RESEARCH TRIANGLE PARK, N.C. – In the beleaguered venture capital business, North Carolina is a shining beacon of hope – at least for one quarter.
Readers of Local Tech Wire were hardly surprised by the news Monday that venture capital deals increased sharply in North Carolina in the second quarter to more than $100 million. As the VC industry slumps nationally in both deal-making and fund raising, the Tar Heel state (well, at least the Triangle) bucked the trend by climbing to the seventh spot nationally among the 50 states, according to new data.
Although Cempra, a drug development firm, raised by far most of the money ($46 million), plenty of other deals helped the state rebound from one of its worst quarters in years.
And let’s not forget the five $200,000 grants handed out to promising startups by NCIDEA.
Plus, deals already announced in July – Nextreme Thermal, $21.3 million, Viamet Pharmaceuticals, $18 million, NanoCorp $2.5 million, Metabolon $1 million – indicate the investment action is continuing despite a slumbering economy.
Second-quarter fundraisers included a bevy of life science firms, such as CeNeRx ($9 million), LaamScience ($2.5 million), Metabolon ($5.3 million), HyperBranch ($1.67 million), Biolex ($1.1 million) and one none-RTP firm, Piedmont Pharmaceuticals ($5 million), according to PricewaterhouseCoopers, Thomson Reuters and the National Venture Capital Association.
(By the way, do you need any further proof of how strong RTP has become as a biotech hub?)
Semiconductor firm Semprius brought in $8 million as did BlueStripe Software.
The N.C. fundraising was overshadowed nationally by a sharp drop of more than 50 percent in VC investments to $3.7 billion spread across 612 deals. A year ago, $7.5 billion in deals were made although the quarterly deal flow was $500 million higher than 2009’s first three months.
How bad were the first six months? As the Associated Press noted:
“It’s the first time U.S. venture capitalists have invested less than $7 billion during the first half of a year since they anted up $6.5 billion from January through June in 1997.”
However, there were some initial public offerings in the quarter, snapping a long drought. If “exit” liquidity options pick up, more VCs may be ready to make investments.
"Halfway through 2009, we are seeing more positive signs than at the beginning of the year, including an overall increase in investment levels and an ongoing interest in seed and early stage funding,” NVCA president Mark Heesen said. “However, until we see notable upticks in venture fundraising and exit activity – which drive investment levels – we won’t expect considerable increases in the number of deals completed each quarter. We continue to engage in a healthy debate as to the right level of funding for our industry, especially given the clean tech category which, despite lower investment levels this quarter, continues to offer a great deal of promise for future opportunities. As we predicted last quarter, we continue to anticipate a gradual increase of investment through the remainder of the year."