Massachusetts Startups Held Their Own in February—Upwards of $200 Million Invested in 26 Deals

3/15/10Follow @bbuderi

There was a lot of turmoil in the Bay State last month: tumultuous weather, seasonal lethargy, and school vacations, not to mention the ongoing discussion/celebration/lamentation surrounding newly elected senator Scott Brown, who arrived in Washington to create even more confusion around health care reform. But investors sure kept their focus, as the venture deals kept coming at a reasonably strong pace.

In total, investors put up $203 million across 26 equity deals in what’s perhaps the most dreary month of the year for Bay Staters. The deal figures (not the weather analysis) come thanks to data provided by our partner, private company intelligence platform CB Insights. The Feb funding tally was well down from the $355.2 million and 28 equity deals in January. But it falls flatly in the middle of the pack since we began tracking monthly deals last June. Four months have been higher and four have been lower. And the February totals aren’t too far below September ($228 million, 25 deals), which was the second-best month in terms of dollars invested since our tracking began. With all the VCs fleeing to Maui and similar locales for their spring breaks, for them to say aloha to that much money speaks pretty well for local entrepreneurs.

The largest deal of the month by a wide margin was the $35 million put into Eleven Biotherapeutics (the Series A deal included an unspecified amount of equity and options or warrants). The Cambridge, MA-based company, which emerged from stealth mode last month as it unveiled the deal, is out to engineer proteins tailored for treating autoimmune diseases and blood clotting disorders. It’s headed by interim CEO Mark Levin, a founding partner of Third Rock Ventures of Boston and the former CEO of Millennium Pharmaceuticals. As Luke noted in his story about the funding, Eleven Biotherapeutics also has the distinction of being inspired by the 1984 rock mockumentary “This is Spinal Tap.”

Second behind Eleven was Luminus Devices, a Billerica, MA, maker of bright, efficient LEDs that took a shining to a $19 million Series F deal (bringing the total raised by the eight-year-old company to some $159 million). Luminus was followed by Woburn, MA-based spinal implant developer Intrinsic Therapeutics, which raised $18 million in another undisclosed mix of equity, options, and warrants.

ChubbyFebChartsMAWith two of the top three deals coming in healthcare, it’s not surprising that the sector led the way among areas of investment in February, as it has done every month we have been tracking the numbers, with the exception of last month (the software sector ruled the roost in January, read on). All told, investors put $89.9 million into nine healthcare deals in February. Energy was a distant second, with three firms in that sector raising just under $40 million. Internet ($24.5million, five deals) was next in line. And the January leader, software—how far the mighty have fallen—came in fourth, with $21.6 million raised in three deals. It should be noted, however, that January’s great performance by the software sector was skewed by a staggering $120 million raised by IkaSystems, a developer of process automation and intelligence management software for the healthcare payer market.

Here are a few other highlights or interesting trends we spotted in the February data, along with the full list of equity financing deals for the month:

—I’m ready to proclaim with gusto that energy is back. The sector, white hot in 2008, seemed to enter a no-funding zone last year. But for the second month in a row, energy companies attracted upwards of $30 million in funding. The sector was led by Boston-based waste gasification company Ze-gen and energy storage company General Compression of Newton, MA, which took the fourth and fifth spots from the top, respectively, for the month.

—The Internet sector was second in deal numbers, with five. Leading the way was Currensee, a Boston-based social network for currency traders. It claimed $8 million for its Series B round that closed last month, although some of the money was raised last year.

—Early-stage deals continue to lead the way. The funding round couldn’t be identified for every deal, but of the 23 for which the round is known, 14 were either seed stage, Series A, or Series B (although I have to ask when Marathon Technologies, which reported a Series B-III round, will be ready to move up the alphabet to a Series C).

—Polaris Venture Partners was the most active investor of the month, taking part in three deals: 1366 Technologies, Veracode, and Allurent. It’s worth a shout out to our neighbors, 1366 and Allurent, both of which are a stone’s throw (in my ball-playing days, anyway) from Xconomy.

ChubbyFebruaryTableFinal




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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