Lack of Venture Capital Could Hinder Small Business in Colorado.

Business Editors/Technology Writers

DENVER--(BUSINESS WIRE)--April 9, 2001

Newly released study finds 76 percent of local entrepreneurs do not

believe there are sufficient sources of in-state venture capital

Access to venture capital funding is a major challenge faced by Colorado entrepreneurs, according to a study released this week by the Venture Capital Association for Colorado (VCAC). The study reports that 76 percent of local entrepreneurs do not believe there are sufficient sources of venture capital available in Colorado.

"Colorado is a great place to start a company but many local entrepreneurs believe their success is constrained because of limited access to equity capital," said Rick Patch, chairman of VCAC and partner at Sequel Venture Partners. "Whether it be through legislation or through aggressive efforts to market Colorado to the financial community, we need to bring additional investments into the state."

The VCAC study surveyed 62 CEOs and CFOs of Colorado-based companies including those in the computer software, computer services, high-tech manufacturing, biomedical and telecommunications industries. The majority of participating companies had fewer than 40 employees.

Overall, the study concluded that the state and local government should focus on two key efforts in supporting the growth of small business: attract more VC dollars into the state and market Colorado aggressively as a technology hotbed.

Voyant Technologies, a Denver-based company that delivers voice solutions for switched and IP networks, became an independent company through a management buyout in August 1999 with funding from local and national venture capital firms. The company spent a year-and-a-half looking for funding before receiving their first round from Quest Capital Partnership, a Denver-based venture capital firm.

"Relative to the large amount of venture capital investing in the state, Colorado has a fairly small pool of investors that emerging companies can turn to for funding," said Bill Ernstrom, CEO, Voyant Technologies. "Bringing additional venture capital firms into the state would reduce financing uncertainty for local early stage companies and would improve Colorado's visibility as an optimum site for entrepreneurial activity and technology development."

Entrepreneurs across Colorado desperately need funding, according to Bob Ballantyne, president, Genesis Laboratory Systems. Genesis is a Grand Junction Colorado-based designer and manufacturer of environmental monitoring technology.

"In order to expand my business and really take it to the next level, I need a sizable venture capital investment," Ballantyne said. "Unfortunately, funding sources are limited. To fuel more startup activity, the state and the local business community should work to create a healthy stream of capital for entrepreneurs and entice venture capital organizations to set up offices in Colorado."

Full results of the survey can be obtained by calling the VCAC at 303-831-4133.

The mission of the Venture Capital Association for Colorado is to coordinate and maximize the venture capital efforts in Colorado with the core purpose to improve and enrich the quality of economic life and local excellence in the state. Its focus is to facilitate the following improvements: the image of Colorado as a community for new ventures, government relations to promote the venture community, educational image and reality to support the venture community, quality of key entrepreneurial management, organizationally sponsored conferences and programs and the infrastructure necessary to support growth in the VC industry.

SOURCE: Venture Capital Association for Colorado