Prepared by Capital Hunter analysts
Venture capital rose to $566 million this period on the backs of 51 companies, the largest number of companies funded in a single week since since late June, when 55 companies received an astounding $714 million, the largest amount of weekly funding we have ever encountered here at Capital Hunter (we have done newsletters since early 2003). The largest funding this period was placed in Renewable Energy, which is currently the largest producer of biodiesel in North America according to their website. Renewable Energy received a $100 million Series A investment from a consortium of relatively unknown investment groups, including Natural Gas Partners, Bunge North America, ED&F Man Holdings and West Central Cooperative. As we mentioned a couple of weeks ago in our previous newsletter, don’t be surprised to see large alternative energy investments make weekly (or at least biweekly) appearances in the coming months. Boingo Wireless also received a sizable fairly chunk of dough, receiving $65 million in Series C funding from a large group of investors that included Mitsui & Company, New Enterprise Associates, Steelpoint Capital, Sternhill Partners and Red Rock Ventures. Boingo is a provider of ultra-high-speed software technology and roaming wireless services to consumers through the United States and expects to use the $65 million to fund both their working capital needs and their recent acquisition of Concourse Communications. Other notable financings this period include Intranasal Therapeutics, which received a $39.1 million in first round financing in order to continue development of their nasal drug delivery therapies and build manufacturing capabilities, Renew Data, an electronic evidence and data recovery specialist which received $30 million in Series C funding from CIBC Capital Partners and ABS Capital Partners, and IntraPace, which received $30 million in Series D funding from Vulcan Capital in order to continue development of their gastrointestinal medical technology.
Regional funding was fairly typical, with California receiving the bulk of the investment, however other states like Kentucky and Iowa (!) received significant sums as well. In fact Iowa received $100 million this period simply due to the investment in Renewable Energy Corporation, which is headquartered in Ralston. Massachusetts received a substantial amount as well, though below normal standards. Unlike last period when no less than nine sectors received at least 5% of funding pie, this period saw much more industrial concentration, as nearly 75% of all funding this period went to one of four sectors: software, biotechnology, medical devices or industrial & energy. Software companies received the most money with $178.8 million, while industrial & energy companies received $119.3 million and biotechnology received $75.1 million.
There was only one IPO this period, two less than last period, which is kind of surprising when you consider that the stock market had one of its best runs last week. The one company that decided to brave the IPO waters, InnerWorkings, surged close to 16% on its opening day of trading, but has since fallen back to approximately $10 a share (it opened at $9). The company has seen its revenues grow from $16.2 million in 2003 to $76.8 million in 2005 and is on pace to hit approximately $120 million in revenues this year. The profit margin, however, leaves something to be desired, as it hovers below the 5% mark, so it remains to be seen whether or not InnerWorkings can become a long term builder of wealth.
Innerworkings
NASDAQ:INWK priced at $95.3 million and is a provider of print procurement solutions to businesses in the United States.
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