Week 05/15/2006 through 05/21/2006

Prepared by Capital Hunter analysts

Like the U.S. stock market last week, venture capital investment dipped considerably, as only $322 million was placed across 33 companies, the smallest amount in nearly two months. The 33 companies that raised capital is the smallest such total in nearly three months, as companies for some reason or another seemed leery of reporting any new deals (as a side note, we find it odd that weekly venture capital investment numbers seem to follow the weekly gyrations of the stock market, when in fact there should logically be only weak correlation at best) last week. In fact, if you remove the top three investments last week venture capital investment would have been below $200 million, which has not happened since mid-July of 2005. Life sciences companies led last week’s funding with over half of all venture dollars going to such enterprises, with biotechnology receiving close to $100 million and medical devices receiving over $67 last week’s funding, with niche sectors such as media & entertainment and computers & peripherals garnering attention as well. Hopefully next week will bring better tidings.

Despite the downturn in the markets last week there were four initial public offerings (as well as wireline company Embarq, a spinoff of Sprint Nextel) headlined by the $425 million Burger King is slated to bring to its private equity backers, Goldman Sachs, Bain, and Texas Pacific Group (for more on this story, click here.) Without further ado, here are the four companies that braved the public markets last week:

Restore MedicalNASDAQ:REST priced at $32 million and is a provider of minimally-invasive implantable medical devices for the treatment of sleep disorders.

Penson WorldwideNASDAQ:PNSN priced at $126.9 million and is a provider of securities processing infrastructure products and services.

Burger KingNYSE:BKC priced at $425 million and is an international fast-food hamburger chain.

Darwin Professional UnderwritersNYSE:DR priced at $83.5 million and is a provider of specialty insurance services for the professional liability market.

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CapitalHunter.com was able to verify that $322 million of venture capital was invested in 33 U.S.-based companies during the past week. The average deal size was approximately 9.76 million. The amount of venture capital invested this period decreased by 24% compared to last periods $422 million.

California was the largest recipient of venture capital funding this week, though its dominance was far less pronounced this period. Sixteen California companies raised $93.1 million in new equity financing, which accounted for 28% of the total venture capital invested this reporting period. The largest private venture financing in California was placed into Imperva. Imperva raised $17 million in Series C funding and is a provider of data security solutions for data centers.

The biotechnology sector raised the most venture capital this reporting period, with only four companies raising $96.7 million in venture financing, which accounted for 30% of the venture capital this period. The largest private venture financing in the biotechnology sector was MacroGenics. MacroGenics raised $45 million in Series C financing and is a developer of next-generation therapeutics for the treatment of cancer and other inflammatory diseases.

Start-ups raising their second stages of financing represented the largest share of the funding pie, as a whopping 38% of all money invested this period went into such companies. The largest such financing was placed into Intercept Pharmaceuticals. Intercept raised $41 million and is a developer of small molecule drugs used in the treatment of chronic liver and metabolic diseases.

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 $143 million:

A total of 70 equity financings of private and public companies occurred during this reporting period. Each of the 70 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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