Week 10/30/2006 through 11/05/2006

Prepared by Capital Hunter analysts:

Venture capital investment rose 27% to $409 million, but unlike last period, where most of the money went to more established companies, over 50% of this period’s capital was placed into companies raising either their first or second rounds of funding. In fact, the $8.52 million per deal was the smallest average deal size since late March, when 37 companies raised just $309 million. Despite the sums placed into earlier stage deals, the largest financings were placed into more developed companies. Spot Runner, a provider of automated television advertising services for small businesses, raised $40 million in Series C funding from Index Ventures and Battery Ventures as well as a bevy of corporate investors including CBS, the WPP Group and the Interpublic Group. Spot Runner plans to use to new funding to both improve its reach into existing television channels and to expand its services into online media such as video-on-demand and IPTV. One such company Spot Runner may like to do business with is MobiTV, which completed its $100 million Series C round with an additional $30 million from Adobe Systems and Hearst Corporation. The company raised $70 million in late July from Oak Investment Partners, Menlo Ventures, Redpoint Partners and Gefinor Ventures. MobiTV plans to use the new capital to build additional network and infrastructure capacity to support its rapid subscriber growth. Three other companies, including Pathway Medical Technologies, Greenway Medical Technologies and Narus, raised an excess in $20 million. While we doubt this week’s early stage funding signifies a trend, it is certainly promising, considering all of the reports about the lack of startup capital available to businesses due to VC firms unwillingness to fund early stage companies due to their surplus of capital. Stay tuned.

Software investment continued to do well, garnering 28% of all funding this period, but curiously biotechnology investment was close to nonexistent, with only two companies raising less than $15 million, which is almost unheard of, as biotech investments tend to be larger on average than investments in other industries. In addition, after a spate of a few months in which ethanol was competing head-to-head with software and life sciences investment, alternative energy investment has practically fallen off the map, with only a single company, Transonic, raising an undisclosed sum from Khosla Ventures, Rustic Canyon Ventures and Venrock Associates. Media companies, in contrast, performed very well, raising close to $60 million this period and that doesn’t include Spot Runner, which we classified as a business services company. If Spot Runner is included, media companies did better than every other sector save software. We do not know if this signals a trend toward more online media investment, but it is certainly something to keep an eye on. We expect biotech investment to rebound, but otherwise do not expect any radical changes in the upcoming weeks.

The IPO market remained strong, with seven companies going public (though not all for the first time, as Owens Corning returned from Chapter 11 bankruptcy with a billion dollar offering), the same number as last week. Owens Corning was the largest of these offerings, as its IPO priced at $1.855 billion, larger than the $1.4 billon Douglas Emmett raised last period. For more information of these companies 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.

Southern National Bancorp of Virginia NASDAQ:SONA priced at $25 million and is a bank holding company with branches in Northern Virginia.

RRSAT Global Communications Network NASDAQ:RRST priced at $47.5 million and is a provider of content management and distribution services to the television and radio industries.

Debt Resolve AMEX:DRV priced at $12.5 million and is a licensor of its proprietary software for consumer credit companies and a purchaser of distressed consumer debt.

Innophos Holdings NASDAQ:IPHS priced at $104.3 million and is a producer of specialty phosphates.

GlobalStar NASDAQ:GSAT priced at $127.5 million and is a provider of mobile voice and communications services.

OrbComm NASDAQ:ORBC priced at $101.5 million and is a provider of global narrowband wireless communications services.

CapitalHunter.com was able to verify that $409 million of venture capital was invested in 48 U.S.-based companies during the past week. The average deal size was approximately 8.52 million. The amount of venture capital invested this period increased by 27% compared last periods $323 million.

California was the largest recipient of venture capital funding this week. Thirty (yes, thirty) California companies raised $258.3 million in new equity financing, which accounted for 63% of the total venture capital invested this reporting period. The largest venture investment in California was placed into the earlier mentioned Spot Mobile .

The software sector raised the most venture capital this reporting period, with fourteen companies raising $118.4 million in venture financing. Software companies accounted for over 28% of the venture capital this period. The largest venture investment in the software sector was placed into Greenway Medical Technologies. Greenway Medical Technologies raised $22 million in Series B funding and is a provider of web-based ambulatory software for physicians.

Start-ups raising their third stages of funding represented the largest share of the funding pie, as 32% of all money invested this period went into such companies. The largest Series C funding was placed into SpotRunner.

The three largest venture deals this period are as follows:

The following fifteen companies and other unnamed investors funded the above mentioned top three venture capital investments for $95 million:

A total of 72 equity financings of private and public companies occurred during this reporting period. Each of the 72 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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