Bay State Venture Funding Perked Up in November: There Were Even Some Energy Deals

12/11/09Follow @bbuderi

Entrepreneurs and anyone else interested in the Bay State’s high-tech economy had more than Thanksgiving to be thankful for last month. After a big dip in October, venture funding for Massachusetts startups seemed to get cooking again in November, as $186 million was infused into 22 deals. The result was a solid 10 percent rise in dollar terms and a 16 percent jump in deal numbers from the $169 million that went into 19 deals in October.

The relative gobbling up of deals in November doesn’t mean dealmakers are back on the gravy train, though. Both the July ($215 million, 25 deals) and September ($228 million, 25 deals) stats topped the November numbers. Still, the numbers provided a dose of good news, as both the dollars and deals totals were the third-highest since Xconomy began tracking monthly figures in June thanks to data that comes from our partner ChubbyBrain, a New York-based information services company developing tools for investors, startups, and hopeful entrepreneurs.

There seemed to be more lopsidedness in the deal structure last month than we normally see. Five of the deals totaled $21 million or more. But the sixth-biggest round was just $6.7 million, leaving a wide gap between the top tier and the next level. And for once, it wasn’t a life sciences company that led the way: the biggest deal was a $31.3 million growth equity round for Cambridgesoft, which as you might guess is a software company based in Cambridge, MA. One caveat: it makes software for life sciences companies.

After that came the healthcare/biotech companies, starting with a $30.2 million B round for Pulmatrix, a Lexington firm out to block infectious bugs from being absorbed into the lungs. Woburn-based BioVex took in $30 million in a Series F round to help its efforts to get a cancer-killing virus approved by the FDA (the company raised $40 million in March). Forma Therapeutics grabbed $25 million in a Series B round as it seeks to develop an engine for discovering new drugs more efficiently. The last of the big five was On-Q-ity. The Waltham-based developer of cancer tests—formed through the combination of CELLective Diagnostics and The DNA Repair Company—raised an impressive $21 million for a Series A round.

And I have to ask: Is energy investing coming back? The sector managed just two deals tallying $3 million. But that was better than the big goose egg in October. And, in fact, it matched the deal total of the previous five months combined. So maybe energy investors are cautiously testing the waters again. Too soon to tell, of course.

Keep reading for other highlights and a table of all November venture deals in Massachusetts.

ChubbyChartsNov09BOS

—14 of the 22 deals were early-stage, meaning seed, A, or B rounds. (This is a bit of an estimate as the round was unspecified for three deals, but I am pretty sure I got it right). This continues the strong tide of investments in early-stage companies we have seen for the past six months.

—Healthcare deals dominated in both numbers and dollar value, with $124.5 million put into nine deals. The next biggest sector in dollar terms was software, where $33.3 million was invested in two deals, but $31.3 million of that was CambridgeSoft. Internet and mobile tied for second in terms of deal numbers, with a trio of deals in each sector.

—Internet startups, which typically rival healthcare in terms of deal numbers, saw the biggest decline of any sector. After tallying nine deals in each of the previous two months, it only claimed two deals in November. Meanwhile, the dollars invested in the sector over the past three months have gone from $62.2 million in September to $41.6 million in October and just $11.25 million last month.

ChubbyTableNov09BOS

Bob is Xconomy's founder and editor in chief. You can e-mail him at bbuderi@xconomy.com, call him at 617.500.5926. Follow @bbuderi

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