Investors Pause to Take a Breath

//October 31, 2005//

Investors Pause to Take a Breath

//October 31, 2005//

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Cash flows primarily to life-sciences firms, largely bypassing telecomAfter two quarters of solid gains, venture capital funding sources appear to be pausing for breath. Twenty New Jersey-based companies pulled in $162.8 million in fresh funding in the third quarter, compared with 22 enterprises that snared $360.7 million in the second quarter, according to the latest MoneyTree survey by PricewaterhouseCoopers, Thomson Venture Economics and the National Venture Capital Association.

Life-sciences companies, which dominated volume activity last quarter, continued to attract investors but shared the limelight with information technology firms as telecommunications dropped off the map.

Third-quarter investors also rotated out of later-stage companies, placing more of their bets with early-stage enterprises. Six such firms attracted $79 million, or 48% of the state’s funding, while nine expansion-stage businesses captured more than $44 million, or 27% of the pot. Rounding off the activity, four late-stage companies culled $39 million, or 24%, while one start-up brought in $700,000, or 0.5%.

On an industry basis, eight life-sciences companies accounted for the lion’s share of the financing, pulling in $119 million, or 73% of the state total. Four software companies received $12.7 million, or 7.8%, while one IT services company and one networking and equipment firm each brought in $11.5 million, or 7.1% apiece. A consumer products and services company took in $7.4 million, or 4.5%, while one semiconductor firm received $500,000, or 0.3%.

Nationally, venture funding dipped to $5.3 billion, down 13.1% from the $6.1 billion recorded in the second quarter.

“There is no flood of capital to float all boats,” says Brendan Dougher, managing partner of the PricewaterhouseCoopers office in Florham Park. “Money follows opportunity and clearly, certain industry segments are more attractive than others right now.”


Investment: $5 million

225 Millburn Avenue,

Suite 104-B

Millburn 07041

Phone: (973) 379-5776

Fax: (973) 379-5876

URL: www.advancedbiohealing.com

This was the first round of financing for the early-stage biomedical company. Advanced BioHealing uses proprietary cell-culture and tissue-preservation technologies to develop wound-care products.


Investment: $6 million

Mack Centre IV

S. 61 Paramus Road

Paramus 07652

Phone: (650) 493-5600

Fax: (650) 858-1854

URL: www.shv.com/healthcare/akarx.html

The early-stage company is developing clinical-stage cancer and hematology products and just completed its first round of financing.


Investment: $1.5 million

196 Princeton Hightstown Road, Building 1A

Princeton Junction 08550

Phone: (732) 936-9001

URL: www.alphion.com

A later-stage telecommunications company that recently completed its sixth round of financing. It develops and manufactures optical network components for signal regeneration, wavelength management and monitoring.


Investment: $27.5 million

6 Cedar Brook Drive

Cranbury 08512

Phone: (609) 662-2000

Fax: (609) 662-2001

URL: www.amicustherapeutics.com

This later-stage biopharmaceutical firm recently finished its third round of financing. Amicus develops orally active, small-molecule drugs to treat a broad range of genetic diseases and plans to use the latest funds to build its drug pipeline. New investors include the Garden State Life Sciences Venture Fund.


Investment: $740,000

221 Nassau Street

Princeton 08542

Phone: (609) 924-6452

Fax: (609) 683-0174

URL: www.cardinalpartners.com/ portfolio.asp

This was the first round of financing for this startup/seed-stage biopharmaceutical company that develops protein biologics for regenerative medicine.


Investment: $11.5 million

68 East Main Street

Somerville 08876

Phone: (908) 203-5200

Fax: (908) 203-5207

URL: www.choicemedia.com

An online health care network that owns or represents a variety of medical and health-related Websites including drkoop.com, MDChoice.com and HeartInfo.org. The expansion-stage firm has completed three rounds of financing.


Investment: $6.8 million

401 Hackensack Avenue

Hackensack 07601

Phone: (201) 543-2430

Fax: (201) 543-2015

URL: www.acctec.net

Early-stage CircuLite, which develops implantable ventricular-assist devices for use in the treatment of failing hearts, has completed two rounds of financing. Investors have included GIZA Venture Capital and ABN AMRO.


Investment: $3 million

1200 Harbor Boulevard, 9th Floor

Weehawken 07086

Phone: (201) 271-1010

Fax: (201) 271-0070

URL: www.classlink2000.com

An expansion-stage company, ClassLink’s software facilitates communications between teachers’ and students’ computers in K-12 classrooms and at home. The firm recently closed on its first round of financing.


