Wednesday, Aug. 22, 2007

Venture capitalists pump $114.5M into Maryland

Report: Investment in Germantown company leads telecom

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Venture capital investments in Maryland companies picked up in the second quarter to $114.5 million, an increase of $2.5 million over the first quarter, according to a new MoneyTree Report.

Biotechnology companies led the way, with $43.9 million in the quarter ended June 30.

Midyear data, however, may still indicate a downward trend from last year. In the first half of ’07, 40 Maryland companies landed a total of 44 deals, totaling $225.5 million. That’s less than half of the totals for all of 2006, when 96 companies made 109 deals worth $655 million.

Nationally, the 977 VC deals in the second quarter were the most since the third quarter of 2006, said the report, released by PricewaterhouseCoopers and the National Venture Capital Association, based on data from Thomson Financial.

‘‘Venture capitalists have found no shortage of promising companies in which to invest, as indicated by the sharp uptick in the number of deals during the second quarter,” Tracy Lefteroff, global managing partner at PricewaterhouseCoopers, said in a statement.

‘‘Innovation is alive and well, and VCs are making sure these companies are provided with the opportunity to become the Fortune 500 powerhouses of tomorrow,” Lefteroff said.

The second-quarter investment in software companies was $1.5 billion nationally, followed by biotech companies with $1.2 billion. Medical equipment companies were third with $1 billion and telecommunications fourth with $475 million.

Biotech, medical equipment and telecommunications led Maryland’s VC investments. Following biotech’s $43.9 million, medical equipment companies landed funding totaling $25.9 million. Industrial-energy companies were third with $15.5 million, with telecommunications at $13.6 million.

The state’s largest biotech deal — $11.0 million — was landed by BioSet Inc. of Rockville. The largest medical equipment investment was $17.0 million in Heartscape Technologies Inc. of Columbia. Reactive NanoTechnologies Inc. of Hunt Valley received $10.5 million, the biggest in the industrial-energy category. And Eka Systems Inc. of Germantown led the state’s telecommunications companies, with a $12.5 million investment.

In terms of total investment, Baltimore County led the state with four deals totaling $35.7 million, followed Montgomery County with seven deals totaling $27.7 million. Other leading counties were Howard, $24.9 million; Anne Arundel, $17.5 million; Prince George’s, $300,000; and Frederick, $100,000. Baltimore City received $8.9 million in three VC deals.

The national increase in the number of deals was led by those to seed and early-stage companies, which rose 31 percent from the first quarter.