Slow Start for 2013 VC Investments, Despite Genband’s $343.5M Round

5/6/13Follow @MichaelXBD

Although a Texas-based company posted the nation’s biggest VC deal of 2013, Texas companies have not been immune to the year’s slow start in venture capital investment.

Companies based in Texas raised $533.65 million in the first three months of the year, according to the latest MoneyTree Report, which was released in April. PricewaterhouseCoopers and the National Venture Capital Association (NVCA) publish the report using data from Thomson Reuters.

The $343.5 million Genband received made up the lion’s share of the investment. The Frisco, TX-based telecommunications company develops VoIP infrastructure technology. One Equity Partners, Sevin Rosen Funds, and Venrock were investors in the round.

Genband, which was founded in 1999, was clearly an outlier. The company was ranked No. 1 last year in the Wall Street Journal’s ranking of the top 50 VC-backed private companies, and through September 2012 it had raised $500 million.

Removing Genband from the total, the other 30 companies reported $190.18 million in investment.

In the fourth quarter of 2012, Texas companies raised $200.5 million, and they raised $409.5 million in the first quarter of 2012. According to the MoneyTree Report, 31 deals were made during the first quarter, down from 36 deals in the prior quarter and 47 in the first quarter of 2012.

The 31 deals make for the lowest quarterly total since the 28 recorded in the first quarter of 2010.

Genband’s deal was the largest in the U.S. during the quarter, according to the report.

The next largest Texas deal was the $41.19 million round Empyrean Benefit Solutions raised. The Houston-based company is a human relations services and technologies company. Claritas Capital, FTV Capital, and two undisclosed firms invested in the round.

Two Austin-based software companies took the third and fourth spots. Q2ebanking, which develops software for financial institutions, raised $20 million from Adams Street Partners and Battery Ventures.

Spredfast raised $18 million from Austin Ventures, InterWest Partners, and Openview Venture Partners. Spredfast makes social media management utilities.

Across the U.S., venture capital activity slowed during the first three months of 2013, with venture capitalists investing $5.9 billion in 863 deals nationwide.

Compared with the previous quarter, VC funding was off nearly 12 percent and the deal count was down almost 15 percent. Venture firms invested $6.7 billion in 1,013 deals in the fourth quarter of 2012, according to the MoneyTree Report.

The amount of capital deployed during the first quarter also was down over 6 percent from the same quarter last year, when nearly $6.3 billion was invested in 868 deals.

 

Michael Davidson is the editor of Xconomy Boulder/Denver. He covers startups, venture capital, clean tech, energy, aerospace, telecoms, and whatever else happens above 5,280 feet. Contact him at mdavidson@xconomy.com. Follow @MichaelXBD

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