Philly VC Deals flat vs. last year; longer term funding may be concern

Tom Paine

Venture Capital investment in Philly Metro area companies was just under $120 million in the third quarter of 2011, according to the PricewaterhouseCoopers/National Venture Capital Association MoneyTree report based on data from Thomson Reuters, released Wednesday. This was more than the $89 million reported in Q2, but less than the $124 million reported in the same quarter last year. Total investment for the first three quarters of 2011 was $337 million, compared to $334 million for the first three quarters of last year. Thirty-six deals were reported in the quarter.

In terms of individual investments, there were no surprises; all the large deals had previously been announced. ISGN, the Bensalem-based mortgage processing technology business, was the largest recipient, raising $30 million. Boston-based OpenView Venture Partners' trio of area investments, Monetate, NextDocs, and Xtium, which I wrote about here, accounted for about $31 million (though I believe these numbers don't reflect another $5 million invested in Xtium).

Other IT-oriented investments included Instamed ($5.5 million), GreenPhire ($1.5 million), Lightning Gaming of Boothwyn ($1 million), Cross Current Corporation of Doylestown ($800,000), Vita Products of Philadelphia ($700,000), and Sanovia of Philadelphia ($500,000). PlaySay, which the report says raised $250,000, has since moved to Washington DC and now has raised a total of $550,000 from Bethesda, MD-based Novak Biddle Venture Partners. AssetVUE and MobileReactor LLC both recently raised $200,000 from Ben Franklin Technology Partners, as was announced ealier this week. Connectify raised an unspecified amount from an investment firm related to the US Intelligence comunity, and recently launched spare space rental site Storably is also reported to have raised funds.

Some angel investments and other larger private equity investments may not be included in the MoneyTree report.

Nationally, VC investment was up 31% over the prior year"s third quarter. Software investments reached $2 billion, the highest level in nearly a decade.

The biggest concern going forward is whether the current level of funding can be maintained. Venture Capital fundraising hit an eight year low in the third quarter, dropping 53% from the prior year, according to the National Venture Capital Association, and VC investments are far outpacing fundraising as many firms are working downs funds they had previously raised.


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