Prepared by Capital Hunter analysts
Venture capital investment dipped slightly to $529 million despite the fact that the average deal size rose to $13.92 million this period, as PE and VC firms made larger investments in fewer companies. Much of the money this period went to the three most popular industries of the past few months, which include software, biotechnology and alternative energy. The largest investment this period was placed into Englewood, Colorado-based Adam Aircraft Industries, which received a $93 million Series F commitment from a consortium of private equity firms and hedge funds including Goldman Sachs, Hunt Growth Capital, DCM-Doll Capital Management, Mesirow Capital, W Capital Partners, D.E. Shaw Laminar Portfolios and Acacia Woods Partners. Adam Aircraft, which manufactures small planes for business and personal use, plans to use the capital infusion to increase production of their FAA-certified A500 and to accelerate the certification of their new A700 AdamJet. After Adam Aircraft, there were six companies that received in excess of $30 million in funding commitments, including three biotechs, an alternative energy startup and an upstart VoIP provider. Artesian Therapeutics, a startup biotechnology company focusing on next-generation drugs for the treatment of cardiovascular disease, raised $39 million in first round funding to continue trials into their lead compound, ATI 22-107, which if successful will be used to treat congestive heart failure. Codexis, another biotechnology company that was funded this period, received $37 million in late stage (Series D) funding from Bio*One Capital Pte., CMEA Ventures, Pequot Ventures, Chevron Technology Ventures and Maxygen to further expand their active pharmaceutical ingredient pipeline and to expand its research and development capabilities. Other large fundings include Infinite Power Solutions, which received $35 million in first round funding in order to continue production of their thin-film lithium-polymer batteries, and SunRocket, which received $33 million in Series C funding and is a rapidly growing VoIP service provider.
California continued to receive the most funding, but Colorado had a surprisingly good week due to the investments made in Adam Aircraft and Infinite Power Solutions. Hopefully this will reverse the funding trend in Colorado, which failed to raise $100 million last quarter despite the fact that Q2 2006 was the best quarter of venture capital investment in nearly five years plus Colorado was one of the few regions that experienced a Q2-over-Q1 drop in venture capital activity. Massachusetts was surprisingly shut out this week, but this is a weekly funding anomaly and shouldn’t be taken as anything more than such. Industrial funding was fairly concentrated as four sectors dominated this period, including software, biotechnology, industrials and telecommunications. We mentioned in our last newsletter that you should expect to see a large industrial & energy funding on an almost weekly basis, though Adam Aircraft wasn’t the type of company we had in mind. In fact, Adam Aircraft was the only industrial & energy investment this week (no ethanol or solar companies), constituting the entire 18% of the sector's portion of the weekly funding pie. Biotechnology, however, was the big winner this week due to three $30 million plus investments, but telecom investment came on strong as well, as the sector received over $70 million in venture capital investment, the highest since last month. Unlike past weeks where early stage (or at least companies receiving their initial outside equity commitment) companies garnered the bulk of venture capitalist’s investment dollars, middle and later stage companies came on strong this week, as approximately 56% of all money invested this period was placed in such companies. Expect software, life sciences, and alternative energy companies of all development stages to continue to dominate the funding headlines in the coming weeks.
There was only one IPO this period, and it was a blank check company looking to complete a merger or stock exchange with another company. The company, Marathon Acquisition, priced at $300 million and currently trades under the ticker symbol MAQ.U on the American Stock Exchange. Hopefully we will see more IPOs in the coming weeks.
Please come visit our web site at
CapitalHunter.com. We have made improvements to both the look and functionality of our web site, including business resources, glossary terms, and other helpful information provided free of charge for the budding entrepreneur. For private equity firms, consulting firms, business journals, and individuals looking to do research on venture backed companies, you can still gain complete access to our entire database for $59 a quarter and $199 a year.
