Tuesday, February 11, 2014

Investments in RI Companies Rebound in 4th Quarter, Top $81 Million in 2013

After a slow third quarter, venture capital investments rebounded in the last quarter of 2014, according to the MoneyTree Report by PriceWaterhouseCoopers and the National Venture Capital Association based on data from Thomson Reuters.

Venture capital investments in New England companies rose to $917 million invested in 106 companies for the 4th quarter, an 7% increase over the 3rd quarter in terms of dollars invested, but a 5% decrease in terms of number of deals.

Three of those 106 companies are in Rhode Island, capturing a total of $27,356,000 in the last quarter.  Over the entire year, venture investments in Rhode Island companies totaled over $81 million, a decrease from the $106 million invested in Rhode Island businesses in 2012.

The increase in investment levels in Rhode Island companies is encouraging, especially after the disastrous third quarter.  Similar evidence of the increased attention to Rhode Island companies was announced recently by the Founders League, to the effect that approximately $140 million was invested in Rhode Island start up companies in 2013. (This number includes investments that are not reported in the MoneyTree survey).

Although those investment levels in Rhode Island companies are improving, they are just starting to approach levels of a decade ago.  The high mark was in 2001, when over $119 million was invested in 11 Rhode Island companies.  In 2002, venture capital investments in Rhode Island companies totaled about $96 million.

Similar trends are seen throughout the United States.   Nationally, venture capitalists invested $8.4 billion in 1077 deals in the fourth quarter, and a total of $29.4 billion in 3955 deals for the entire year.  This represents an increase of 7% in dollars and 4% in deals over 2012 levels. For the year, investments into the software industry (which includes Internet companies) reached the highest levels since 2000 with $11.0 billion invested in 1523 deals.  Internet-specific companies captured $7.1 billion in 2013, marking the highest level of Internet investment since 2001.

Locally, the three companies to receive investments in the fourth quarter of 2013 are:

  • Greenbytes, Inc., of Providence, received a $3,500,000 follow on investment from existing investors Battery Ventures and Generation Investment Management.  Founded in 2007, Greenbytes develops desktop virtualization storage optimization software to maximize the performance and capacity of virtual desktops.
  • Shape Up the Nation, of Providence, received a $3,856,000 investment in November from Cue Ball Group and Excel Venture Management.  Founded in 2006, Shape Up is a leading provider of clinicaly-proven, social networking and incentives-based employee wellness programs that help people exercise more, eat healthier and improve their overall well-being.  Shape Up will use a significant portion of the investment to build upon its existing mobile capabilities and launch its mobile app and device integration infrastructure.  
  • Utilidata, Inc., of Providence, received a Series B financing of approximately $20,000,000 from existing investors Braemar Energy Ventures and American Electric Power, and from new investors  Formation 8 Partners and Saudi Aramco Energy Ventures.  Utilidata is a leading supplier of technology to help reduce energy waste from power lines between electric utilities' substations and their customers.
(Sources:  MoneyTree Report and company websites)

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