Week 02/05/2007 through 02/11/2007

Prepared by Capital Hunter analysts:

Venture capital investment increased sharply to $590 million this period, blasting right through our prediction last week of moderate funding numbers over the next month and establishing February records to boot. This period’s $590 million is the largest amount for any week in February since we started in 2003, and probably the largest weekly funding for February since 2001. What is even more surprising were the sectors that led this period’s growth. The network equipment sector, which has been nearly absent from our newsletter the past few months, received more funding than any other industry, led by the $64 million Series F investment Force10 Networks received from a host of private equity and venture capital firms, and by Tango Networks, which received $25 million and provides hardware solutions for the integration of wireline and wireless networks. Another industry that had a surprisingly strong week was telecommunications. Teliris, which is developing next-generation video teleconferencing solutions, raised $40 million in Series A funding from Fidelity Ventures and Columbia Capital and Move Networks, which provides video-over-IP (not to be confused with voice-over-IP) solutions, raised $11.3 million from Hummer Winblad and Steamboat Ventures. Software and life science investment continued to do well, with software companies taking in close to $100 million and biotechnology taking in close to the same, although Targanta Therapeutics $70 million financing constitutes the bulk of life science investment for this period. We do not expect to see an upward funding trend develop, but this period’s results are certainly encouraging and hopefully are a harbinger of things to come.

The IPO market, which exploded with nine new entrants last period, outdid itself once again, with no fewer than sixteen new companies this period. The most interesting of the bunch is Fortress Investment Group, a hedge fund with close to $30 billion of assets under management and is officially the first of its kind to go public. Fortress priced at a shade under $635 million and shot up 68% in its first day of trading, though it has come back down a bit. Due to the amount of companies and the limitations of size for our newsletter we must forgo the descriptions we usually provide. However, unless the IPO market starts to become frothy, we will again provide descriptions:

Union Street Acquisition, priced 12.5 million shares at $8 a share for $100 million. Synta Pharmaceuticals, priced 5 million shares at $10 a share for $50 million. Dekania, priced 9.7 million shares at $10 a share for $97 million. Cellcom Israel, priced 20 million shares at $20 a share for $400 million. JA Solar Holdings , priced 15 million shares at $15 a share for $225 million. 3SBio , priced 7.7 million shares at $16 a share for $123.2 million. Switch & Data, priced 11.7 million shares at $17.00 a share for $198.3 million. National Cinemedia, priced 38 million shares at $21 a share for $798 million. Mellanox Technologies, priced 6 million shares at $17 a share for $102 million. Accuray, priced 16 million shares at $18 a share for $288 million. Verichip, priced 3.1 million shares at $6.50 a share for $20.15 million. U.S. Auto Parts Networks, priced 10 million shares at $10 a share for $100 million. Trans-India Acquisition, priced 10 million shares at $8 a share for $80 million. Targa Resources Partners, priced 16.8 million shares at $21 a share for $352.8 million. Optimer Pharmaceuticals, priced 7 million shares at $7 a share for $49 million. Fortress Investment Group, priced 34.3 million shares at $18.50 a share for $634.3 million.

CapitalHunter.com was able to verify that $590 million of venture capital was invested in 40 U.S.-based companies during the past week. The average deal size was approximately 14.75 million. The amount of venture capital invested this period increased by 55% compared the last period’s $381 million.

California was the largest recipient of venture capital funding this week. Sixteen California companies raised $249.7 million in new equity financing, which accounted for 43% of the total venture capital invested this reporting period. The largest venture investment in California was placed into the earlier mentioned Force10 Networks. Force10 Networks raised $64 million in Series F funding and is a provider of gigabit and 10-gigabit switches and routers for network service providers.

The networks & equipment sector raised the most venture capital this reporting period, with four companies raising $108.5 million in venture financing. Network equipment companies accounted for approximately 17% of the venture capital this period. The largest venture investment in the sector was placed into the just mentioned Force10 Networks.

Start-ups raising their late stages of funding represented the largest share of the funding pie, as 37% of all money invested this period went into such companies. The largest late stage funding was placed into Force10 Networks.

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 $174 million:

A total of 71 equity financings of private and public companies occurred during this reporting period. Each of the 71 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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