Week 05/07/2007 through 05/13/2007

Prepared by Capital Hunter analysts:

Venture capital investment jumped surprisingly to $695 million this period on the strength of strong life science investment as well as a (temporarily at least) resurgent telecom sector, though it should be noted that much of the telecom investment was placed in online distribution services. The largest investment of the period was Portola Pharmaceuticals, which is currently developing next-generation drugs to treat cardiovascular disease, and raised $70 million in late stage funding from a bevy of investors (included below in the investors section) and is going to use the proceeds to further the development of its two compounds currently in clinical trials. CVRx, a Minnesota-based company developing medical technology to treat hypertension, raised $65 million in Series D funding and plans to use the proceeds to further development of their core product, the Rheos System. The Rheos System is set to begin clinical trials to see if the device can reduce hypertension in people who are resistant to current hypertension drugs on the market. Telecommunications investment was the surprise of the period, with over $130 million going to the sector, the largest amount invested in telecom since ClearWire raised $600 million from Intel Capital back in July of 2006. The largest telecom investment was placed in Joost, founded by the same people who founded Kazaa and Skype, the latter of which was sold to eBay in late 2005 for $2.6 billion plus incentives, and raised $45 million from Sequoia Capital, CBS, Viacom and the Li Ka Shing Foundation, making Joost one of the largest Series A investments this year. Other notable investments include Tesla Motors, which raised $45 million in Series D funding and is currently developing stylish electric cars, BioNeurotics, which raised $33.8 million and is currently developing epilepsy therapeutics, and Solaicx, which raised $27.1 million and is developing single-crystal silicon wafers for photovoltaic panels. We do not expect venture capital investment to remain over $600 million on a weekly basis, but the surprise this period could signify stronger funding down the line. Stay tuned.

The IPO market remained steady, with five companies listing this period, the same number as was reported last newsletter. Unlike last period, when Interactive Brokers debuted with a $1 billion plus IPO, there were no companies that made a huge splash, as the five that listed combined for a haul that barely breached the totals Interactive brought home all by itself. The biggest IPO, Aecom Technology, raised just over $700 million and provides technical services for the U.S. Government. Venture backed companies going public this period include TomoTherapy, which raised over $42 million in private equity funding since its inception in 1997 and makes radiation therapy systems, and Biodel, which raised $21 million in Series B funding in August of 2006 from Great Point Partners, Vivo Ventures and OrbiMed Advisors and develops specialty drugs to treat diabetes and osteoporosis. For a description of each company just click on the Yahoo! Finance link below. Without further ado, here are the five companies that went public this period:

TomoTherapy NASDAQ:TTPY priced at $223.1 million and is a developer of radiation therapy equipment.

Aecom Technology NYSE:ACM priced at $703 million and is a provider of professional technical and management support services to government agencies.

Solera Holdings NYSE:SLH priced at $420 million and is a provider of software and services to the automobile insurance claims processing industry.

JMP Group NYSE:JMP priced at $88 million and is a full-service investment banking and asset management firm focusing on small and mid-cap companies.

Biodel NASDAQ:BIOD priced at $75 million and is a specialty pharmaceutical company focused on the development of treatments for endocrine disorders.

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CapitalHunter.com was able to verify that $695 million of venture capital was invested in 39 U.S.-based companies during the past week. The average deal size was approximately 12.17 million. The amount of venture capital invested this period increased by 59% compared the last period’s $438 million.

California was the largest recipient of venture capital funding this week. Twenty-two California companies raised $428 million in new equity financing, which accounted for 61% of the total venture capital invested this reporting period. The largest investment in California was placed into Portola Pharmaceuticals.

The biotechnology sector raised the most venture capital this reporting period, with seven companies raising $173.1 million in venture financing. Biotechnology companies accounted for approximately 26% of the venture capital this period. The largest investment in the sector was placed into the previously mentioned Portola Pharmaceuticals.

Start-ups raising their third stages of funding represented the largest share of the funding pie, as 35% of all money invested this period went into such companies. The largest Series C funding was placed into the aforementioned Portola Pharmaceuticals.

The three largest venture deals this period are as follows:

The following twenty-five companies and other unnamed investors funded the above mentioned top three venture capital investments for $180 million:

A total of 68 equity financings of private and public companies occurred during this reporting period. Each of the 68 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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