Senior Vice President
East Coast Regional Managing Director
City National Technology Group
Boston was a standout for venture capital financing last quarter, posting a robust year-over-year increase in dollars invested and keeping the region in second place nationally for venture activity, after only Silicon Valley.
In a switch, the New England capital’s strength owed largely to technology companies rather than the traditional leadership of health care businesses.
A total of $1.37 billion was invested by VC firms in Boston-region companies in the first quarter, up 45 percent from a year earlier and off 12 percent from the 2014 high-water mark of $1.55 billion in the fourth quarter, according to data firm CB Insights.
By contrast, venture investments nationwide last quarter totaled $11.3 billion, up 11 percent from a year earlier and down 18 percent from the fourth quarter. Silicon Valley companies took in $5.05 billion last quarter, flat with a year earlier.
Significantly, 93 Boston-area firms received financing in the first quarter, the same number as a year earlier and off slightly from 94 in the fourth quarter. Nationwide the number of deals was down 12 percent from a year earlier, paced by declines in key markets including Silicon Valley, New York City and Los Angeles.
In the fourth quarter, Boston’s list of biggest venture deals were dominated by biotech companies, reflecting its perennial leadership in that sector. But in the first quarter, six of the 10 largest deals were financings of tech companies — mainly those serving business, or “enterprise” users.
“Boston traditionally has been more about enterprise software than consumer software,” said Bill Sweeney, East Coast regional director for City National’s Technology Group. “That’s certainly where the strength was last quarter.”
The single largest Boston deal in the first quarter was a $175 million Series D investment in SimpliVity, a five-year-old Westborough, Mass., firm focused on simplifying information technology for companies. Its OmniCube system, for example, is an all-in-one box that combines servers, data storage and networking functions.
Onshape, a Cambridge, Mass., firm founded in 2012, got a $64 million Series C venture infusion. It has developed what website TechCrunch calls a “technological marvel,” or, online software that allows engineers worldwide to easily collaborate on product design in real time, via the cloud.
Meanwhile, in the biotech sector one of the region’s biggest deals last quarter was a Series E funding of $36.4 million for Chiasma. The Newton Center, Mass., firm is focused on designing pills to take the place of injections to treat serious diseases.
EQUITY FINANCINGS FOR BOSTON VENTURE-BACKED COMPANIES*
|1 Q 2015||4 Q 2014||3 Q 2014||2 Q 2014||1 Q 2013|
|Number of Financing Deals||93||94||71||102||93|
|Amount Invested ($MM)||$1,369.4||$1,557.0||$681.1||$1,199.4||$947.6|
TOP 10 DEALS IN BOSTON
|COMPANY NAME||DESCRIPTION||CITY||ROUND TYPE||RAISED ($MM)||INVESTORS|
|SimpliVity||Provider of IT infrastructure for enterprises||Westborough||Series D||$175||Kleiner Perkins Caufield & Byers, Accel Partners, Meritech Capital Partners, CRV, DFJ Growth Fund, Waypoint Capital|
|Altiostar Networks||Mobile broadband solutions provider||Tewksbury||Unattributed VC - II||$70||Cisco Investments|
|Onshape||Cloud 3D CAD system for collaboration||Cambridge||Series C||$64||New Enterprise Associates, North Bridge Venture Partners, Commonwealth Capital Ventures|
|Collegium Pharmaceutical||Pharmaceutical company focused on chronic pain treatment||Canton||Series C||$50||Longitude Capital, Frazier Healthcare, Boston Millennia Partners, Skyline Ventures, Aperture Venture Partners, TPG Biotech, Adage Capital Management, RA Capital Management, Rock Springs Capital, EcoR1 Capital, Eventide Asset Management|
|VMTurbo||Software-defined control platform for cloud and virtualized environments||Boston||Series D||$50||Highland Capital Partners, Globespan Capital Partners, Bain Capital Ventures, Iconiq Capital|
|Semma Therapeutics||Develops therapies for Type 1 diabetes patients||Cambridge||Series A||$44||MPM Capital, ARCH Venture Partners, Medtronic, Fidelity Biosciences|
|Nimbus Therapeutics||Uses computational chemistry to design breakthroughs for the treatment of metabolic diseases and cancer, among others||Cambridge||Series B||$43||Atlas Venture, SR One, Pfizer Venture Investments, Lilly Ventures, Bill Gates, Lightstone Ventures|
|Chiasma||Develops oral medications for rare diseases that were previously available by injection only||Newton Center||Series E||$36.4||MPM Capital, ARCH Venture Partners, 7 Health Ventures, F2 Capital, Abingworth, Sofinnova Ventures, Rock Springs Capital|
|Char Software||Mobile application developer recently focused on enterprise automation systems||Boston||Series D||$35||Foundation Capital, New York Angels, Polaris Partners|
|Localytics||Enterprise mobile app analytics and app marketing provider||Boston||Series D||$35||Foundation Capital, Polaris Partners, Sapphire Ventures|
The content of Venture Capital Report is compiled from data and sources believed to be reliable, but is not guaranteed as to accuracy or completeness. Opinions expressed are those of the authors or the interviewees and are not necessarily the opinions of City National Bank, member FDIC. This publication is intended to be a source of general information regarding subject matters of interest to our clients. The effectiveness of the advice or suggestions presented, if any, will depend on the reader’s situation and are for the reader to determine. If investments are discussed, the discussion should not be considered or relied upon as specific investment advice directed to the reader’s specific investment objectives, nor should any discussion of specific securities be taken as a solicitation or recommendation for any reader to buy or sell such securities. City National Bank (and its clients or associated persons) may at times have positions in securities and investments discussed from time to time in this publication and may make additional purchases or sales inconsistent with the discussion. City National Bank, as a matter of policy, does not give tax, accounting, regulatory or legal advice. Rules and regulations in the areas of law, tax and accounting are subject to change and open to varying interpretations. The reader is encouraged to consult his or her own tax, accounting or legal adviser.