Week 03/05/2007 through 03/11/2007

Prepared by Capital Hunter analysts:

Perhaps we should stop making weekly venture capital projections, as they have missed by a wide margin the past few weeks. Venture capital investment rose to $764 million this period from the already lofty $720 million raised by companies last period, the largest weekly amount since September of ’06 and the 61 companies that received an investment was the largest number of companies we have ever had for a given week at Capital Hunter since we started our newsletter back in April of 2003. Biotechnology companies continued to receive the most attention, with the sector taking in close to $200 million, though software, digital media, and high-tech industrials all managed to take their share of the pot as well. The Phenomix Corporation, which develops technology for the identification and validation of drug targets, raised $55 million in Series C funding from a large host of venture capital firms, including JPMorgan, Novartis, Delphi Ventures, French firm Sofinnova Ventures, and many others and plans the use the capital to further develop their pipeline of products. Another biotech firm, TransOral Pharmaceuticals, raised $40 million in Series D funding from New Enterprise Associates, Hamilton BioVentures, InterWest Partners, Vivo Ventures and others. TransOral basically makes next-generation therapeutics targeting the central nervous system and plans to expand product with their new capital infusion. There were quite a few other notable financings as well, especially in the Internet arena. TicketsNow, which operates an online ticket marketplace and was a competitor to StubHub until StubHub was purchased by eBay for $310 million a couple of months ago, raised $34 million from Adam Street Partners, Draper Fisher Jurvetson and New World Ventures. It was the company’s first outside round of financing, and the company was in the Inc. 500 (along with StubHub) with over $100 million in 2005 revenues. Another interesting funding was Internet REIT, which raised $38 million in Series B funding from Starbucks founder Howard Schultz’s venture capital firm Maveron and Perot Investments, founded by former presidential candidate Ross Perot. The company buys, develops and operates domain names, including CreditReports.com, Recipe.com, Shows.com, eBuy.com and many others. We still predict an average of about $400 million a week for the coming months, but as the past few weeks have shown, the week-to-week fluctuations of venture capital can be quite unpredictable.

The IPO market, despite the continuing sell-off, held up okay, with three companies going public, although one notable company, Jazz Pharmaceuticals, which has raised over a quarter billion dollars from investors, withdrew their offer due to the tenuous market conditions that currently exist. The most notable of the four companies is Clearwire, which is gambling on WiMax technology to be the next medium of choice for users worldwide. The company, founded by Craig McCaw, who developed and sold his cellular phone company McCaw Cellular to AT&T for $11.5 billion back in 1993, has raised close to a billion dollars in funding since its founding in 1998 and debuted Monday at $24.50 but has since fallen to $21.75, a sizable drop from the $25.00 a share the company originally priced at, though to be fair practically every stock has done poorly the past few weeks. Xinhua Media, which provides financial and other media services in China, raised close to $300 million but is down close to 15% from its asking price of $13.00 a share. Sourcefire, on the other hand, has climbed close to 20% since its market debut, and currently trades at $17.55 a share. The company provides open source network security solutions to Fortune 500 companies and government agencies, allowing anyone to make their own modifications to the software. Well, without further ado, here are the links to the three companies that went public this period:

Clearwire NASDAQ:CLWR priced at $600 million and is a developer and operator of wireless broadband networks.

Xinhua Finance MediaNASDAQ:XFML priced at $300 million and is a provider of media services in China.

Sourcefire NASDAQ:CCIX priced at $86.5 million and is an open source provider of network security.

CapitalHunter.com was able to verify that $764 million of venture capital was invested in 61 U.S.-based companies during the past week. The average deal size was approximately 12.52 million. The amount of venture capital invested this period increased by 6% compared the last period’s $720 million.

California was the largest recipient of venture capital funding this week. Twenty-seven California companies raised $338.1 million in new equity financing, which accounted for 45% of the total venture capital invested this reporting period. The largest investment in California was placed into the earlier mentioned Phenomix Corporation.

The biotechnology sector raised the most venture capital this reporting period, with only six companies raising $183.1 million in venture financing. Biotechnology companies accounted for approximately 23% of the venture capital this period. The largest investment in the sector was placed into the previously mentioned Phenomix Corporation.

Start-ups raising their second stages of funding represented the largest share of the funding pie, as 42% of all money invested this period went into such companies. The largest Series B funding was placed into the previously mentioned Internet REIT.

The three largest venture deals this period are as follows:

The following seventeen companies and other unnamed investors funded the above mentioned top three venture capital investments for $145 million:

A total of 82 equity financings of private and public companies occurred during this reporting period. Each of the 82 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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