Week 02/19/2007 through 02/25/2007

Prepared by Capital Hunter analysts:

Venture capital investment dropped sharply this period, with companies only raising a mere $178 million, the smallest amount of capital in a given week since July of 2005, and the 60% drop from last period’s $445 million is the largest week-over-week decline since we started the newsletter back in 2003. Software and life science investment were predictably the top destinations for venture capital, but outside a few digital media deals other sectors were largely shut out. In a show of just how pathetic deal flow was, the largest financing of the period, Chimerix, received just $23.1 million, which under normal circumstances would not even come close to the top weekly deals and would probably not even merit discussion. Chimerix, which by the way develops orally-available bioactive medicines, raised the Series D funding from notable biotech backers Canaan Partners, Sanderling Ventures, Asset Management Company and Frazier Healthcare Ventures in order to continue research and development. The only other financing above $20 million was infrastructure software company Gearworks, which raised $21.4 million in Series B funding in order to expand their mobile workforce solutions overseas as well as expand marketing and sales in their home market. Hopefully this dreadful state of affairs will correct itself for our next newsletter, but we cannot be sure. We still expect to see $300-$450 million a week for at least the next few months, but if we come across anything that changes our assumptions we will let you know.

The IPO market was just as bad (actually worse) as venture capital investment this period, with the only offering being a US Dollar Index Trust, which we do not normally cover here at Capital Hunter. Hopefully this state of affairs is just a lull and not the start of a new trend. Without further ado, here is the index trust that listed this period:

Powershares DB US Dollar Index Trust AMEX:UUP priced at $25 million and is an exchange traded fund (ETF) that invests in US dollar futures contracts.

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CapitalHunter.com was able to verify that $178 million of venture capital was invested in 21 U.S.-based companies during the past week. The average deal size was approximately 8.48 million. The amount of venture capital invested this period decreased by 60% compared the last period’s $445 million.

California was the largest recipient of venture capital funding this week. Eight California companies raised $74 million in new equity financing, which accounted for 44% of the total venture capital invested this reporting period. The largest venture investment in California was placed into Sanarus Medical. Sanarus raised $15 million in Series E funding and is a developer of minimally invasive devices for the diagnosis and treatment of breast tumors.

The software sector raised the most venture capital this reporting period, with eight companies raising $66.9 million in venture financing. Software companies accounted for approximately 38% of the venture capital this period. The largest venture investment in the sector was placed into the earlier mentioned Gearworks.

Start-ups raising their later stages of funding represented the largest share of the funding pie, as 30% of all money invested this period went into such companies. The largest late stage funding was placed into the previously mentioned Chimerix.

The three largest venture deals this period are as follows:

The following fourteen companies and other unnamed investors funded the above mentioned top three venture capital investments for $59.5 million:

A total of 47 equity financings of private and public companies occurred during this reporting period. Each of the 47 equity financings are profiled in a weekly report which include venture financings, private placements, secondary offerings, PIPE’s, and IPO’s.

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