Week 01/29/2007 through 02/04/2007

Prepared by Capital Hunter analysts:

Venture capital investment declined to $381 million, a negligible 9% drop from last period but the number of companies receiving funding dropped sharply, with only 28 companies receiving funding, down from 36 a week ago. The reasons for this period’s drop are largely cyclical and we expect to see approximately 30-40 companies a week on average receive investment for the foreseeable (read: next few months) future. Business service companies received the most funding, but that was almost entirely due to the $66 million business process outsourcing provider ServiceSource International received from General Atlantic Partners. We are unsure as to the round of the financing (the company received $10 million from Benchmark in 2005), but based on the information in our database, we have it listed as a Series B transaction, though the company may have received additional rounds of financing. Software and life science companies continued to do well, with Malvern-based anti-inflammatory drug developer Ception Therapeutics receiving $63 million in growth capital and Innerpulse, a Durham-based developer of implantable defibrillators, raising $50 million from a consortium of life science investors. Digital media investment finally had an off-week, with the sector only garnering a mere $17.4 million, the smallest amount in many weeks. Other sectors, including semiconductors, network equipment, computer equipment and telecommunications combined for less than $3 million, though this is more a weekly anomaly than anything to be concerned about. We expect venture investment to remain stable over the next few weeks, hovering in the $300-450 million range with the small possibility of seeing values outside that range, more likely on the upside than the downside. Hopefully we will have more to substantive topics to report in the coming weeks.

The IPO market had its best week since the end of last year, with nine companies braving the public markets, up from a then encouraging four companies last period. The group that listed this period was an eclectic bunch, including worker’s comp insurer Employers Holdings, animal products provider Animal Health International, medical device company Xtent, molecular medicine company Molecular Insight Pharmaceuticals, a real estate partnership and a few SPACs. Without further ado, here are the nine companies:

Renaissance Acquisition Corp. AMEX:RAK.U priced at $93.6 million and is a blank-check company looking to acquire assets in the consumer goods, consumer services or financial services sector.

HFF NYSE:HFF priced at $257.4 million and is a provider of commercial real estate and capital markets services to the U.S. commercial real estate industry.

Employers Holdings NYSE:EIG priced at $454.8 million and is a provider of workers compensation insurance to businesses in low to medium hazard industries.

Duncan Energy Partners LP NYSE:DEP priced at $273 million and is a natural gas limited partnership.

Animal Health International NASDAQ:AHII priced at $129.8 million and is a distributor of animal health products in the United States.

Xtent NASDAQ:XTNT priced at $75.2 million and is a developer of customizable drug eluting stent systems for the treatment of coronary artery disease.

NTR Acquisition AMEX:NTQ-U priced at $240 million and is a blank-check company looking to acquire assets in the North American energy industry.

Information Services Group AMEX:III-U priced at $225 million and is a blank-check company looking to acquire assets in the information services industry.

Molecular Insight Pharmaceuticals NASDAQ:MIPI priced at $70 million and is a biopharmaceutical company specializing in the emerging field of molecular medicine.

CapitalHunter.com was able to verify that $381 million of venture capital was invested in 28 U.S.-based companies during the past week. The average deal size was approximately 13.61 million. The amount of venture capital invested this period decreased by 9% compared the last period’s $417 million.

California was the largest recipient of venture capital funding this week. Nine California companies raised $96.6 million in new equity financing, which accounted for 24% of the total venture capital invested this reporting period. The largest venture investment in California was placed into the earlier mentioned ServiceSource International.

The business services sector raised the most venture capital this reporting period, with two companies raising $84.5 million in venture financing. Business services companies accounted for approximately 21% of the venture capital this period. The largest venture investment in the business services sector was also placed into ServiceSource International.

Start-ups raising their third stages of funding represented the largest share of the funding pie, as 48% of all money invested this period went into such companies. The largest Series C funding was placed into Ception Therapeutics. Ception Therapeutics raised $63 million and is a developer of next-generation anti-inflammatory drugs.

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 $179 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.

About CapitalHunter.com

CapitalHunter.com is a web-based financial information company that identifies, preserves and electronically disseminates worldwide data on venture capital and other equity financings. Customers utilize the CapitalHunter.com searchable database to research newly and historic financings and to identify active investors.

Please visit www.capitalhunter.com and get immediate access. New subscribers can request a free investor analysis.

To be REMOVED from this free service, CLICK HERE