Investment in Boston-area companies climbed 17.6% to $797.5 million in the second quarter, defying a national decline in venture capital investment.

This quarter's financings represented the most money raised by Boston-area companies in a year, up ever so slightly (0.5%) from the $793.9 million raised in the second quarter of 2012.

This quarter was notable both for the size of some of the deals and for the return of early-stage investing. Boston's bright performance bucks the national downturn this quarter, in which venture capital investment posted its worst quarter in almost three years.

A total of 74 Boston-area firms received venture capital funding in the second quarter, a 2.7% increase from the 72 in the first three months of the year, and a 12% decline from the 83 companies raising funds in the second quarter of 2012. Based on those numbers, Boston ranked third in venture capital deal flow in the country, behind the San Francisco Bay Area and New York.

Despite a pullback in the overall level of investing later this year, Boston's biopharmaceutical and software sectors should continue to attract strong interest, and a stronger market for public offerings should continue to support deal flow in the area.

Capital efficiency continues to be important. While investment in capital-intensive deals such as clean technology has waned, other green industries in Boston continue to evolve, as evidenced by the largest deal in the second quarter:

  • Blu Homes Inc., a Waltham, Mass., provider of energy-efficient, prefabricated homes, received $65 million in fourthround funding from Brightpath Capital Partners and the Skagen Group.

This was a standout, underlining one of the potential new directions in which Boston is headed.

Two other large deals from Boston's core sectors include:

  • Affirmed Networks Inc., a provider of solutions for the mobile data space, which received $51 million in capital funding from a group that included Bessemer Venture Partners and Charles River Ventures.
  • Extreme Reach Inc., a Needham, Mass.- based company offering video advertising and tracking across media platforms, which raised $50 million in fourth-round financing from Spectrum Equity Investors.

Nationwide, U.S.-based companies raised a total of $7.2 billion in the second quarter from 801 venture capital deals, a 0.5% dip in deals and a 2% decrease in capital investments in the second quarter.

The largest U.S. deal was for Fab Inc., a New York-based shopping site for design aficionados, which raised $150 million in fourth-round funding from a number of investors, including Andreessen Horowitz and Atomico

EQUITY FINANCINGS FOR BOSTON AREA VENTURE-BACKED COMPANIES*

  2 Q 2013 1 Q 2013 4 Q 2012 3 Q 2012 2 Q 2012
Number of Financing Deals 74 72 71 81 83
Amount Invested ($M) $797.52 $656.72 $624.21 $749.89 $793.86
 

TOP 10 DEALS IN BOSTON

COMPANY NAME DESCRIPTION CITY ROUND TYPE RAISED ($MM) INVESTORS
Blu Homes Inc. Green home builder Waltham Fourth Round $65.0 Brightpath Capital Partners, Skagen Group
Affirmed Networks Inc. Provider of solutions for the mobile data space Acton Fourth Round $51.0 Bessemer Venture Partners, Charles River Ventures, Deutsche Telekom
Extreme Reach Inc. Video advertising solutions Needham Fourth Round $50.0 Spectrum Equity Investors
Karyophram Therapeutics Inc. Cancer treatment developer Natick Third Round $48.2 Delphi Ventures, individual investors
Radius Health Inc. Developer of treatments for osteoporosis Cambridge First Round $43.0 BB Biotech Ventures, Brookside Capital LLC
Interactions Corp. Virtual call-center solutions Franklin Later $40.0 Cross Atlantic Capital Partners, North Hill Ventures, RED LLC
Tokai Pharmaceuticals Developer of treatments for prostate cancer Cambridge Third Round $35.5 Apple Tree Partners, individual investors, Novartis Venture Fund
Rapid Micro Biosystems Inc. Detection technologies for microbial contamination Bedford Third Round $32.6 Kleiner Perkins Caufield & Byers, Longitude Capital Management Co. LLC
Mevion Medical Systems Inc. Radiation therapy treatment for cancer Littleton Seventh Round $25.0 Caxton Associates, CHL Medical Partners, ProQuest Management LLC
BitSight Technologies Inc. Provider of big data analytics for risk management Cambridge Second Round $24.5 Commonwealth Capital Ventures, Flybridge Capital Partners
 

 

*Equity financings include cash investments by professional venture capital firms, corporations, other private equity firms, and individuals into companies that have received at 
least one round of venture funding.

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