Prepared by Capital Hunter analysts
Venture capital investment had its strongest week since 2001, with 47 companies receiving over $870 million, which breaks the Capital Hunter (we have covered venture capital investment since April 2003) record by over $150 million, set back in late June of this year. The reason for the jump in funding was due to a pair of notable $100 million plus investments made during this period. The largest of these was Competitive Power Ventures Holdings (“CPV”), which raised $200 million from Warburg Pincus and expects to use the new capital to develop natural gas power generation plants which could create as much as 6000 megawatts for consumers in the United States and Canada when completed. CPV also has multiple wind power projects in development and manages a portfolio of natural gas and fossil fuel plants throughout the United States. The other company to receive serious moolah this period, Cortina Systems, raised $132 million in order to fund their recent acquisition of Intel’s optical networking business lines. The deal was valued at approximately $115 million. Cortina is a provider of semiconductor technology for efficient port connectivity in the networking and telecommunications sectors. The next three largest financings were all in the life sciences and distribution sectors. Handango, which is a distributor of mobile content, raised approximately $60.5 million in Series B funding from Institutional Venture Partners, Pharos Capital Group, SSM Ventures, NeoCarta Ventures and CenterPoint Ventures and plans to use the new capital to aggressive expand its market leading position in the smartphone content market. Amicus Therapeutics, which is developing pharmacological chaperones for the treatment of genetic disorders, raised $60 million in late stage (Series D) financing in order to develop new projects and advance their pipeline of lysosomal storage disorder products. Amicus planned to list on the NASDAQ in early August but had to withdraw their registration statement with the SEC due to market conditions (i.e. weak demand and Sarbanes-Oxley). Prism Pharmaceuticals also raised $60 million this period and plans to use the new capital to continue research and development of their acute cardiovascular product line. Though we do not expect more $870 million funding periods in the near future, do not be surprised to see continuing strength in the venture capital sector for the weeks to come, with $500-650 million per week as the norm.
Funding was a bit more geographically spread this period, with California only garnering 34% of the week’s capital, as opposed to the 50% plus it generally takes down. Maryland, due to the Competitive Power Ventures investment, received 26%, while Pennsylvania took down 11% and New Jersey, Texas and Utah received less than 10%. The biotechnology sector received the most capital this period, with industrials, semiconductors, software, and retail companies taking down significant amounts as well. Early stage funding continued to lead later stage funding, though much of the financing went to biotechnology companies, which have different funding profiles from software and other asset light businesses. We continue to expect software, biotech, and alternative energy to lead in the coming months, though lower oil prices might spook prospective investors who have been funding ethanol and other technologies competing with fossil fuels, though we doubt it will have much impact. Stay tuned.
There were no initial public offerings this period, continuing the deep IPO slump of recent weeks. However, we expect to see a slate of companies list next week, so don’t be surprised to see the paragraph surprising full come September 27.
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