventures Ltd.
Silicon Flatirons, a center for law, technology and entrepreneurship, also supports entrepreneurs, said Brad Bernthal, entrepreneurship initiative director. In the past year, the center has presented 48 events to the public, with more than 6,600 attendees. Other university programs also draw entrepreneurial interest, including the Deming Center for Entrepreneurship, which is part of the Leeds School of Business at CU, and the Alliance for Technology, Learning, and Society, or ATLAS, an interdisciplinary program at CU that also holds many public events.
While venture-capital statistics show that the Boulder Valley has arrived, statistics on “angel” investors are harder to come by. The Angel Capital Association, an industry group based in Overland Park, Kansas, has no Boulder members, according to a researcher there.
“Angels” generally are high net worth individuals who make individual investments in companies, although several angel groups operate in the region, including the Boulder Angels.
Anecdotally, Boulder Valley “angels” are active — many of them people who already have done well as entrepreneurs in the community and are ready to give back, Lefkoff said.
Boulder Angels is a group of 10 people, currently with five investments — two in Boulder County and three outside of Colorado, said John Ives, coordinator for the group. The group averages one or two new investments per year and makes investments similar to his estimated “average” of about $500,000 per company.
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