Week 05/01/2006 through 05/07/2006

Prepared by Capital Hunter analysts

Venture capital investment, which had been soft the past two weeks, surged this week to $482 million on the back of seven companies receiving over $25 million, the most such financings in nearly a month. Biotechnology investment made up the biggest chunk of investment, accounting for nearly 31% of this week’s funding, the largest percentage for biotechnology since late October when Cerimon Pharmaceuticals raised $70 million. The biggest reason for biotech's dominance was the fact that three companies, Aerovance, Cardiokine and KAI Pharmaceuticals, raised in excess of $35 million, with Aerovance and CardioKine raising significantly more, as can be seen in the top venture capital investments below. The distribution of funding, which was condensed around software and life sciences last week, was a bit more evenly spread out, with semiconductors, media & entertainment and network equipment raising substantial amounts of capital and other niche areas such as consumer goods & services and electronics garnering attention as well.

Initial public offerings, of which there were six last week, cooled somewhat, with only three companies deciding to list this week. The three companies, however, all raised in excess of $100 million, the first time that has happened in quite some time. The three new public companies are as follows:

Dyncorp International NYSE:DCP priced at $375 million and is a provider of mission-critical outsourced technical services to civilian and military government agencies.

Delek US Holdings NYSE:DK priced at $160 million and is a diversified energy business focused on petroleum refining and supply and on retail marketing.

Northstar Neuroscience NASDAQ:NSTR priced at $106.5 million and is a provider of medical technology company focused on the development of neurostimulation therapies for neurological disorders.

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CapitalHunter.com was able to verify that $482 million of venture capital was invested in 38 U.S.-based companies during the past week. The average deal size was approximately 12.68 million. The amount of venture capital invested this period increased by 39% compared to last periods $348 million.

California was the largest recipient of venture capital funding this week. Twenty-one California companies raised a eye-popping $313.5 million in new equity financing, which accounted for 66% of the total venture capital invested this reporting period. The largest private venture financing in California was placed into Aerovance. Aerovance raised $60 million in Series C financing and is a biopharmaceutical company developing next-generation therapeutics for severe respiratory and inflammatory diseases.

The biotechnology sector raised the most venture capital this reporting period, with only four companies raising $148 million in venture financing, which accounted for 31% of the venture capital this period. The largest private venture financing in the biotechnology sector was the previously mentioned Aerovance.

Start-ups raising their Series C rounds of financing represented the largest share of the funding pie, as 37% of all money invested this period went into such companies. The largest such financing was also Aerovance.

The three largest venture deals this period are as follows:

The following seventeen companies and other unnamed investors funded the above mentioned top three venture capital investments for $148 million:

A total of 76 equity financings of private and public companies occurred during this reporting period. Each of the 76 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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