|
|
|
The Acquisition of Venture Cap from A to V
From Achillion to VBrick – Who Got the Bucks?
|
Business New Haven
4/29/2002
By: Susan Cornell
|
Reversing a downward trend that began in the third quarter of 2000, venture capitalists invested $7.1 billion in entrepreneurial enterprises in the fourth quarter of 2001. The $7.1 billion invested was slightly higher than the prior quarter's $7.0 billion, and the number of financing rounds grew from 810 in Q3 2001 to 856.
The fourth quarter numbers suggest that the psychological and economic climate for venture investing is beginning to improve after a steady 18 months of decline. These are the findings of the PricewaterhouseCoopers/Venture Economics/National Venture Capital Association MoneyTree™ Survey.
“The free-fall is over and we've landed safely on higher ground,” says Tracy Lefteroff, global managing partner of the venture capital practice of PricewaterhouseCoopers. “The uptick in dollars and deals in the fourth quarter occurred despite economic disruption and uncertainty. And, calendar year 2001 investments were nearly double 1998, which was the last pre-bubble year. The stars have realigned along historical norms.”
During 2001, $36.5 billion was invested in nearly 4,000 companies, ranking the year, as the venture capital industry's third-best in terms of total dollars invested.
Biotechnology experienced the largest gains in terms of total investments, rising from 3.5% in 2000 to 8.2% in 2001. Conversely, Retailing/Distribution, falling from 18.4% in 2000 to 10.0% in 2001 experienced the biggest decrease in terms of a percentage basis. This drop reflects the fallout in the e-retailing sector. The Software sector remained strong throughout both 2000 and 2001, while several sectors (e.g., Telecommunications and Networking & Equipment) held their own despite considerable uncertainty.
The Biotechnology and Software industries showed the most strength in Q4 2001, attracting 22.5% and 14.1% respectively and capturing a greater percentage of overall investments than in the prior quarter. During Q3 2001, they attracted 16.9% and 10.1% respectively. The Medical Devices & Equipment sector recorded an increase in Q4 2001 both in number of deals and dollars invested, rising 27% and 7.2% respectively from the prior quarter. The level of funding going into the Semiconductor and Telecommunications industries fell slightly in Q4 from the prior quarter, dropping 10% and 3% respectively. Taken together, the top three industries in Q4 – Software, Biotechnology, and Networking & Equipment – captured over half of total investments in the quarter.
New England was one of the three regions showing the most strength in 2001. The region captured a larger percentage of total investments than in 2000. The top three regions taken together – Silicon Valley, New England, and Texas – accounted for 48% of the deals reported and 55% of the dollars invested in 2001. Of the seven regions experiencing an increase in the level of investing in Q4 2001 over the prior quarter, New England showed the second-largest gain, rising 27.6%. Taken together, the top two regions – Silicon Valley and New England – accounted for 38% of the deals reported and over half of the dollars invested.
A higher than average percentage of first-time financings went to early-stage companies in 2001, rising from 55.3% in 2000 to 62.1%. This shows that venture capitalists continue to believe that companies in their earliest stages of development offer great potential for an extraordinary ROI.
During Q4 2001, companies receiving their second sequence of financing garnered the most money, capturing 24% of total dollars, or $1.73 billion. Second-time financings reaped the most money in all of 2001 as well, capturing 27% of total dollars or $9.99 billion. The most significant declines in 2001, both in the number of deals and dollars invested, were experienced by first-time financings.
From its new home at 300 George Street, Achillion Pharmaceuticals Inc. focuses on the discovery, development and commercialization of innovative anti-infective agents. The privately held company garnered the highest investment amount - just shy of $45 million - in Connecticut in the fourth quarter, according to the MoneyTree Survey.
William G. Rice, Achillion's Chief Executive Officer, says, “Our ability to attract this magnitude and quality of investment, given this challenging financial environment, is rewarding. With this financing we will have sufficient capital to continue to achieve key milestones, particularly in the clinical development of our lead product candidate, beta-L-Fd4C, for the treatment of both chronic hepatitis B and HIV infections.”
In less than two years from beginning operations, Achillion has raised $65 million in equity financing. This financing provides sufficient capital to drive forward the clinical development plan of beta-L-Fd4C through phase two human trials and to continue the advancement of the company's proprietary Zinc Finger Targeting (ZFT) discovery platform.
