Moving on: F.C. start-up leaves town

FORT COLLINS A Fort Collins start-up software company, unable to attract venture financing in Colorado, plans to relocate to Californias Silicon Valley.

Engineered Intelligence Corp. said the company was lured to the West Coast by a $2 million investment from U.S. Venture Partners, a venture capital firm based in the technology-rich San Francisco Bay area.

The requirement to move “wasnt specifically stated in the funding,´ said Jim Gutowski, executive vice president of marketing and sales for Engineered Intelligence. “But they said, If youre here, we can help you a lot more.”

The loss to the Northern Colorado economy is immediately quantifiable.

Four of the companys five employees will move. And with its new venture money Engineered Intelligence has posted job openings for six new positions and expects to create eight additional jobs by the end of the year, Gutowski said.

Its common for venture capital companies to want to keep their investments close at hand, said Ken Deines, owner of Capital Funding Strategies, a Fort Collins firm that advises biotechnology start-ups.

“Very simply its a matter of oversight,” he said. “If you put your money in a company, whether its $1 million or $5 million, you want them to be close enough to where you can oversee what youre doing & If theres a problem, you want them to be right there when they need you.”

Engineered Intelligence, a winner of The Northern Colorado Business Reports 2003 IQ Award for technology innovation, specializes in software to enable parallel computing for personal computer users. The company calls the technology “desktop supercomputing.”

Headed by former Hewlett-Packard Co. executive Matt Oberdorfer, Engineered Intelligence has developed a programming language called CxC Compiler (pronounced “C by C”) to simplify parallel computing.

Demand for the new language has been driven by increasing use of clusters of computer servers, which provide a low-cost alternative to standard supercomputers. Clusters provide similar computing power to supercomputers at about one-tenth of the cost.

However, cluster users must run computations in a serial order waiting for one model to be processed before moving on to the next. CxC Compiler allows complex computations to be run by users at different terminals in parallel.

Engineered Intelligence introduced the new product in November 2002 and has since struck up a sales agreement with HP. The computer giant is bundling CxC Compiler with its server clusters.

Before striking the deal with U.S. Venture Partners, Engineered Intelligence had been in talks with Colorado venture capital organizations with a goal of $1 million.

While local VCs showed interest, no one was ready to commit, Gutowski said. At the same time, U.S. Venture Partners learned of Engineered Intelligence and swooped in to make an offer.

“They said we were not asking for enough money,” Gutowski recounted. “They said you need $2 million we think that can help to make you successful.

“The decision was not difficult. They do bring a lot to the table besides just money. USVP is incredibly well connected in the industry.”

Still, the relocation of Engineered Intelligence points to an underlying weakness in Colorados venture capital network, said Kathy Kregel, executive director of the Fort Collins Virtual Business Incubator, in which Engineered Intelligence was a client.

Kregel has detected pressure from venture capitalists “from both coasts” to fund Colorado start-ups.

“Unfortunately, the Colorado VCs dont move as fast as they do on the coasts,” Kregel said. “Thats kind of the essence of whats going on.”

Furthermore, Engineered Intelligence founder Matt Oberdoerfer received a better reception in Silicon Valley for his new technology, according to Kregel

“He indicated that what was really exciting was the number of people (in California) who really got his technology,” Kregel said. Would-be Colorado investors “werent close enough to it that could assess, Yes, this has some genius merit to it.”

One of the Colorado venture capital companies that looked at the Engineered Intelligence proposal was Vista Ventures, which has Colorado offices in Fort Collins and Boulder.

“We tried hard to find a way to make it work,´ said Dave Dwyer, a Fort Collins-based partner in Vista Ventures. “We just couldnt justify the investment in our judgment & I might add, obviously, they talked to all the other funds in Colorado, too.”

Dwyer suggested said the California investor “may have another company in its portfolio, or know somebody they could connect with (Engineered Intelligence) that would solve some of the issues that we see.”

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