Venture Investment Dollars in RI Companies Soar in 2012

Venture capital investments in New England rose to $790 million invested in 114 companies in the fourth quarter of 2011, according to the MoneyTree Report by PriceWaterhouseCoopers and the National Venture Capital Association based on data from Thomson Reuters.

Four of those companies are in Rhode Island, netting a total of $35,599,900.  Over the entire year, venture investments in Rhode Island companies totaled over $106 million, a huge increase over the $43.3 million invested in RI companies in 2011.

While investment levels in Rhode Island companies are improving, they are just starting to reach levels of a decade ago. The high mark was in 2000, when over $100 million was invested in 11 Rhode Island companies. In 2001, venture capital investments in Rhode Island companies totalled $46.9 million for the entire year.

At the same time, investment levels across the U.S.are on the decline.  Nationally, venture capitalists invested $6.4 billion in 968 deals in the fourth quarter, and a total of $26.5 billion in 3698 deals for the entire year.  This represents a decrease of 10% in dollars and a 6% decrease in deals over 2011.  The Software, Biotechnology and Medical Device sectors received the most investment dollars for the year.  Internet companies scored their second highest level of investment since 2001, with $6.7 billion being invested in 976 deals.

Locally, the four companies to receive investments in the fourth quarter of 2012 are: 

•    Illuminoss Medical, Inc. of East Providence, a company that is developing minimally invasive solutions for the stabilization and treatment of bone fractures, received an expansion investment from Foundation Medical Partners.

•    The NanoSteel Company, of Providence, received $10,000,000 in investments from EnerTech Capital and Fairhaven Capital Partners.  The NanoSteel Company develops nano-structured steel alloys designed to deliver superior performance.

•    PreCision Dermatology Inc., of Cumberland, received $25,599,900 in expansion investments from Essex Woodlands Health Ventures, Frazier Healthcare, Longitude Capital Associates L.P., and NovaQuest Capital Management LLC.  PreCision Dermatology is developing innovative therapies to physicians and patients that demonstrably improve the skin.

•    TranslateAbroad Inc., of Providence, a company that provides a mobile application that allows users to point their phone camera at any Chinese text (like a food menu) and receive real-time translations, received an early stage investment from 500 Startups L.P.

Let's hope 2013 continues the upward trend of more investment dollars to Rhode Island!

FTC Provides Privacy Guidance for Mobile App Developers

With about 100 new mobile apps being released every day, how do you keep track of how your personal information is being used?  Mobile apps have been notoriously slow in adopting privacy policies and user-friendly privacy settings.  After some recent pronouncements by the California Attorney General, the Federal Trade Commission issued a new Report on Mobile Privacy Disclosures and some best practice guidelines for mobile app developers last week..

While a great deal of the report is directed at platform developers (such as Apple, Google, Microsoft and Blackberry), there are some recommendations for app developers as well.  These include:

• Having a privacy policy and making sure the policy is available through the platform's app store
• Providing just-in-time disclosures and obtaining affirmative express consent when collecting sensitive data outside the platform's API (such as financial, health or children's data) or sharing sensitive data with third parties
• While app level disclosures do not need to repeat the platform level disclosures on data the app collects, if the app developer decides to share that data then the just-in-time disclosures and consents should kick in
• App developers need to understand the third party apps they integrate (particularly those that facilitate advertising and analytics) in order to provide truthful disclosures
• App developers should consider participating in self regulatory programs, trade associations, and industry organizations, which can provide industry wide guidance on how to make uniform, short-form privacy disclosures

The FTC also issued some tips to mobile app developers.  These are more in the nature of suggestions and best practices, such as understanding the platform and libraries you are using and how they collect data, and considering encryption for sensitive data. 

The thrust of the FTC's concerns is that privacy be incorporated by design, not by afterthought.  The FTC has demonstrated that it is serious about these issues, and has initiated enforcement actions against companies whose apps do not comply.  For example, the FTC recently settled with the social media company Path.  Path was collecting birth dates as part of the registration process, but its original app did not prevent children under 13 from registering.  Path caught the error on its own and revised the app to kick out children under 13 who tried to register.  But the FTC still enforced an $800,000 penalty for Path's violation of COPPA with its initial design, and is requiring Path to obtain independent privacy assessments every other year for the next 20 years.

The FTC publications, following the California Attorney General's pronouncements last month, make it clear the the state and federal regulators are watching the mobile industry closely.  All participants --- app developers, app platforms, and app advertisers --- should carefully review their privacy and data collection policies and those of the apps from which they collect information to make sure that the privacy practices are following the current guidelines and that the data collection practices are consistent with the privacy policies.