Top 10 venture capital deals of Q3

“Clean tech” captures investors’ attention

Enterprise IT companies were conspicuously absent from the list of the 10 largest venture capital deals struck during the third quarter, as the growing market for alternative energy and other "clean tech" companies piqued investors' attention.

Of the nearly US$750 million that investors poured into the top 10 deals of the third quarter, only us$124 million went into start-ups building enterprise IT products. The remainder of the 10 largest deals broke down as follows: four investments in energy companies, two in medical device makers, one in a biotechnology company, and one in a healthcare company, according to MoneyTree Report from PricewaterhouseCoopers (PwC) and the National Venture Capital Association based on data provided by Thomson Financial.

Overall, venture capitalists invested US$7.1 billion in 887 deals during the third quarter, down slightly from the US$7.2 billion invested in 1,000 deals during the second quarter.

The MoneyTree Report recently began tracking a market segment called clean tech, which it defines as companies dealing with alternative energy, pollution and recycling, and power supplies and conservation. While this segment is still emerging, it's growing quickly; 62 clean tech companies received investments in the third quarter totaling US$844 million, up 40 percent from the same period last year.

"While clean tech companies don't make up a large percentage of the total amount of dollars that are going into venture-backed companies, it did account for about 7 percent of the dollars and about 12 percent of the deals, and we see the significant increase of interest in these companies in the last couple of year," says Tracy Lefteroff, global managing partner of PwC's venture capital and life sciences industries services.

Software during the third quarter maintained its recently regained title of category with the most deals, with US$1.11 billion going into187 start-ups, says the report.

"Enterprise software and services was still a contrarian investment category only a year ago; we see that changing quickly as there are more and more very interesting enterprise deals and interesting entrepreneurs coming to market and finding a warm reception from customers because of the low cost of their solutions and the ability to actually go and service those problems and those needs without having to rely on and burden IT departments even more," says Bryan Stolle, general partner, Mohr Davidow Ventures.

The life sciences category, which represents biotechnology and medical device companies combined, saw more dollars but fewer deals than software with US$1.9 billion in 175 deals during the third quarter.

The Internet-specific category, defined as those companies with a business model fundamentally dependent on the Internet regardless of industry, saw US$1.1 billion in 195 deals during the third quarter, making investments in the category top $1 billion for four of the last five quarters, the report says. The media and entertainment category saw US$509 million going into 96 deals, an increase in both deals and dollars from the second quarter.

Networking companies received US$289 million in 29 deals, down from US$371 million in 35 deals during the second quarter. Investors put US$585 million in 74 telecom companies during the third quarter, representing more dollars but fewer deals than the US$515 million invested in 84 companies during the third quarter.

In addition, the report says third quarter investments into companies getting financing for the first time was strong, continuing a trend set in the second quarter.

Specifics of the Top Ten Venture Capital Deals for the third quarter are:

  1. $110 million invested in Globus Medical, which makes medical devices for spinal surgery.

  2. $100 million in GreatPoint Energy, which converts coal and biomass into clean, natural gas.

  3. $83 million in Summit Energy Services, provider of energy management and procurement services.

  4. $77 million in HelioVault, developer of technology for depositing thin-film photovoltaic coatings.

  5. $75 million in Pelikan Technologies, which develops enabling technologies for diagnostic applications.

  6. $75 million in Ceres, a biotech company focusing on plant genomics.

  7. $72 million in Bill Me Later, provider of payment and marketing technology solutions.

  8. $52 million in Xtera Communications, which develops technologies for long-haul fiber optic communications systems.

  9. $50 million in Solaria, which develops photovoltaic module production solutions.

  10. $49 million in Bravo Health, primary healthcare services provider for the elderly.

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