Saturday, July 19, 2008

New England funding slide outpaces national average

By Christopher Calnan

New England venture-backed financings declined 22.4 percent in value and 31 percent in number of deals during the second quarter compared with the same period last year, according to a new report from Dow Jones VentureSource.

Investors financed 76 local companies in fundings totaling $713.8 million during the quarter versus 110 fundings worth $920.5 million during second quarter 2007, one of the most active quarters since the dot-com bubble, the report shows.

Last month’s $39 million investment in Boston-based life sciences startup Enlight Biosciences was the largest in New England during the quarter and ranked 15th among the nation’s largest financings for the quarter.

Other major local fundings included the $37 million investment in Northborough-based Aspen Aerogels Inc.; the $37 million funding of Lexington-based Concert Pharmaceuticals Inc. and the $35 million financing of Bedford, N.H.-based Segway Inc., Dow Jones reported.

Lexington-based General Catalyst Partners was the quarter’s most active local venture capital firm, completing five deals, followed by Waltham-based Atlas Venture with four deals.

New England’s falloff in financings for all companies, including tech firms, outpaced the drop on the national scene. Nationally, the value of investments in venture-backed companies declined 12.4 percent during the second quarter compared with the same period last year.

The dip in venture-backed financings coincides with the sluggish national economy and the initial public offering window that has been closed this year to New England companies, which have yet to complete an IPO — the first time since 2003 that none have been closed by midyear.

Despite the lack of IPOs, investors are still focusing on new deals and completing financings, Dow Jones director of global research Jessica Canning said in a news release.

“Venture capitalists commonly take the long view when it comes to investing,” she said. “While IPOs and acquisitions may be rare now, VCs aren’t consumed by that.”

Nationally, VCs completed 602 deals worth $6.64 billion during the three-month period compared with 712 deals worth $7.58 billion during second quarter 2007. However, the median second-quarter investment reached $8 million compared with $7 million during the same period last year, Dow Jones reported.