Life sciences companies, including biotechnology firms, pharmaceuticals and health care companies, were the dominant players attracted by venture capitalists investing in Maryland in 2006.
But those industries were closely followed by telecommunications and software companies as favorites of funding firms looking for strong investments.
“We have a strong legacy sector in telecommunications and technology in this region,” said Julia Spicer, executive director of the Mid-Atlantic Venture Association. “That will continue to be opportunistically a great investment space, and we have lots of investors across the board who understand that space.”
Some 30 venture firms in the state made more than 300 investments in more than 100 companies during the year, a move that confirms a trend from the past few years showing growth in venture capital activity.
The MAVA, in its third-quarter survey results of members, said more venture capital firms plan to begin raising money earlier than expected in 2007.
“Results from this quarter?s survey validates the early market indicators often used to predict a healthy and vibrant investment climate such as increases in deals closed, deal flow and valuations,” Spier said.
Despite several high-profile biotechnology deals in 2006, software and telecommunications remained the dominant industries among venture capitalists looking to invest in the Baltimore-Washington region.
Funding for software companies was approaching the $200 million mark at the end of the third quarter with $192 million invested in 51 deals.
While numbers aren?t out yet for the fourth quarter, those figures put the category on track to outpace 2005 investments. During the third quarter of 2005, investments had reached only about $140 million.
Telecom also had a strong year. With more than $270 million invested in 17 deals in the first three quarters of 2006, the industry sector jockeyed with software and biotechnology for the top spot among investors.
But while software and telecom quietly remained on top, it was the biotech industry that made headlines in 2006 with several multimillion dollar deals.
Investments in local biotech companies surged ahead in the second quarter with $145 million in funding and 13 deals.
Biotechnology remains a growth area for the region, said Spicer, with few venture firms focused on the sector and more money needed to fund fewer companies.
“[Software] is more predictable in some ways,” said Bill Gust, managing general partner of Anthem Capital in a July interview. “It?s more predictable. You can sell the company or software to somebody else and recoup your investment. Whereas the life sciences ? you?re talking about tremendous amounts of money needed to carry a company into commercialization.”
TOP FIVE COMPANIES RECEIVING MONEY
» CURRENT Communications Group LLC, Germantown, $130 million
» CoGenesys Inc., Rockville, $55 million
» Gateway Grand Condominiums, Ocean City, $49.5 million
» MacroGenics Inc., Rockville, $45 million
» Supernus Pharmaceuticals, Inc., Rockville, $40.6 million
ACTIVE DEAL MAKERS
» New Enterprise Associates, Baltimore, 81 investment deals
» Novak Biddle Venture Partners LP, Bethesda, 35 investment deals
» JMI Equity, Baltimore, 20 investment deals
» Boulder Ventures Ltd., Owings Mills, 15 investment deals
» Grotech Capital Group, Timomium, 13 investment deals
