Massachusetts Startups Pull in $186M in May; Life Sciences Companies Take the Top Five Deals

6/24/10Follow @xconomy

Last month was not at all about equality, at least when it came to venture investing. Overall, monthly venture investing totals have remained pretty stable for most of the spring in Massachusetts, hovering around the $200 million neighborhood, based on data provided by private company intelligence platform CB Insights. (That’s only counting deals worth $1 million and up; we’ll write about the sub-$1 million startup financings in a separate story.) The real news each month has been whether the investments have been distributed on a relatively egalitarian basis across sectors, or whether one particular industry has charged ahead to take the majority of venture dollars.

In May, the latter was definitely the case. Companies in the healthcare sector pulled in all but about $50 million of the $186 million in venture dollars that Massachusetts startups raked in through 19 equity deals. (There was one non-equity deal that’s not included in this total: $4.9 million in convertible notes for Woburn, MA-based OzVision Global.)

Those life sciences companies pulled in nearly nine times as much cash as the runner-up sector, Internet. And the top deal in May took up nearly one-quarter of all venture dollars raised for the month. That would be $45 million in Series C money for Tetraphase Pharmaceuticals, a Watertown, MA drugmaker that’s developing tetracycline-based antibiotics to target bacteria that have become resistant to existing treatments. The next four biggest transactions all went to life sciences companies, who were putting the cash toward biotech developments such as drugs for cancer and heart failure, or diagnostic devices.

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We reported on most of the May venture transactions when news of them first broke, but one that slipped under our radar originally was $7 million for Blu Homes, a Waltham, MA-based green building company. The company’s website says it uses computer modeling, and ships its pre-fab homes as folded steel and wood pieces. Its finished homes are constructed with top-notch green elements, such as recycled or recyclable materials, low-flow fixtures, and designs for optimizing natural heating and cooling.

That sounds a bit to me like MIT spinout Difra (also a presenter at the Xpo portion of our XSITE event last week). Difra uses 3-D modeling software to design homes and imports the designs to a laser cutting machine. Difra’s hook is that its process doesn’t require nails to keep the pieces together, and that its cutting process produces less waste than traditional methods of producing wooden house components. Blu Homes’ aim seems a bit different, but it definitely seems like both startups are occupying a niche environmental space; green home building that puts more power in the customer’s hands.

The mobile sector had raised money at a pretty sluggish pace for most of this year, usually with one or two relatively small deals a month. This changed a bit in May, when we saw a mobile deal hit double digits: $12 million in Series B money for Cambridge-based Sand 9. The startup is developing a new kind of resonator—the component that ensures products such as mobile phones and GPS units operate on the right frequency—so as to make wireless devices smaller, more integrated, and more functional. Historically the part has been made from quartz crystals, but Sand 9 is developing the device with ultra-tiny electronics.

Read below for the full list of $1 million-plus equity deals in May.

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