Week 10/09/2006 through 10/15/2006

Prepared by Capital Hunter analysts:

Venture capital investment rose slightly to $444 million this week, a somewhat disappointing figure considering all of the action on Monday and Tuesday, but a respectable total nevertheless. The biggest surprise of the period were the totals placed into medical device and online media companies, which significantly outpaced the totals of other sectors. The largest of the medical device financings, Macroflux, raised $75 million in Series A funding from Japanese VC firm Nomura Phase4 Ventures, New Enterprise Associates and HBM Ventures and plans to use the funding to expedite its spinout from the Alza Corporation, a subsidiary of Johnson & Johnson. The biggest online media funding this period was Cellfish Media, which raised $50 million and plans to use the new capital to develop and expand their portfolio of mobile content. Ripe Digital Entertainment is another online media company that received a big chunk of capital, taking in $38 million in order to expand their video-on-demand offerings. Biotechnology also has a decent week, garnering over $71 million in venture capital led by MorphoTek, which took in $40 million, and Amyris Biotechnologies, which only received $13.6 million. Alternative energy investment made a small comeback this week, with an assortment of solar companies receiving early stage investment, although there are no ethanol deals to report. For our next newsletter we expect a drop in venture capital, likely below the $400 million range and limited visibility for the upcoming weeks.

Initial public offering activity was the same as last week, with four companies going public. By far the largest of these is SAIC, a San Diego-based provider of scientific and technical services to the U.S. government, which raised over $1.125 billion, the first billion dollar IPO since Warner Chilcott went public in late September and the largest IPO since MasterCard went public in a $2 billion IPO in late may of this year. Like last week, in the interest of resources and time, I encourage you to use the links below, which will take you to Yahoo! Finance where you can find a lot of information about the company that interests you. Without further ado, here are the public markets four newest companies:

Ultrapetrol Bahamas NASDAQ:ULTR priced at $137.5 million and is a provider of marine transportation services for the oil and commodities markets.

SAIC NYSE:SAI priced at $1.125 billion and is a provider of engineering, scientific, systems integration and technical services to the U.S. government.

eHealth NASDAQ:EHTH priced at $70 million and is a provider of online health insurance comparison and shopping services.

Acme Packet NASDAQ:AKPT priced at $109 million and is a provider of session-border controllers for the VoIP market.

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CapitalHunter.com was able to verify that $444 million of venture capital was invested in 45 U.S.-based companies during the past week. The average deal size was approximately 9.87 million. The amount of venture capital invested this period increased by 20% compared last periods $371 million.

California was the largest recipient of venture capital funding this week. Twenty-three California companies raised $242 million in new equity financing, which accounted for 54% of the total venture capital invested this reporting period. The largest venture investment in California was placed into the earlier mentioned Macroflux.

The medical device sector raised the most venture capital this reporting period, with five companies raising $116.1 million in venture financing, though online media was not far behind. Medical device companies accounted for over 26% of the venture capital this period. The largest venture investment in the medical device sector was placed into Macroflux.

Start-ups raising their first stages of funding represented the largest share of the funding pie, as 56% of all money invested this period went into such companies. The largest such financing was placed into Macroflux.

The three largest venture deals this period are as follows:

The following sixteen companies and other unnamed investors funded the above mentioned top three venture capital investments for $165 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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