Posted on: Wednesday, July 28, 2004
Venture capital hits $16M in Islands
Advertiser Staff and News Services
Hawai'i companies raised $16.3 million in venture capital during the first six months of the this year, surpassing the total of $15.6 million raised for all of 2003, according to figures released yesterday.
Firetide, a beneficiary of Act 221 state technology investment tax credits, said the follow-on financing will be used to expand sales and marketing as well as for product development.
Firetide moved its headquarters from Honolulu to Los Gatos, Calif., in February in an effort to attract more investment, but the company maintains offices in Honolulu.
Nationwide, venture capital firms took in $5.6 billion in the second quarter of 2004, a two-year high that continues an upward trend in such investment. That amount, shared among 761 companies, represents a 17 percent increase from last year.
However, both the amount of investment and the number of deals are far below the highs of 1999 and 2000, when Internet companies received upward of $20 billion per quarter.
"We see 'refined optimism' in the market," said Tracy Lefteroff, global managing partner of the venture-capital practice at PricewaterhouseCoopers. "Investment levels are realistic, not exuberant."
Venture capitalists invested heavily in early-stage companies, with 229 companies receiving $1.17 billion in first-time outside investment, the highest number of start-ups in two years and the most dollars invested since the first quarter of 2001. Venture capitalists saw this as a positive sign.
Financing for expansion-stage companies — those that have established themselves with a product but now wish to expand their businesses — accounted for $2.8 billion, or 50 percent of all venture investment in the quarter, an increase of $200 million from a year ago.
Late-stage financing, however, was flat year over year. Late-stage companies, those which are well-established and considered well on their way to profitability or a public offering, accounted for $1.6 billion for the quarter.
The types of businesses financed shows a continuation of the trend toward healthcare companies. Life sciences companies accounted for $1.41 billion, or 25 percent of all venture capital for the quarter, and life sciences investing, which includes biotechnology and medical device companies, remained near historic highs, according to the survey.
Computer technology remained attractive for venture capitalists. Software makers saw $1.2 billion in investment for the quarter, spread among 212 companies. Semiconductor investment rose 17 percent to $437 million. Investment in networking rose slightly, while telecommunications investments fell from the previous quarter.
The bulk of this year's money — $13.6 million — was raised in the second quarter by Firetide Inc., a wireless computer networking company. The remaining $2.7 million was raised by Hawaii Biotech in the first quarter, according to a survey from PricewaterhouseCoopers, Thomson Venture Economics and the National Venture Capital Association.
