Feature Story
Foundry Group Lands $225M Debut Fund For Start-Ups
Foundry Group, an early-stage venture firm whose partners are from Mobius Venture Capital, closed its first fund at $225 million, the firm told VentureWire. The firm initially set a $175 million target for Foundry Venture Capital 2007 LP and then settled on a $225 million cap because of high interest from limited partners, according to Jason Mendelson, one of the firm's five managing directors. The fund had its final close Tuesday after a $159 million first close in September. Foundry Group is not identifying its limited partners other than those named in a September regulatory filing. They are Guardian Life Insurance Co., Morgan Stanley, Parish Capital Advisors LLP, Procific and University of Texas Investment Management Co. The firm's other managing directors besides Mendelson are Brad Feld, Seth Levine, Ryan McIntyre and Chris Wand. All are from Mobius and remain involved with the portfolio of that firm's sixth fund, which is done backing new companies. Mobius says it isn't going to raise another fund. Mendelson said fund-raising went smoothly for Foundry Group because its partners have worked together for at least seven years and have a proven record. The group was helped by several timely exits in their Mobius portfolio. Those include email-security provider Postini Inc., which Google Inc. bought in September for $625 million, and Internet-television company Sling Media Inc., which EchoStar Communications Corp. has agreed to acquire for $380 million. From its Boulder, Colo., office, Foundry plans to invest in technology start-ups throughout the U.S. The firm expects to back 25 to 30 companies from the debut fund during the next three to five years, Mendelson said. Most initial investments will be in seed or Series A financings. It has yet to announce any deals from the fund. Rather than concentrating on certain technology sectors, Mendelson said, the firm takes a "thematic investment approach," looking at broad technology trends such as email usage and the interaction between humans and computers. "The way that we look at the world is a little different," he said.http://www.foundrygroup.com <http://www.foundrygroup.com>
Article by Russell Garland, Venture Wire
The 25th Annual Venture Capital in the Rockies featured some of the nation's most promising start-ups
After congregating in Beaver Creek at the 25th Annual Venture Capital in the Rockies conference the last week in February, VC’s from around the country are radiating their risk capital into the Rocky Mountain region in support of some of the nation’s most promising start-ups. Out of 20 presenting companies, almost half were from greater metro Boulder, which is becoming the center of venture-backed entrepreneurism with organizations like Brad Feld’s Foundry Group, clean-tech fund Infield Capital, the TechStars start-up competition and others fueling the fires of technology economic development. And after merging several regional VC associations into the Rocky Mountain Venture Capital Association (RMVCA) last year, there was more out-of-state representation than ever before.
Sponsored by the RMVCA and KPMG, the conference was a refreshing and defining moment in the entrepreneurial renaissance we're seeing in our region. The roster of presenting companies has evolved from pure high-tech to a maturing mix of businesses, with products ranging from batteries to energy drinks, from solar voltaics to smart homes, all gaining ground alongside the more typical “Web 2.0” applications and software platforms spawned from the proverbial garage or dorm room.
From cutting deals over drinks and bar napkins in the late '90s, the VC's have emerged a bit more mature as well, with very disciplined, almost academic financial diligence applied to more developed companies, most with actual customers, revenues and strong seed-stage funding well in place. Many of those entrepreneurs who lightning struck in the '90s made the lifestyle move to the region in general, and Boulder County in particular. They didn't know each other back then, but now they do, and it's fun to watch these now-over-30-year-old serial entrepreneurs work together and apply their filtering and funding processes to the next wave of deals that are driving a true entrepreneurial renaissance in the region and around the country.
As usual, Boulder County was more than well represented at VCIR. Two companies from the inaugural TechStars program, socialthing! and FiltrBox (both social networking management applications) were more prototypical of VC-backed companies with relatively low investment requirements and potentially astronomic returns. In a similar vein, business networking solutions developer HiveLive was happy to report a $5.6 million infusion at the conference from the national VC firm Grotech Capital. Energy-related companies have been almost non-existent at past conferences, but Boulder’s Tendril Networks (energy management software) and Albeo Technologies (high-efficiency lighting systems) were promising examples of a market quickly going green, and risk capital waking up to the opportunities – and social responsibilities. Rounding out the Boulder contingent were Newmerix (application lifecycle management software), ISONAS (Internet security systems) and Zayo Group (a new telecom that’s consolidating bandwidth suppliers around the country – very refreshing to see this critical Colorado industry on the rise again, driven by burgeoning broadband demand). Boulder’s storage heritage was repped as well with ProStor making a presentation for the second year in a row.