With ZFT, Achillion identifies zinc finger proteins required for the replication of HIV and other pathogens, and applies ZFT to design small molecules that inhibit the function of those protein targets without affecting human cells. ZFT incorporates novel target identification, state-of-the-art high speed chemical synthesis and high throughput screening to produce novel pre-clinical candidates designed to treat multiple diseases within the $33 billion infectious disease market, particularly by addressing the growing worldwide challenge of drug resistance.
New Haven based Agilix Corporation received $20,799,900.for the fourth quarter. “The magnitude of this financing reinforces the investment community's confidence in our value proposition,” Martin Mattessich, president & CEO of Agilix, states. “We are well positioned to serve our biopharmaceutical and agricultural customers with revolutionary ways to analyze and mine commercially important genomes and proteomes. In addition to scaling our production facilities to serve our discovery partners, Agilix is also expanding its internal research and development infrastructure.”
Agilix Corporation is a developer of functional genomics and proteomics platform technologies to aid in the discovery and analysis of genes, their protein products and related biological functions. Agilix has built several discovery platforms based on various technologies licensed to Agilix from Yale University and invented in the laboratories of Dr. Paul Lizardi, associate professor of pathology at Yale.
AimNet Solutions, a Norwalk network professional services and managed network services provider focused on the mid-market, announcing in March that it had secured $7 million in late-stage financing from a group of investors led by William E. Simon & Sons (WESS). The company has raised over $39 million from investors led by WESS, which was founded by the late former United States Secretary of the Treasury, William E. Simon and his sons. Other institutional investors include Mellon Ventures, ClearLight Partners LLC and North Atlantic Capital Corp.
Rusty Carpenter, director of Marcom & PR, pointed out, however, that “PWC was using incorrect data from 4Q01. We actually closed this round 1Q02.”
Ed Nalbandian, AimNet CEO, says, “we appreciate the continued support from our financial investors and like them, we believe that our focus on professional services and managed services across both wide and local area network technologies has fueled our success and enabled us to uniquely meet the needs of our clients. The economic climate of the past year has made us more efficient, productive and resilient, and we are looking to the future with confidence.”
AimNet Solutions, new to Norwalk just over a year ago, has operations in New England, the New York Metro area and the Southeast.
Middletown-based Axiom8, Inc., founded about two years ago, develops and markets Ossia, the first Dynamic Collaborative Communications application. With Ossia, a person remains at the end of the line while the software reaches out to disparate devices, including telephones, cell phones, and networked PCs, to find other individuals and bring them together - live. Ossia is the first seamless communication solution that provides users with a way to communicate in the manner most appropriate for any situation, enabling a highly dynamic and collaborative environment.
Trident Capital invested $600,000 in Southport's C7 Group, Inc. C7 provides telecommunications and wireless converging broadband technologies, industry related research and consulting services. C7 Group's principal operating company, The Strategis Group, Inc., with offices in Washington, DC, London, Singapore and Sao Paulo, is a large consulting firm in telecommunications, with over 30 years of experience in the wireless telephone and cable TV industries. The firm has been a key player in the history of modern telecommunications.
Hartford-based DirectAdvice, Inc. is a provider of customized, hosted financial planning and advice services to financial service organizations worldwide.
The company's platform enables financial services organizations to deliver personalized planning and advice to individuals directly or in conjunction with Financial Advisors and Call Center support. In the United States, versions of DirectAdvice's online planning and advice technology are currently in use by Ayco, Mellon Financial Corporation, People's Bank, SunGard, Wachovia, and companies with whom they do business. The platform is also being used by international financial services giant AMP in Australia and by major financial institutions in Japan and Germany. DirectAdvice is a Registered Investment Advisor with the United States Securities and Exchange Commission. Warburg Pincus invested $9 million in DirectAdvice in 4Q01.
Brian L. Hollander, President and CEO of DirectAdvice, says, “Attracting an investment of this size in the current market environment, from a firm with Warburg Pincus' reputation and track record, is a major accomplishment for DirectAdvice. It represents a clear vote of confidence in our technology, our business model and our potential for continued growth. We intend to use the funds to further develop our online financial planning and advice technology, and to expand our sales and marketing efforts worldwide.”
Watertown's Litchfield Communications, Inc. (LCI), a developer of standards-based semiconductor technology, reference designs and support software for the next-generation of multi-service networking equipment, closed its Series B equity round with a total of $10 million. Led by Kodiak Venture Partners, this round of funding will allow LCI to complete the development of its first series of products and introduce them to the market.
