Venture Capital News
Venture Capitalists See Sparse Returns From IPOs
The number of U.S. venture-backed companies staging initial public offerings in the first quarter rose 63 percent from a year ago, but the median amount raised by these companies has plummeted to a new low.
According to newly released data from Dow Jones VentureOne, the median value raised in venture-backed IPOs during the quarter was US$33.75 million, the lowest total since at least 1999 when VentureOne began the study. In fact, during the past seven years that figure has never fallen below $40 million in a quarter.
A further sign of weakness in the IPO market: the median pre-money, or pre-IPO, valuation of these venture-backed companies in the first quarter was $98.7 million, down from $150.5 million in the first quarter of 2005, and the lowest total by far since at least 1999. The previous low was $124 million in the fourth quarter of 2002.
The total number of venture-backed IPOs jumped, however, to 13 from eight during the year-earlier period, raising $599 million in total versus $371 million a year earlier. On average, there were 10.25 IPOs per quarter last year for a quarterly average total of $560 million.
Meanwhile, the overall value of acquisitions of U.S. venture-backed companies during the quarter also appeared lackluster, bolstered only by windfalls from acquisitions of information technology companies. Across all sectors, 92 venture-backed companies either merged or were acquired in the first quarter for a total deal value of $7.52 billion, versus $7.45 billion and 93 companies.
Within information technology, 63 companies were acquired for $4.25 billion in the first quarter, versus 53 companies for $2.7 billion a year ago. The median value of these deals shot up to $41.3 million from $27.2 million a year ago.
While overall IPO news was unexciting, a bright spot came via biopharmaceuticals companies. Seven of the 13 IPOs during the quarter were biopharmaceuticals companies, nearly twice the amount as in the year-ago first quarter. It also marks the highest biopharmaceutical IPO total since the second quarter of 2004, when the industry saw 13 such companies hit the public markets.
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Healthy Quarter for Irish Tech Investment
According to figures from the Q1 Techpulse Venture Capital survey by Ion Equity, investment was up 70 percent on the previous quarter, but down 27 percent compared to the same period last year.
Despite the value of capital injections being less than the corresponding 2005 quarter, Ion Equity director Ulric Kenny is upbeat about the highest figures since early last year.
This quarter continues a trend of 12 to 14 deals completed each quarter with an average deal value of about EUR4.5 million (US$ 5.5 million). This is in line with European averages of EUR4.5 to EUR5.5 million according to Kenny.
He added that one notable feature of first quarter 2006 was the amount of early stage funding. "We had six first-time fundings by early stage technology companies and that is a very positive sign," Kenny said.
Investment in the telcommunications sector remained dominant in the first quarter. Ion Equity figures revealed that four of the five largest recent deals were in the telecoms sector.
Irish Broadband raised EUR25 million (US$30.5 million) from existing investors bringing its total funding to date to EUR43 million (US$ 52.5 million).
Meanwhile, Anam Mobile raised EUR14 million (US$ 17 million) for its mobile messaging infrastructure from Fleming Family & Partners. FF&P is a wealth management business and this marks a departure from its usual late-stage investments. The Anam expansion coincides with two of its British competitors: Empower Interactive netted USD18 million in venture capital; Airwide Solutions raised US$25 million.
Disappointingly the first quarter of 2006 saw international venture capital investment in Ireland halve from 50 percent of total funds early in 2005 to 25 percent of funds raised recently. This international participation was mainly private equity houses investing in Ireland for the first time — FF&P in the Anam Mobile deal, and Redstone Capital in Global Mobile Encryption's EUR4.3 million funding.
Trinity Venture Capital was the most active domestic player: funding four of the 14 deals completed. Normally busy ACT Venture Capital was quiet in the most recent quarter following two deals totalling EUR24 million (US$ 29 million) in the fourth quarter of 2005.
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EDA Startup Nangate Secures $10M in Venture Capital
Representatives of Nangate Inc., a leading provider of electronic design automation (EDA) software that offers unprecedented improvements in power consumption, performance and cost of integrated circuits (ICs), announced Wednesday that it has raised US$10M in series A financing from a consortium of investors, including Vaekstfonden, IVS and SEED Capital.
The investment will allow Nangate to continue product development and expand its worldwide sales and support organizations.
The company was incorporated in October 2004 by a team of serial entrepreneurs with impressive prior international business successes, including that of IC startup Exbit Technology, which was acquired in 2001 for $164M by Vitesse Semiconductor Corp.
Having recognized a need for IC design solutions that can help unleash the true potential of silicon process technologies, Nangate has assembled an exceptional team of veteran IC designers, library developers and seasoned EDA professionals who are all fluent in semiconductor development across a wide range of design disciplines.
The company employs more than 40 people worldwide, with engineering operations in Copenhagen, Denmark and Moscow, Russia. In addition, the company has established an advanced research division in Porto Alegre, Brazil and sales and support offices in Silicon Valley, USA.
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Consumer Internet Expert Joins Lightspeed Venture Partners
Representatives of Lightspeed Venture Partners, a leading provider of seed and early-stage venture capital to technology companies, announced Monday that Jeremy Liew has joined the firm as a partner focusing on software, Internet services and digital media. Having served on the management teams of America Online, InterActiveCorp, and Citysearch, Jeremy brings proven expertise in driving the success of Internet businesses.
Liew has more than 12 years of experience in business strategy, internationally as well as within the U.S. He most recently served as general manager at Netscape (a subsidiary of America Online) where he had P&L responsibility and effected a significant increase in the group's operating results, reversing a four-year negative trend. Earlier at America Online, Liew was senior vice president of corporate development in the office of the chairman, a role in which he was responsible for strategic planning, corporate development, and business development activities.
Prior to joining America Online, Liew was vice president of strategic planning at Fortune 500 media and e-commerce company InterActiveCorp (formerly USA Networks and USA Interactive). There he drove strategic analysis of new business opportunities, as well as sourcing, evaluating, and executing acquisitions and investments. Jeremy came to InterActiveCorp from Citysearch where he led merger integration activities, developed sales teams, and provided strategic planning. Previously, he worked at international management consulting firm McKinsey & Co.
Liew holds a master's degree in business administration from the Stanford Graduate School of Business. He earned both a B.S. in mathematics and a B.A. in linguistics from Australian National University.
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Perceptive Technologies, LLC Relocates to Downtown Orlando
Perceptive Technologies, LLC, a software development firm with 10 professional employees, has relocated from St. Cloud, FL to the downtown facility of the University of Central Florida Technology Incubator located in the Angebilt Building at 37 North Orange Avenue, Suite 810.
Opening its doors two years ago, Perceptive Technologies initially focused on general information technology support. White and partner Alan Bowman recognized the need for database driven business software development. Now the firm focuses on custom database driven software, along with documentation and training and web design for small and medium sized businesses.
Perceptive focuses on listening to the client, understanding their needs, and designing a solution that is tailored to those needs. The benefits to the client are the increased efficiency and streamlining of processes and procedures that result in a favorable return on investment.
