The next big thing.

• Author: WOELFLEIN, MIKE
• Position: Venture capital, networking and equipment - Brief Article

VENTURE CAPITAL TURNS TO NETWORKING AND EQUIPMENT

The world of venture capital can be a fickle place. Calorado marched through the first three quarters of 2000 breaking records, and when the state's final tally is in, VC investing may be three times what it was in 1999.

But even in a boom, waves roll beneath the surface. PriceWaterhouseCoopers' Money Tree Survey says that telecom investment saw a 263 percent year-to-year increase through the first three quarters of 2000, to $761.6 million. In the third quarter it represented 31.6 percent of all VC funding in Colorado. But change may be afoot.

By the end of the year, with telecom companies bruised and battered by the markets, VC firms were already starting to abandon them, running to the next big thing: networking and equipment.

Starting this month, this space in our small business department will be dedicated to financing small firms.

No matter what development stage a small company is in, financing is going to be an issue. A high-tech company may need $100 million to complete its network. A new retail outlet may need $20,000 to add space. An owner or the partners may turn to a venture capital firm, a bank or a wealthy uncle to get it. This space will try to help them figure it out.

Venture capital investing has themes, and the themes appear to be changing.

"It's almost like a herd mentality," said Ed Messman, vice president of the Denver office for Imperial Bank's Emerging Growth Division. "If a Kleiner Perkins invests in a Colorado firm, I guarantee that Colorado venture capitalists will go in with them."

The folks at Money Tree differentiate between telecom and networking. Companies concerned with the "transmission" of voice and data are...