Though the greater economy is seeing some strain, the tech sector and entrepreneurial community have clearly crawled out from under the bubble that burst. Add the revolution in Web-based consumer and business applications to the plethora of new technologies that are starting to re-invent old products, processes and traditional industries like energy and telecom, and you have a more interesting crop of companies than ever.
“Some of the most successful serial entrepreneurs of the Dot-Com era have been attracted to the Rocky Mountain region for its lifestyle and entrepreneurial culture,” said Chris Onan, Appian Venture Capital managing partner and VCIR conference chair. “Nearly a decade later, we’re pooling some of the world’s best talent, capital and technologies to create unprecedented synergies for some of the most promising start-up companies in the Western U.S. If you want to see the coming renaissance in entrepreneurial innovation, this is the place to be.”
Article by John Metzger 02/08
New Mexico 1st Venture Capital Growth: Investors Put $128M Into 21 Firms in 2007
Thanks to aggressive government and community efforts and the advantage of starting with nearly nothing -- New Mexico's venture capital industry ranks No. 1 for growth over the past decade.
A new nationwide survey by the National Venture Capital Association found investment activity here grew by 375 percent between 1997 and 2007, putting the state well ahead of traditional venture capital hot spots like Austin and the Silicon Valley for growth.
The study also pinpointed other up-and-comers, such as Seattle, Pittsburgh and Washington, D.C.
NVCA President Mark Heesen called investment growth "organic." "Once a critical mass of companies is funded in a certain region, a new ecosystem will develop," he said in a statement. "It is very magnetic in the sense that startups breed innovative thinkers who, in turn, attract venture capitalists." According to figures provided by venture firms to the NVCA, investors put $128 million into 21 companies here in 2007, including major investments in Advent Solar, Miox Corp. and Aspen Avionics.
In 1997, a comparatively paltry $27 million was invested in three companies. Local investors credited several factors for the growth, including:
Investment of state permanent fund money into venture capital funds, with the requirement that those funds open local offices and commit to making investments here. Though the state has had the legal ability to make such investments since the mid-1990s, the 2003 Legislature, with the backing of Gov. Bill Richardson, doubled the amount that could be invested. Since 1994, the state has committed nearly $340 million to about 26 venture capital firms, most of which remain active here.
Investment of permanent fund cash directly into companies. Also enacted in 2003, the state experimented with several methods to make direct investments, and completed several, including major equity stakes in Eclipse Aviation. Ultimately, the state Investment Council funded a privately managed investment pool, Sun Mountain Capital, which, along with partner investors, has invested in several companies.
The work of local nonprofits, such as Technology Ventures Corp., a Lockheed Martinfunded nonprofit that seeks to match early-stage companies with investors, and the Small Business Investment Corp., which manages a pool of state money for early-stage investments and microlending.
Efforts by trade organizations like New Mexico Angels and Coronado Ventures Forum, both of which hold regular meetings in which potential investors can learn about new opportunities.
The wealth of existing research and development at the state's national labs, universities and other institutions in hot investment realms, such as renewable energy and life sciences technologies.
Sun Mountain Capital managing partner Brian Birk called the ranking "gratifying." "New Mexico has always had the raw materials but has lacked just a couple ingredients," he said. "Now that those have been addressed, the state is really being discovered."
The study, which excluded areas that had less than $100 million in investment in 2007, ranked Pittsburgh at No. 2, with 267 percent investment activity growth, and Seattle at No. 3 with 103 percent growth. Los Angeles and Washington, D.C., rounded out the top five.
George Richmond, who in 1999 founded a local private investor group now called New Mexico Angels, said investorfunded companies are known for driving the creation of highwage jobs and wealth.
"I don't think New Mexico can be first in growth every year, but we're moving into the right area," he said. Stephanie Spong, an Albuquerque-based principal for Utah's Epic Ventures, one of the most active firms doing business here, said the state is wellpositioned to take advantage of expected growth in renewable energy and other "green" tech, and expects venture activity to continue to grow. "It's a great place to live in terms of lifestyle ... with a lower cost to live than some of the traditional epicenters of VC," she said. "We're still a very early-stage region, but there's a tremendous commitment from the people on the ground."
Andrew Webb
2008 Albuquerque Journal, N.M.
