MoneyTree VC report: Which startups really are based in Philly area?

Tom Paine

In sorting through the Q2 2012 PricewaterhouseCoopers/National Venture Capital Association MoneyTree Venture Capital report (free registration) based on ThomsonReuters data, you can often come across some confusing information.

For instance, be wary of startups shown as being based in Delaware. Often they have nothing more to do with the state other than being registered there. For instance, Speaktoit, a Siri-like app for Android, is shown in the report as being based in Newark, DE, but CEO Ilya Gelfenbeyn told me by email when the funding was first announced in May that "we are in DC and now opening an office in Sunnyvale, CA", and only has a registration office in Delaware. Speaktoit recieved funding from Intel Capital. Another example is Roqbot, a social music service for businesses, which is shown as being based in Dover, DE, but is actually based in California. Google Ventures is among its backers.

Also, there are a number of startups listed as being located in Conshohocken. which happens to be the current location of First Round Capital's office until it moves to Philadelphia (as Josh Kopelman announced today). So it is no surprise that First Round is an early stage investor in each of them, although they won't be located there or in the Philly area at all in some cases. One, crowdfunding VC site FundersClub, lists three UPenn alumni as its top principals, although I haven't been able to determine yet where it is they call home. Another crowdfunding startup, Upstart, which lets investors back individuals rather than companies, is located in Palo Alto according to FormDs.com. Grokker looks like it is a reincanation of a visual search engine of the same name that shut down in 2009. which was also located in the Bay area. Another, Perceptual Networks, may have bi-coastal roots in terms of its founders, but Kopelman confirmed in his post today that it will have a Philly presence in that it will have space in FRC's new offices. I have no information on what Perceptual Networks is out to do yet.

Another interesting investment is that of Norwest Venture Partners in Media-based Alarm Capital Alliance, which provides home security systems through a network of third party dealers. The size of the investment wasn't disclosed. I know little about ACA, but I do know that Norwest usually invests in fairly sizable amounts of a few million or more. If I understand correctly, part of what ACA does is to provide dealer financing, so the Norwest investment could be related to that.

In all, it was a weak quarter for IT and digital-related investments in the Philly area. The total of all investment was less than $58 million, according to MoneyTree, but a quick glance indicates at least $44 million of that was in Pharma ventures and even some of remainder included the report was for companies not actually located in the area.

Philly Tech News' own database tracking Philly area (IT-related) VC investments doesn't exactly match the MoneyTree data, often because of timing differences. Some partial rounds often appear in different quarters. For example, MoneyTree shows a $3 million investment in InstaMed for the quarter, while my report includes the entire $14 million round the company announced in May.

Philly Tech News Philly VC Investments Database (Updated 8/15/2012)



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Software & Internet VC for Q4 2011 in Philly area not too strong

Tom Paine

Fourth Quarter 2011 VC investment in the Greater Philadelphia region totaled $132.7 million involving 30 deals, according to the MoneyTree report issued today by PricewaterhouseCoopers and the National Venture Capital Association based on Thomson Reuters data. For the full year 2011, VCs invested $492.2 million in 122 deals here. Although the total investment represented 8% growth over 2010, it is still well below levels that prevailed for several years prior to 2009, and did not grow as much as investment nationally.

Looking at the VC picture for Internet, software and digital technologies in the region reveals larger concerns. In the fourth quarter, the four largest investments totaling $103 million were for companies with food processing and water purification technologies and for Pharma startups. Much less than the remaining $30 million went to Internet or software ventures. In fact, the largest Internet investment listed, slightly more than $4 million, was for SolveMedia, a company that's actually New York-based now though it still has a Philly office. The next largest was probably PHD Virtual Technologies; though the amount of its recent round is not shown in the MoneyTree report, CEO Thomas Charlton told me in a December interview it was for $4 million. DuckDuckGo raise $3 million, Sidecar (formerly Snipi) raised $2.52 million and Quik Inc of Blue Bell raised $2 million. One company I hadn't heard about before is LogoGarden of Wilmington, a site that helps people create custom logos, which was reported to have raised $2 million.

The remaining investments reported were all for well under $1 million, many of which were included in Ben Franklin Technology Partners' recent funding announcement.

The MoneyTree report may not capture some important dynamics, particularly in the seed/angel investment area. Although MoneyTree reports a decline of 48% in seed funding by VCs nationwide in 2011, many angels and private investors are not part of the reporting system used to collect this data, and their paticipation may not be fully reflected.

Nationwide, in 2011 venture capitalists invested $28.4 billion in 3,673 deals, an increase of 22% in dollars and 4% in deals, according to MoneyTree. One factor that could impact future investment is that VC firms raised $10 billion less than they invested last year, a pace that obviously can't continue forever. Further cuts in Ben Franklin's 2012-2013 funding could also have a negative impact locally.

Dow Jones VentureSource released its own set of numbers today released its own set of numbers today, which are somewhat different.



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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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4th Quarter 2009 Philly VC Investments; Not too much for IT

The PricewaterhouseCoopers/National Venture Capital Association MoneyTree detailed report on 4th quarter 2009 VC investments is out (free registration required).

Total investments in Philadelphia Metro were $142 million. But after subtracting $61 million for Biotech, $43 million for Medical Devices, and $25 million for Industrial/Energy, that only leaves about $13 million for investments that might primarily be considered IT-related, spread over 13 deals.

Most of these I have reported on before, including MobileMD, MuseAmi, PackLate, Agilence, and Timsesight Systems. Other investments revealed in the report are Core Solutions of Wayne ($500,000), which supplies electronic health record (EHR) systems for behavioral healthcare, Alphion Corporation of Princeton Junction ($1 million),which develops and manufactures integrated photonic components, and NearVerse of Philadelphia ($1 million), which provides mobile IP network application services.



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PricewaterhouseCoopers MoneyTree 2009 Venture Results Out; Big Drop in Philly Area

Although there was slight improvement in the fourth quarter, venture capital investments in the Philadelphia area fell to $424 million in 2009 from $754 million in 2008, according to PricewaterhouseCoopers MoneyTree data released tioday. Fourth Quarter 2009 investments were $142 million versus $126 million in 2008.
There were 28 deals in the fourth quarter and a total of 89 for the year, compared to 149 reported last year.
Today's report provides only aggregate data; detailed deal-by-deal data is expected out on February 1.

See today's press release here.




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