Week 04/02/2006 through 04/09/2006

Prepared by Capital Hunter analysts

Venture capital investment, which was somewhat sluggish (though still fairly robust in historical terms) the past two weeks, surged this week as venture capitalists found 37 homes for $512 million, only the fifth time this year that weekly venture capital funding has exceeded $500 million. For the year to date, venture capital and private equity firms have invested over $5.7 billion, a 50% increase from the same period last year. The biggest recipients of this new money were software and biotechnology companies, which received $170 million and $125 million, respectively, accounting for over 50% of the week’s funding. The largest software investment was placed in Claria, a former adware company that is now releasing an online platform that hopes to personalize the Web experience. Claria raised $40 million from Softbank Capital, Rogers Communications, Asia Pacific Ventures and Sand Hill Capital and hopes to launch the beta version of its product sometime this month. While biotechnology received a sizable chunk this week, over 80% was placed in just two separate companies. Merrimack Pharmaceuticals, a Cambridge-based pharmaceutical company with a drug undergoing Phase II trials, raised $65 million in Series E financing from a consortium of investors and plans to use the proceeds to develop clinical programs and research & development efforts. Tengion, a King of Prussia-based company that is currently developing technology to create human tissue and human organs from a patient’s own cells, raised $35 million in late stage financing from as of now unknown investors. Whether the growth of venture capital is due to an increasing amount of acceptable targets for VC money or simply a glut of funds of which they have to find suitable home for (more about this phenomenon can be seen here) is anyone’s guess.

IPO activity, which like VC investment was sluggish last week, shot up this week as seven new companies had newly minted shares to offer the public. The seven companies are as follows:

Lake Shore Bancorp NASDAQ:LSBK priced at $25.9 million and is the owner of Lake Shore Savings Bank, a saving bank operating in New York.

Visicu NASDAQ:EICU priced at $468 million and is a provider of healthcare information technology and clinical solutions to the critical care industry.

General Finance Corporation AMEX:GFN-U priced at $60 million and is a blank-check company looking to acquire specialty finance companies.

Goodman Global NYSE:GGL priced at $423.5 million and is a provider of HVAC related products.

Castle Brands AMEX:ROX priced at $31.5 million and is a developer and marketer of premium branded spirits.

Sealy NYSE:ZZ priced at $448 million and is a bedding manufacturer.

Omega Navigation Enterprises NASDAQ:ONAV priced at $147.8 million and is a provider of marine transportation services.

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CapitalHunter.com was able to verify that $512 million of venture capital was invested in 37 U.S.-based companies during the past week. The average deal size was approximately 13.86 million. The amount of venture capital invested this period increased by 58% compared to last periods $325 million.

California was the largest recipient of venture capital funding this week. Fourteen California companies raised $229.25 million in new equity financing, which accounted for 45% of the total venture capital invested this reporting period. The largest private venture financing in California was placed into the earlier mentioned software company Claria.

The software sector raised the most venture capital this reporting period, with fifteen companies raising $170.55 million in venture financing, which accounted for 33% of the venture capital this period, the same as last week. The largest private venture financing in the software sector this period was Claria.

Start-ups raising their later stage rounds of financing represented the largest share of the funding pie, as a whopping 39% of all money invested this period went into such companies. The largest such financing was placed into the aforementioned Merrimack Pharmaceuticals.

The three largest venture deals this period are as follows:

The following ten companies and other unnamed investors funded the above mentioned top three venture capital investments for $140 million:

A total of 84 equity financings of private and public companies occurred during this reporting period. Each of the 84 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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