Week 12/26/2006 through 01/07/2007

Prepared by Capital Hunter analysts:

Hopefully everyone had a good Christmas and New Year’s and is well rested and ready to make ’07 a good year. We did not send out a newsletter last period due the low number of investments (our server was down as well, so we apologize for any inconvenience) for that week as well as the low number of IPOs. Including this period and what would have been last period, we still only had 26 companies bringing in close to $185 million, about 60% less than an average week in 2006. Close to 75% on that capital either went to life science startups (biotech and medical devices) or online applications (online software and digital media), with the remainder going to healthcare services and semiconductor companies. The only funding in excess of $20 million this period was Synosis Therapeutics, which develops drugs and therapeutics for the central nervous system and raised $32 million from prominent biotech investors Versant Ventures, Abingworth Management, 5AM Ventures & Novo A/S. The next largest funding was Senior Whole Health, which raised $16 million and manages healthcare benefits for senior citizens. As you have probably gathered, very little happened in the world of venture capital the past two weeks. The outlook for next week looks much better, with some very sizable financings, so you can look forward to seeing better numbers next week. Stay tuned.

The IPO market, which went bonkers in December with no less than thirty-two listings, cooled down considerably the past couple of weeks, with only two companies testing the public waters. One of those is a blank-check company and another is a master trust (not listed below). In fact the only operating company that went public was MSB Financial, a small banking franchise operating in New Jersey. Hopefully we will see better numbers next period. Here are the public markets two newest entries:

Freedom Acquisition Holdings AMEX:FRH-U priced at $480 million and is a Special Purpose Acquisition Company (SPAC) looking to acquire assets.

MSB Financial NASDAQ:MSBF priced at $22 million and is a provider of banking services to residents in New Jersey.

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CapitalHunter.com was able to verify that $185 million of venture capital was invested in 26 U.S.-based companies during the past two weeks. The average deal size was approximately 7.12 million. The amount of venture capital invested this period decreased by 53% compared the last period’s $393 million.

California was the largest recipient of venture capital funding this week. Eleven California companies raised $101.6 million in new equity financing, which accounted for 52% of the total venture capital invested this reporting period. The largest venture investment in California was placed into Synosis Therapeutics. Synosis Therapeutics raised $32 million in Series C funding and is a developer of next-generation drugs for the treatment of central nervous system disorders.

The biotechnology sector raised the most venture capital this reporting period, with four companies raising $57.5 million in venture financing. Biotechnology companies accounted for approximately 30% of the venture capital this period. The largest venture investment in the biotechnology sector was placed into the previously mentioned Synosis Therapeutics.

Start-ups raising their second stages of funding represented the largest share of the funding pie, as 49% of all money invested this period went into such companies. The largest Series B funding was placed into the previous mentioned Senior Whole Health.

The three largest venture deals this period are as follows:

The following twelve companies and other unnamed investors funded the above mentioned top three venture capital investments for $63 million:

A total of 55 equity financings of private and public companies occurred during this reporting period. Each of the 55 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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