Venture Capital Investment In Michigan Soars In Fourth Quarter

BLOOMFIELD HILLS ? The amount of venture capital invested in Michigan technology companies in the fourth quarter was nearly four times more than the same quarter of the previous year, and nearly six times more than was invested in the third quarter of 2004.

For all of 2004, $148.1 million was invested in Michigan companies, a more than 50 percent increase from the $92 million VC invested in 2003, according to the PricewaterhouseCoopers/Thomson Venture Economics/National Venture Capital Association Money Tree Survey.

So what does the increase in venture capital investing mean for Michigan?

?It?s a good sign that venture capitalists are feeling confident,? said Jackie Goforth, leader of the PricewaterhouseCoopers ? Detroit Technology Practice.

Here are the facts: The number of deals in which Michigan-based venture capital funds invested decreased from 10 deals in Q3 2004 to 2 deals in Q4 2004. During Q4 2003, 7 deals were reported. For all of 2004, 21 deals were reported, down from 2003?s total of 39 deals.

The only Michigan-based venture capital fund that was active in Michigan or around the nation during Q4 2004 was North Coast Technology Partner L.P. This fund had two deals during Q4 2004.

Nationally, venture capitalists reversed a three-year downward trend by investing $20.9 billion in 2,876 deals in 2004, according to the survey. The annual investment level had fallen every year beginning in 2001, culminating in a six-year low of $18.9 billion in 2003. The increase in 2004 was largely attributable to late stage investments jumping to $7.2 billion in 2004 compared to $4.9 billion in 2003.

After a dip to $4.6 billion in the third quarter of 2004, investing in the fourth quarter rebounded to $5.3 billion ? the approximate quarterly average of the last two years. The fourth quarter marked the 11th consecutive quarter of venture investing in the $4-6 billion range.

Five Michigan companies in the software, medical devices and equipment, biotechnology, and semiconductor industries were recipients of venture capital funding during the fourth quarter of 2004.

Michigan companies receiving funding during the fourth quarter of 2004 were the following:

Altair Engineering, Inc., TroyI; Software ? $30 million – Provides engineering software and computing technologies.

ArborText, Inc., Ann Arbor; Software – $6 million – Develops software for document management and enterprise publishing.

QUATRx Pharmaceuticals, Inc., Ann Arbor; Biotechnology- $15.35 million ? Develops new early-stage prescription pharmaceutical candidates.

Replication Medical, Bloomfield Township; Medical Devices and Equipment – $1 million – Develops a spinal disc nucleus replacement composed of hydrogel polymers.

Sensicore, Inc., Ann Arbor; Semiconductors – $12 million – Develops multi-sensor devices for water and wastewater applications.

For all of 2004, $148.1 million was invested in Michigan companies, a more than 50 percent increase from the $92 million VC invested in 2003, according to the PricewaterhouseCoopers/Thomson Venture Economics/National Venture Capital Association Money Tree Survey.

So what does the increase in venture capital investing mean for Michigan?

?It?s a good sign that venture capitalists are feeling confident,? said Jackie Goforth, leader of the PricewaterhouseCoopers ? Detroit Technology Practice.

Here are the facts: The number of deals in which Michigan-based venture capital funds invested decreased from 10 deals in Q3 2004 to 2 deals in Q4 2004. During Q4 2003, 7 deals were reported. For all of 2004, 21 deals were reported, down from 2003?s total of 39 deals.

The only Michigan-based venture capital fund that was active in Michigan or around the nation during Q4 2004 was North Coast Technology Partner L.P. This fund had two deals during Q4 2004.

Nationally, venture capitalists reversed a three-year downward trend by investing $20.9 billion in 2,876 deals in 2004, according to the survey. The annual investment level had fallen every year beginning in 2001, culminating in a six-year low of $18.9 billion in 2003. The increase in 2004 was largely attributable to late stage investments jumping to $7.2 billion in 2004 compared to $4.9 billion in 2003.

After a dip to $4.6 billion in the third quarter of 2004, investing in the fourth quarter rebounded to $5.3 billion ? the approximate quarterly average of the last two years. The fourth quarter marked the 11th consecutive quarter of venture investing in the $4-6 billion range.

Five Michigan companies in the software, medical devices and equipment, biotechnology, and semiconductor industries were recipients of venture capital funding during the fourth quarter of 2004.

Michigan companies receiving funding during the fourth quarter of 2004 were the following:

Altair Engineering, Inc., TroyI; Software ? $30 million – Provides engineering software and computing technologies.

ArborText, Inc., Ann Arbor; Software – $6 million – Develops software for document management and enterprise publishing.

QUATRx Pharmaceuticals, Inc., Ann Arbor; Biotechnology- $15.35 million ? Develops new early-stage prescription pharmaceutical candidates.

Replication Medical, Bloomfield Township; Medical Devices and Equipment – $1 million – Develops a spinal disc nucleus replacement composed of hydrogel polymers.

Sensicore, Inc., Ann Arbor; Semiconductors – $12 million – Develops multi-sensor devices for water and wastewater applications.