Week 07/31/2006 through 08/06/2006

Prepared by Capital Hunter analysts

Perhaps we should stop offering weekly funding prognoses, as we seem to be wrong every week. Venture-backed companies received close to $666 million, which is almost nearly as high as the $714 million raised in late June despite the fact that only 35 companies received funding. The biggest reason, or rather two, for the weekly spike was due to a pair of large investments in the alternative energy sector. Altra, which develops renewable biofuels from ethanol plants, received $120 million from a group of seven investment firms that included Kleiner Perkins, Khosla Ventures, Duff, Ackerman & Goodrich Ventures (DAG Ventures), Sage Capital Partners, Omninet Private Equity, Advanced Equities and the Angeleno Group to continue building ethanol facilities throughout the greater U.S. The other major alternative energy investment, Ion America, received approximately $102 million from a trio of blue-chip VC firms that also included Kleiner Perkins, Mobius Venture Capital and New Enterprise Associates. Little is currently known about Ion America, as it just recently emerged from stealth mode and as far as we can tell lacks a functional web site, but it is a developer of next-generation fuel cells using solid-oxide technology. Biotechnology investment continued to remain strong, accounting for over 25% of the funding this period, as Esprit Pharma raising over $90 million from major VC firms Apax Partners, Oak Investment Partners, Domain Associates, New Enterprise Associates, Montagu Newhall Global Partners and Performance Equity Management, with Acceleron Pharma ($30 million) and Biodel ($21 million) raising significant amounts as well. As alternative energy investment picks up, there is a possibility that we might start to see large capital infusions on a weekly basis. Only time will tell.

There were three IPOs this period, down from five two weeks ago (Alien Technology withdrew their $138 million IPO due to market conditions. Capital Hunter regrets the error) and five the week before that. The most successful of the three was Security Capital Assurance, which priced at $20.50 a share and is currently trading at $21.30 a share. The firm, which raised close to $460 million, was the priciest insurance IPO in two years and raised approximately 60% more than Allied World Assurance, a reinsurer that went public on July 12. The other two, Osiris Therapeutics and Buckeye GP Holdings, did not fare as well on their opening day of trading. Osiris is currently trading at about the same price it did when it went public and Buckeye is trading almost 10% below its IPO price. Here are the three companies (and their Yahoo! Links) for your viewing pleasure:

Security Capital Assurance NYSE:SCA priced at $460.2 million and is a Bermudese provider of credit enhancement and protection products to the structured financial markets in the United States and internationally.

Osiris Therapeutics NASDAQ:OSIR priced at $38.5 million and is a biotechnology company using stem cell technology to develop products used to treat medical conditions related to inflammatory, orthopedic and cardiovascular diseases.

Buckeye GP Holdings NYSE:BGH priced at $178.5 million and is a pipeline company engaged in the transportation, terminalling and storage of petroleum products.

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CapitalHunter.com was able to verify that $666 million of venture capital was invested in 35 U.S.-based companies during the past week. The average deal size was approximately 19.03 million. The amount of venture capital invested this period increased by 17% compared to last periods $567 million.

California was once again the largest recipient of venture capital funding this week. Fourteen California companies raised $320.1 million in new equity financing, which accounted for 49% of the total venture capital invested this reporting period. The largest private venture financing in California was placed into the earlier mentioned Altra.

The industrial & energy sector raised the most venture capital this reporting period, with just three companies raising $239 million in venture financing, which accounted for over 36% of the venture capital this period. The largest private venture financing in the industrial & energy sector was also Altra.

Start-ups raising their second stages of financing represented the largest share of the funding pie, as 52% of all money invested this period went into such companies. The largest such financing also was placed into Altra, although Esprit Pharma also received a pretty good chunk (see below).

The three largest venture deals this period are as follows:

The following fourteen companies and other unnamed investors funded the above mentioned top three venture capital investments for $312.72 million:

A total of 65 equity financings of private and public companies occurred during this reporting period. Each of the 65 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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