Venture capitalists break records
Brian Digon, RBC daily, 20.01.2008
Interest in energy, biotechnology, and medical device manufacturers helped drive venture capital funding in 2007 to a record high since the Internet boom of 2001. Investments amounted to $ 29.4 billion, which is 11% more than last year. Interest in investing in software companies and Internet startups is not subsiding.
In general, almost 4,000 investment rounds were held during the year, which is 5% more than in 2006, according to the latest quarterly report by PricewaterhouseCoopers (PwC) and the National Venture Capital Association.
The sector of the biomedical industry, which combines biotechnologies and the production of medical equipment, set its absolute record in 2007, receiving $ 9.1 billion (or 31% of all investments) in the course of 862 transactions.
"Medical equipment is the story of the day," says Tracy Lefteroff, managing partner at PwC's wealth management practice. Manufacturers of medical equipment (without biotech companies) received $ 3.9 billion – an increase of 40% compared to last year and a 78 percent jump since 2005.
One of these companies, Globus Medical (engaged in developments in the field of spinal cord surgery), received $ 110 million, which pulls in the largest investments received by one firm. CardioNet, a developer of monitoring systems for cardiology, received the same amount.
"I am very pleased to see a steady and continuous flow of venture capital into these companies," says Sherrill Neff, founder and partner of the Quaker BioVentures fund, which has $600 million under management.
Companies engaged in "clean" technologies were on the list of participants in the five largest deals of the year. Investments in the eco-friendly production sector increased by 47% to $2.2 billion. This is almost 7% of all investments. GreatPoint Energy attracted the most funds in this sector (100 million). It is engaged in the production of coal gas and biomaterials.
"Clean technologies is one of the fastest growing sectors, and we expect its growth to continue in 2008," Deepak Kamra, Chief Partner of Canaan Partners ($3 billion in management), estimates the prospects. "The factors that spurred interest in this sector, primarily the high price of oil, are still relevant. We think this is a long–term trend," he says.
During Friday's conference call, venture funds shared their concerns about 2008. A falling market and a possible recession could hit the market of initial public offerings (IPOs) – one of the ways to fix profits for investors. "Technological IPOs are "stalled", this exit is closed," complains Deepak Kamra. "But it will open again." Terry McGwire, co-founder and managing principal partner of Polaris Venture Partners ($3 billion in management), on the contrary, believes that the slowdown in the pace of IPOs is not necessarily bad news for strong companies.
Although venture capitalists may have already tempered their enthusiasm. Investments in the fourth quarter fell to $ 7 billion, in the third they amounted to $ 7.6 billion. But Mr. Lefteroff points out that the December period was the fourth quarter when investments reached the 7 billion bar. And this is 12% more than last year's result.
Software production remains one of the most popular sectors for investing capital. Software companies received 5.3 billion. Investments in telecommunications fell by 19%, to $2.1 billion (in 2006 – $2.6 billion). Interest in Internet startups continues unabated. They accounted for 16% of all investments over the past year. Companies in this sector attracted $4.6 billion (12% growth). Projects from the media sector accumulated $1.9 billion (in 2006 – $1.7 billion).
Portal "Eternal Youth" www.vechnayamolodost.ru
21.01.2008