Week 05/08/2006 through 05/14/2006

Prepared by Capital Hunter analysts

Venture capital investment remained stable this week, with $422 million invested across 41 companies, a 12% drop from the $482 million invested last period. Unlike last week, where software and biotech accounted for over half of the week’s totals, investment was a bit more evenly spread across different sectors. Medical device investment, which only accounted for 9% of total funding last week, received $77.7 million, or 18% of the total funding this week, an almost 70% increase. Semiconductor investment also remained strong, as $86.1 million flowed into the sector this period, an increase of nearly 50% from last week, when only two financings, Luminus Devices and Wavestream, accounted for $66 million. Other sectors, including business services, IT services and network equipment received substantial amounts of capital as well.

IPO activity remained strong this week, as five new companies, including two biotech companies, listed on American stock exchanges, up from three a week ago. The five companies are as follows:

Novacea NASDAQ:NOVC priced at $40.625 million and is a biopharmaceutical company currently focusing on in-licensing, developing and commercializing next-generation therapies for cancer.

Alliance Holdings GP NASDAQ:AHGP priced at $312.5 million and is a limited partnership with interests in Alliance Resource Partners, which produces and markets coal to utility and industrial companies.

Compass Group Diversified Holdings NASDAQ:CODI priced at $202.5 million and is an acquirer and manager of small and mid-sized businesses in the United States.

Biomimetic Therapeutics NASDAQ:BMTI priced at $36.8 million and is a developer of therapeutics for the treatment of skeletal related injuries.

Basin Water NASDAQ:BWTR priced at $72 million and is a designer of engineered systems for ground water treatment.

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CapitalHunter.com was able to verify that $422 million of venture capital was invested in 41 U.S.-based companies during the past week. The average deal size was approximately 10.29 million. The amount of venture capital invested this period decreased by 12% compared to last periods $482 million.

California was the largest recipient of venture capital funding this week. Eighteen California companies raised $210.6 million in new equity financing, which accounted for 50% of the total venture capital invested this reporting period. The largest private venture financing in California was placed into PA Semi. PA Semi raised $50 million in Series C financing and is a fabless semiconductor company providing power-efficient processors used in high-performance computing applications.

The software sector raised the most venture capital this reporting period, with fifteen companies raising $95.3 million in venture financing, which accounted for 22% of the venture capital this period. The largest private venture financing in the software sector was Seven Networks. Seven Networks raised $20 million in Series D financing and is a provider of mobile email software.

Start-ups raising their third stages of financing represented the largest share of the funding pie, as a whopping 50% of all money invested this period went into such companies. The largest such financing was the aforementioned PA Semi.

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 $123.9 million:

A total of 87 equity financings of private and public companies occurred during this reporting period. Each of the 87 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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