Week 03/06/2006 through 03/12/2006

Prepared by Capital Hunter analysts

Weekly funding has oscillated around the $400 million mark the past couple of months, and this week was no exception. Venture capital investment rose once again this week, as over $453 million was placed into 40 companies, a week-over-week rise of 36% from last week’s $333 million. Unlike the past two weeks, where software and biotechnology investment dominated the headlines, this week’s funding represented a more egalitarian distribution between the sectors, as no industry received more than 18% and seven sectors received more than 5% of the $453 million pie. Healthcare services investment was skewed, however, by the $77 million investment received by Take Care Health Systems, a provider of retail-based healthcare delivery systems based in Conshohocken, Pennsylvania, which was the largest investment in a healthcare services company in over two years. The funding also accounted for the totality of healthcare services funding this week. Other notable investments for the week include ISE, a San Diego based provider of hybrid electric drive systems for trucks and busses which received a $25 million Series B investment from the trio of NGP Energy Technology Partners, Rockport Partners and Third Avenue Management, the Regency Beauty Institute, a Brooklyn Park, Minnesota based provider of cosmetic education which received a $20 million investment from LLR Partners and Prairie Capital, and Luxtera, a San Diego based company that provides IC technology to the optical communications industry which received a $22 million Series C investment from a consortium of investors, including Cal Tech, Sevin Rosen Funds, New Enterprise Associates and August Capital.

IPO activity showed an uptick, as three companies listed this week, up from one last week. The three companies are as follows:

Alexza Pharmaceuticals NASDAQ:ALXA priced at $44 million and is a provider of therapeutics for the treatment of acute and intermittent conditions.

Eagle Test Systems NASDAQ:EGLT priced at $100.8 million and is a provider of high-performance automated test equipment for the semiconductor industry.

Tam SA NYSE:TAM priced at $463.8 million and is a Brazilian provider of air transportation services.

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CapitalHunter.com was able to verify that $453 million of venture capital was invested in 40 U.S.-based companies during the past week. The average deal size was approximately 11.33 million. The amount of venture capital invested this period increased by 36% compared to last periods $333 million.

California was the largest recipient of venture capital funding this week. Fourteen California companies raised $186.8 million in new equity financing, which accounted for 41% of the total venture capital invested this reporting period. The largest private venture financing in California was placed into Coremetrics. Coremetrics raised $31 million in Series D financing and is a provider of online marketing analytics services for the capture of clickstream activities.

The healthcare services sector raised the most venture capital this reporting period, but the entirety of the funding was placed into Take Care Health Systems, mentioned in the introduction above. Software, the second most popular sector this week, had fourteen companies raise $72.9 million in venture financing, which accounted for only 16% of all investment this period. The largest private venture financing in the software sector this period was placed into BlueNote Networks. Bluenote Networks received $15 million in Series B funding and is a provider of IP telephony software and services.

Start-ups raising their Series A round of financing represented the largest share of the funding pie, as 34% of all money invested this period went into such companies. The largest such financing was placed into the aforementioned Take Care Health Systems.

The three largest venture deals this period are as follows:

The following seven companies and other unnamed investors funded the above mentioned top three venture capital investments for $133 million:

A total of 98 equity financings of private and public companies occurred during this reporting period. Each of the 98 equity financings are profiled in a weekly (in this case biweekly) report which include venture financings, private placements, secondary offerings, PIPE’s, and IPO’s.

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