“We know the next-generation networking fabric will be based on packet-switched technologies such as Optical Ethernet, MPLS, and Resilient Packet Ring. But these high-speed packet-switched networks will need to interface with and transport legacy traffic formats such as Frame Relay, ATM, and TDM,” says Tom Johnson, founder and chief technology officer. “At LCI, we're currently developing a family of semiconductor products to address the emerging need for a seamless interface between networks. We look forward to working with our experienced group of investors as we enter this important stage of growth for the company.”
Paragon Networks manufactures products that, using either wireless, wireline, or optical transmission facilities, provide voice and data service connectivity, performance monitoring, compression, aggregation, layer 3 routing, quality of service filtering, and protection switching of both client and operations support systems traffic. Leading global wireless service providers such as Verizon, Cingular, Sprint PCS, Nextel, Telcel, and others around the world utilize Paragon Network's products and technologies. Designed specifically for wireless service providers, Paragon's suite of backhaul solutions enable the rapid deployment of voice and data services and provide a migration path to 3rd generation networks.
Paragon Networks is a privately held company with ownership shared between leading venture capital companies and its employees. Headquartered in Brookfield, the company distributes its products worldwide through a network of both direct and indirect channels. The company was on the receiving end of $1,116,000 in 4Q01.
Meriden-based Protein Sciences Corporation (PSC) claims to be the world leader in developing genes encoding for proteins into commercial human and veterinary vaccines, therapeutics and diagnostics using its proprietary baculovirus expression vector system (BEVS) technology that includes its patented expresSF+ serum free, high yielding, scalable insect cell line. Customers access PSC's proprietary BEVS technology through its GeneXpress program. This allows them to obtain cGMP human and animal clinical materials more reliably, rapidly and less expensively than through alternative protein expression systems.
Dan Adams, PSC president and CEO, comments, “We are gratified to be able to make this announcement in such a difficult financing climate. We finally have relief from the multitude of debt, security interests and antidilution protections that relate to the predecessor company but made it impossible to capitalize on our opportunities. Without the interest on debt, we would have been cash flow positive and profitable last year on a proforma basis.”
New Haven's Rib-X Pharmaceuticals, Inc., a bioscience company focused on the discovery of new anti-infectives, raised approximately $22 million in a Series A financing. The company will exploit a proprietary high-resolution crystal structure of the ribosome to discover new antibiotic agents. The ribosome performs the essential biological function of protein synthesis, and is the target for many known antibiotics. Rib-X has exclusively licensed the high-resolution ribosome structure that was discovered by two of the company's founders, Thomas Steitz and Peter Moore, both of Yale University. In addition, the company has exclusive access to breakthrough structure-based drug design software developed by company co-founder William Jorgensen, also of Yale.
“We founded Rib-X confident in our belief that the key elements of success in drug discovery are a validated chemical space and a validated clinical target,” says Susan Froshauer, Rib-X president and CEO. “The Steitz and Moore technology both provides a window to the binding of known antibiotics to the ribosome and presents an invaluable opportunity to design multiple new classes of antibiotic agents. Having reached this level of research and development funding with such a high caliber investor base, we are in an optimal position to successfully harness the intellectual richness of the ribosome technology and the collective knowledge of our scientific founders.''
Norwalk-based SmartEquip has invented an electronic delivery engine for business-critical information in the construction and industrial equipment industry. With SmartEquip, equipment rental companies, distributors, and other equipment users, can receive information on maintenance, repair, operations, safety, training and marketing directly in their fleet or rental management systems. They receive this information with no need for Web browsers, and no need for dedicated Internet connectivity.
Wallingford's VBrick Systems, a producer of low-cost DVD-quality video networking appliances and systems, received $22 million in new venture capital in its third institutional investment round of funding.
“This funding will accelerate our global growth strategy, which includes aggressive product and partnership development as well as increased marketing and sales initiatives. Our investors bring much more than the $22 million in financing to VBrick Systems,” says CEO Frederick Geyer.
“Their combined knowledge and expertise will greatly contribute to our company's success. VBrick Systems has a seasoned team of people working in concert to deliver outstanding value to its customers. We are thriving in this difficult economic climate because we meet a growing market need.”
“Increasingly, customers are deciding that these capabilities are a must-have, not just a nice-to-have, whether they are running a business, managing an educational institution or serving in a government agency.”
|
Go FirstGo PreviousGo
NextGo LastGo
to Index
|
|
