Venture capital poured into Utah in 2011

Venture capitalists stepped up their investments in Utah during the final quarter of 2011 in what is viewed as a positive sign of how investors see the future of the state's economy and the companies based here.

During the fourth quarter of 2011, venture capitalists invested nearly $47.2 million in 15 Utah-based deals, or nearly 350 percent more than the $10.5 million they invested during the same quarter of the previous year when they funded nine deals.

"It [2011] was an exciting year for Utah from a venture capital perspective," said Keith Parsons, a partner at Pricewaterhouse Coopers, publishers of the Utah MoneyTree report that offers data on the volume and value of such investments.

For all of 2011, the report indicated that venture capitalists invested $222.9 million in 43 Utah-based deals. In the previous year, they invested just $144.8 million in 26 separate rounds of funding for local businesses.

Parsons said what was notable about the fourth quarter of 2011 was that 55 percent of the funding went to "early stage companies," or businesses that were viewed as having good businesses plans but needing capital to get better established.

He said that was a change from recent years when venture capitalists focused more on later stage, or better established, companies. Later stage companies generally are viewed as less risky investments.

"It suggests that they are looking at the future a little more optimistically and are now willing to take on a little more risk," Parsons said.

HzO Inc. is a company with a proprietary chemical process that protects electronic devices from damage when they are exposed to or dropped in water. Earlier this month, the company's process received the Innovations Design and Engineering Award at the Consumer Electronics Show in Las Vegas.

The company received $7 million in venture capital funding in August and a follow up $3 million during the fourth quarter.

"The money was welcome. In today's world it certainly doesn't hurt to take advantage of funding when it is available," said Paul Clayson, HzO's president.

The funding will be used for working capital, Clayson said.

Other start-up or early stage companies that received funding included Ingeo Systems Inc., a Logan-based software company, and GroSocial Inc. of Orem, which offers "social media marketing software" to help businesses find new customers using sites such as Facebook and Twitter.

Ingeo Systems received almost $8.9 million in the fourth quarter of last year. GroSocial received $450,000.

The MoneyTree report went on to indicate that software companies received nearly 58 percent of the venture capital funding committed to Utah in 2011, or around $128.6 million. Companies operating in the media and entertainment industry received approximately $44.4 million, or 20 percent of the venture capital invested in Utah last year.

steve@sltrib.com

Twitter: @OberbeckBiz —

Utah venture capital funding — a five-year look

2007 • $177.7 million invested in 36 deals

2008 • $196.9 million invested in 39 deals

2009 • $159.3 million invested in 33 deals

2010 • $144.8 million invested in 26 deals

2011 • $222.9 million invested in 43 deals

Source: MoneyTree Report