A strong mix of technology and health care deals helped keep the Boston area in second place among venture capital destinations nationwide in the first quarter.
Companies in the New England capital took in $899 million in venture financing last quarter, up 49% from $602 million a year earlier, though down from $973 million in the fourth quarter.
A total of 88 Boston-area businesses were funded in the first quarter, up from 75 a year earlier and down slightly from 93 in the fourth quarter, according to data firm CB Insights.
Boston’s funding total ranked second only to the $4.87 billion taken in by perennial leader Silicon Valley in the first quarter. New York City ranked third, with $838 million.
Health care has historically been Boston's hot growth sector, but the top spot in venture funding last quarter was claimed by a tech company – Actifio, which has developed a lower-cost technology to simplify management of shared business data files.
The Waltham, Mass., company poses a major challenge to the market owned by traditional data-storage businesses.
That has attracted venture capital firms including North Bridge Venture Partners and Andreessen Horowitz, both of which were in the group that pumped $100 million into Actifio in the first quarter – an investment that valued the 4-year-old company at $1 billion.
Another Boston tech firm in the top 10 list of financings last quarter was Applause, which received $43 million in Series E funding. The Framingham, Mass., firm, formerly known as uTest, was launched in 2007 as a software testing service. Now it’s expanding to provide companies with more consumer feedback on how well their mobile apps work, for example, and how to improve them.
Although Boston tech companies have always been a draw for venture capitalists, the region's health care firms, particularly biotech, remain favored targets for venture money.
Five health care companies were in the top 10 list of venture fundings last quarter. They were led by Voyager Therapeutics of Cambridge, which got $45 million in startup financing from Third Rock Ventures. Voyager is a gene therapy firm that plans to develop treatments for fatal and debilitating diseases of the central nervous system, including Parkinson's disease.
Biotech stocks have posted stellar gains in the last few years, but suffered a sharp pullback in recent weeks. Though that could give some venture investors pause about funding biotech start-ups, for most funds "the investment horizon for biotech is quite long," said Bill Sweeney, East Coast regional director for City National's Technology Group.
What's more, a setback for biotech companies in public markets could mean better deals for venture investors in the private market.
Four other Cambridge-based health care companies were on the quarter's top 10 list, including NinePoint Medical, which received $34 million in Series B funding from a group that included Third Rock Ventures and specialty glass maker Corning.
NinePoint, founded in 2009, makes devices that allow doctors to see highly detailed images of living tissue for diagnostic purposes – such as where to take a biopsy.
With its wealth of colleges and universities, Boston was a natural incubator for another company on last quarter's list, Simple Tuition, which provides advice on paying for college expenses and managing student loans. The 7-year-old firm took in $26 million in Series E funding. It says it has helped more than 10 million families.
EQUITY FINANCINGS FOR BOSTON AREA VENTURE-BACKED COMPANIES*
|1 Q 2014||4 Q 2013||3 Q 2013||2 Q 2013||1 Q 2013|
|Number of Financing Deals||88||93||80||70||75|
|Amount Invested ($MM)||$898.9||$972.9||$608.8||$858.7||$601.8|
TOP 10 DEALS IN BOSTON
|COMPANY NAME||DESCRIPTION||CITY||ROUND TYPE||RAISED ($MM)||INVESTORS|
|Actifio||Data management and backup||Waltham||Series E||$100||North Bridge Venture Partners, Advanced Technology Ventures, Tiger Global Management, Technology Crossover Ventures, Andreessen Horowitz, Greylock Israel|
|Voyager Therapeutics||Gene therapy focusing on the central nervous system||Cambridge||Series A||$45||Third Rock Ventures|
|Applause||Software development testing||Framingham||Series E||$43||Longworth Venture Partners, Goldman Sachs, Egan-Managed Capital, MassVentures, QuestMark Partners, Mesco|
|Bit9||Advanced threat protection and endpoint security platform||Waltham||Series E||$38.3||Kleiner Perkins Caufield & Byers, Sequoia Capital, Highland Capital Partners, Atlas Venture, .406 Ventures, Blackstone Group|
|SAGE Therapeutics||Medicine development focusing on the central nervous system||Cambridge||Series C||$38||Arch Venture Partners, OrbiMed Advisors, Undisclosed Investors, Third Rock Ventures, Foresite Capital Management, EcoR1 Capital|
|NinePoint Medical||Develop medical devices that enable high-resolution in-vivo imaging||Cambridge||Series B||$34||Prospect Venture Partners, Third Rock Ventures, Corning|
|Simple Tuition||College financing platform and tools||Boston||Series E||$26||Flybridge Capital Partners, Atlas Venture, North Hill Ventures|
|Blueprint Medicines||Develop personalized, highly selective therapies to manage cancer||Cambridge||Series B||$25||Fidelity Biosciences, Third Rock Ventures, Biotechnology Value Fund, Nextech Invest, Casdin Capital|
|Moderna||Pioneer in developing messenger RNA Therapeutics, a new in vivo drug modality||Cambridge||Series B||$25||Flagship Ventures, Boston Medical Investors|
|Mendix||App platform to enable deploying enterprise applications||Boston||Series B||$25||Battery Ventures, Prime Ventures|
*Quarterly tallies consist of equity rounds completed in the quarter and in which a venture capital or corporate venture firm participated in the round.
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