Lots of Lookers, Still Not Many Takers

The latest MoneyTree report shows a dip in first-quarter venture fundingMONEYTREE – More venture capitalists may be kicking the tires these days, but they’re not yet big spenders. In the first quarter this year, 14 New Jersey companies pulled in $105.6 million in venture capital, compared with 17 companies that attracted $120.5 million in the fourth quarter of 2005. In last year’s first quarter, 18 New Jersey companies received $135.6 million in venture funds.

Compiling the figures was the PricewaterhouseCoopers quarterly MoneyTree survey.

EPAM Systems, a later-stage company that provides software engineering outsourcing services, came away with $25 million, the largest single investment in the first quarter. Transave, an expansion-stage biotechnology company that develops inhalable formulations of drugs for lung disease, took the No. 2 spot with $17.8 million.

Six later-stage companies picked up a total of $65.3 million in the first quarter, or 62% of the overall investment. Three expansion-stage firms garnered $20.2 million, or some 19% of the total, while four early-stage companies received $19.8 million for about another 19%. Just one investment went to a startup, which got $300,000.

Brendan Dougher, managing partner of the Florham Park office of the PricewaterhouseCoopers accounting firm, notes that biotech companies were the leading recipients of first-quarter investments, with three companies taking in a total of $28.1 million. “Since New Jersey is home to the pharmaceutical industry, I would expect to see a continued trend of investments in biotech,” says Dougher.

On a nationwide basis, venture capitalists invested $5.6 billion in the first quarter, up 12% from the same period a year ago. “We are truly at our healthiest and most sound investment point since the mid-1990s,” says Mark Heesen, president of the National Venture Capital Association in Arlington, Va. “That said, we will need to see-improvements in the IPO markets and better evidence of early-stage investing momentum in future quarters if we expect to sustain this reasonable pace.”

E-mail to mdaks@njbiz.com

ARCHIVE SYSTEMS

Investment: $900,000

25 Commerce Road

Fairfield 07004

Ph: (800) 899-3975

URL: www.archivesystems.com

This was the second round of financing for the expansion-stage document management company.

EPAM SYSTEMS

Investment: $25 million

Princeton Pike Corporate Center

989 Lenox Dr., Suite 305

Lawrenceville 08648

Ph: (609) 844-0400

Fax: (609) 844-0415

url: www.epam.com

The software development and maintenance company closed on its first round of financing provided by private equity firm Siguler Guff & Company, which has offices in Boston and New York City.

HAPTOGUARD

Investment: $300,000

2050 Center Avenue, Suite 200

Fort Lee 07024

Ph: (201) 947-1270

URL: www.biospace.com

The developer of therapeutics for inflammatory diseases agreed last month to be acquired by Parsippany-based Alteon for $8.8 million in stock. Alteon is developing small molecule drugs to treat and prevent inflammatory aspects of diabetes and cardiovascular disease.

HYCRETE TECHNOLOGIES

Investment: $1 million

250 Newark Avenue, Suite 3

Jersey City 07302

Ph: (201) 386-8110

Fax: (201) 386-8115

URL: www.hycrete.com

The early-stage manufacturer of corrosion-resistant and waterproofing products for use with concrete has completed two rounds of financing. Investors include the NJTC Venture Fund.

MAGNOLIA BROADBAND

Investment: $14 million

550 Hills Drive

Bedminster 07921

Ph: (908) 234-0885

Fax: (908) 234-2552

URL: www.magnolia-broadband.com

This later-stage company develops semiconductors and antenna technology for the wireless industry and recently completed its seventh round of financing. New investors include Quantum Technology Partners and WS Investments. Existing ones include Intel Capital, Draper Fisher Jurvetson Gotham, ECentury Capital, SCP Private Equity Partners, Selway Partners, Silverstar Holdings, and Uniquest.

MFORMATION TECHNOLOGIES

Investment: $15.3 million

343 Thornall Street

Edison 08837

Ph: (732) 692-6200

Fax: (732) 549-7542

URL: www.mformation.com

This is the fifth round of financing for this later-stage company that provides software to manage wireless devices. Alex Brown Venture Partners, Battery Ventures, Carmel Ventures, Intel Capital and North Bridge Venture Partners participated in the funding.

NOBLE DEVICE TECHNOLOGIES

Investment: $8 million

211 Warren Street

Newark 07103

Ph: (781) 224-9740

The early-stage developer of visible and infrared image sensors raised $8 million in its first round of financing. Funding came from Matrix Partners and North Bridge Venture Partners. Noble plans to relocate some operations to the Boston area while maintainingfacilities in New Jersey.

ORTHOCON

Investment: $10 million

167 Stone Hill Road

Colts Neck 07722

Ph: (732) 683-9304

Fax (732) 683-9476

URL: www.orthocon.com

An early-stage pharmaceutical and medical device company, Orthocon develops implantable, biodegradable products to be used in orthopedic and other surgical and dental procedures. The firm has closed one round of financing led by BB Biotech Ventures, with participation by Canaan Partners and advisory firm Rockport Venture Partners.

QUINTUM TECHNOLOGIES

Investment: $3.7 million

71 James Way

Eatontown 07724

Ph: (877) 773-2547

Fax: (732) 544-9119

URL: www.quintum.com

This later-stage developer of voice over Internet protocol (VoIP) has completed three rounds of financing.

TACIT NETWORKS

Investment: $6 million

4081 Hadley Road Suite G

South Plainfield 07080

Phone: (908) 757-9950

Fax: (908) 845-0373

URL: www.tacitnetworks.com

This later-stage company provides wide-area file services to distributed computer networks. Brocade Communications Systems was among the investors in the third round of financing.

TERRACYCLE

Investment: $1.5 million

121 New York Avenue

Trenton 08638

Phone: (609) 393-4252

Fax: (609) 393-4259

URL: www.terracycle.org

This expansion-stage company produces plant food from liquified worm waste. New Vantage Group provided the financing.

TF INSTRUMENTS

Investment: $750,000

11 Deer Park Drive, Suite 105A

Monmouth Junction 08852

URL: www.tf-instruments.com

The early-stage company develops ultrasonic resonator technology used to analyze liquid samples for applications in drugs, food processing, cosmetics and medical diagnostics. The company was

established in 2003 as the successor to Resonic Instruments AG, which became insolvent that year.

Transave

Investment: $17.8 million

11 Deer Park Drive

Suite 117

Monmouth Junction 08852

Ph: (732) 438-9434

Fax: (732) 438-9435

URL: www.transaveinc.com

This biotechnology company uses proprietary, sustained-release lipid inhalation technology to develop treatments for lung diseases. The expansion-stage firm has completed five rounds of financing.

VPISYSTEMS

Investment: $1.3 million

943 Holmdel Road

Holmdel 07733

Ph: (732) 332-0233

Fax: (732) 332-0516

URL: www.vpisystems.com

The later-stage developer of software and hardware for communications networks has completed seven rounds of financing. Investors have included Core Capital Partners, Techno Venture Management, Cipio Partners and Siemens Venture Capital.