Investment: $7 million

777 New Durham Road

Edison 08817

Phone: (732) 331-1300

Fax: (732) 331-1301

URL: www.enterprisedb.com

Enterprise DB develops and supports open-source database software that lets users extract and manage information from an existing database. The early-stage firm recently closed its first round of financing.


Investment: $45.4 million

Two Tower Center

East Brunswick 08816

Phone: (732) 828-9950

Fax: (732) 828-9954

URL: www.apax.com/en/investments/ esprit-pharmaceuticals-inc.html

This early-stage specialty drug company has completed four rounds of financing.


Investment: $6.7 million

103 Eisenhower Parkway

Roseland 07068

Phone: (973) 618-9000

Fax: (973) 618-9254

URL: www.expand.com

A later-stage company, Expand Networks provides wide-area network compression and acceleration appliances. The company has finished five rounds of financing. Investors have included Tamir Fishman Ventures, America Online, Weiss Peck & Greer, RBC Capital Markets and Eurocom Holdings.


Investment: $7.1 million

47 Brunswick Avenue

Edison, New 08817

Phone: (732) 593-1200

Fax: (732) 512-0691

URL: www.homeclick.com

Home Decor Products is an online retailer of home improvement products that operates four Websites: HomeClick.com, AbsoluteHome.com, Barbecues.com and KnobsandThings.com. The expansion-stage company has concluded three rounds of financing. Investors have included Kinderhook Partners, Seymour Holtzman and other individual investors.


Investment: $500,000

550 Hills Drive

Bedminster 07921

Phone: (908) 234-0885

Fax: (908) 234-2552

URL: www.magnoliabroadband.com

Magnolia develops semiconductors and antenna technology for the wireless industry. The expansion-stage firm recently completed its eighth round of financing. Investors have included Intel Capital, Draper Fisher Jurvetson Gotham, ECentury Capital, SCP Private Equity Partners, Selway Partners, Silverstar Holdings and Uniquest.


Investment: $3.3 million

5000 Hadley Road

South Plainfield 07080

Phone: (908) 757-8817

Fax: (908) 769-4288

URL: www.multiplexinc.com

This later-stage company manufactures active photonic components and subsystems for optical networks. It recently closed its fourth round of financing.


Investment: $8.5 million

3000 Eastpark Boulevard

Cranbury 08512

Phone: (609) 452-3600

Fax: (609) 452-3672

URL: www.pharmacopeia.com

This early-stage company develops small-molecule therapeutics focused on multiple sclerosis. The firm has completed its first round of investment financing.


Investment: $2.4 million

67 Walnut Avenue

Clark 07066

Phone: (732) 396-9010

Fax: (732) 396-9011

URL: www.rightanswers.com

An expansion-stage company, RightAnswers provides IT help desks with self-service applications, and custom and packaged technical content. It has completed one round of financing.


(Formerly REJUVENON)

Investment: $19.1 million

1031 U.S. Highway 22, Suite 303

Bridgewater 08807

Phone: (908) 231-1435

Fax: (908) 231-1459

URL: www.sapphirethera.com

Sapphire is a biopharmaceutical company that develops and commercializes compounds for clinical or preclinical testing in oncologic and metabolic diseases. The expansion-phase company recently completed its third round of financing.


187 Route 36, Suite 101

West Long Branch 07764

Investment: Not reported

Phone: (732) 263-0800

URL: www.sleepinnovations.com

The expansion-stage company, which completed its first round of financing, fabricates and markets foam bedding, sleep products and accessories under three brands: Novaform, Personal Expressions and Comfort Plus. It also produces similar products under private-label programs for retailers like Target, Sears, Kohl’s, Costco and Sam’s Club.


Investment: $336,000

P.O. Box 219

1161 East Broad Street

Elizabeth 07207

Phone: (908) 351-0500

Fax: (908) 351-0722

URL: www.toppsmeat.com

Topps, an expansion-stage company, is a producer and supplier of hamburgers and other portion-controlled meat products. It has closed two rounds of financing.


Investment: $366,000

212 Carnegie Center

Suite 201

Princeton 08540

Phone: (609) 716-7200

Fax: (609) 716-8463

URL: www.valaran.com

This expansion-stage firm makes software to link computer applications and devices. It has completed nine rounds of financing. Investors include EnerTech Capital Partners, TL Ventures, Celtic House Venture Partners and Kinsman Capital.