9 Utah firms funded
Venture capital declines from a year ago, quarterly figures show
Nine Utah companies representing six industries received funding in this year's first quarter, according to statistics scheduled for release today by Thomson Financial, PricewaterhouseCoopers and the National Venture Capital Association.
Control 4 Corp., a Salt Lake-based home automation company, led the quarter at $15.8 million in funding from Foundation Capital, Thomas Weisel Partners, vSpring Capital and Fraser Health Care and Technology Ventures and Co.
Other deals included Supercomputer maker Linux NetworX, based in Bluffdale, which captured $10 million. SliceX Inc., a Salt Lake-based Internet protocol provider, also received $10 million.
"If you look historically, first quarter has been one of the worst quarters for VC funding other than last year," said Joe Strain, a manager at PricewaterhouseCoopers' Salt Lake office. "Last year's first quarter was a bit of a fluke. And it really was just one big deal that boosted it up."
While year-over first-quarter investments were down, investments more than doubled from the $26 million raised by Utah companies in the fourth quarter of 2005.
The average Utah deal, at $6.7 million, fell below the average U.S. deal size of $7.4 million. Strain blames the decrease on two early stage investments — $988,000 to Lingoteck Inc. and $1.4 million to Cymphonix Inc. — which lowered the first-quarter average.
Devin Thorpe, founder of Thorpe Capital, a Salt Lake-based investment bank that helps clients find venture capital, said a three-month sample size in Utah's economy is too small to understand underlying investment trends.
"There just aren't enough deals," Thorpe said. "One big deal can skew the data, and so the focus should be on longer term."
Thorpe said venture capital funding in the state is poised to take off with the launch of the state's $100 million "fund of funds," created by the Legislature to increase venture capital investment in the state.
"I expect that they will literally be putting money into venture funds in the next two to five months," Thorpe said. "That will bring about a dozen new venture funds into focus on Utah. By virtue of getting the money, we know we have their attention. It should increase venture capital funding, especially in the latter half of this year and next year."
Nationally, $5.6 billion spanning 761 deals was raised in the first quarter, up from $5 billion and 707 deals in the first quarter of 2005, the survey said. Utah investments in the first quarter made up 1.07 percent of total U.S. venture funds raised.
Software startups attracted the most U.S. venture capital in the first quarter, collecting $1.25 billion, according to the Associated Press. Venture capitalists also showed strong interest in biotechnology, which generated first-quarter investments of $808 million, an 18 percent increase from last year.
"There are glimmers of activity that remind me of the early days of the Internet bubble," Bob Williams, a general partner with Bay Partners in Cupertino, Calif., told AP. "I wouldn't call it irrational exuberance yet, but I would call it budding enthusiasm."
E-mail: danderton@desnews.com
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