Senior Vice President
East Coast Regional Director
City National Technology Group
(617) 380-5608
Bill.Sweeney@cnb.com

vc-report

Boston surged back into the No. 2 spot for venture capital financing nationwide in the fourth quarter, helping to lift the national funding total.

Businesses in the New England capital took in $1.55 billion in venture money in the quarter, up 127% from $682 million in the third quarter and up 59% from a year earlier, according to CB Insights.

With the jump in activity, Boston overtook New York City to rank second only to Silicon Valley in venture funding. Historically Boston has been No. 2, but New York has been rising in recent years and had topped its East Coast rival in the summer quarter.

Led by biotechnology companies, a total of 93 Boston-area firms got funded last quarter, up from 65 in the third quarter and the same number as a year earlier.

Nationwide, venture funding rose to $13.5 billion in the fourth quarter, a 38% jump from the third quarter and a 69% gain from the final quarter of 2013.

Six of the top 10 Boston-area venture deals last quarter were in the region’s mainstay of biotech.

“There is just a tremendous amount of activity in labs here,” said Bill Sweeney, East Coast regional director for City National’s Technology Group. “And biotech needs an enormous amount of capital.”

In the stock market, biotech shares have been among the best performers of the last 15 years as investors have embraced the growth opportunities. That, in turn, creates a bigger appetite among VC firms to fund startup companies that have promising technologies, Sweeney said.

At the top of the list of fourth-quarter Boston fundings was a $450 million Series E investment in Moderna, a Cambridge, Mass.-based firm that seeks to target diseases via messenger RNA — that is, by instructing cells to produce specific proteins or antibodies. The four-year-old company has been one of the industry’s biggest fundraisers, a sign of investors’ faith in its technology.

Also on the list of major deals was a $53.2 million Series B financing for Syros Pharmaceuticals. The Watertown, Mass. firm, founded in 2013, is working on ways to identify and manipulate “gene switches” that may be key to treating diseases.

Another Cambridge firm, Seres Health, wants to find ways to use some of the 100 trillion microbes that live naturally in or on the human body to help fight illness. The three-year-old company got $48 million in Series C funding last quarter.

EQUITY FINANCINGS FOR BOSTON VENTURE-BACKED COMPANIES*

  4 Q 2014 3 Q 2014 2 Q 2014 1 Q 2014 4 Q 2013
Number of Financing Deals 93 65 100 88 93
Amount Invested ($MM) $1,551.8 $681.7 $1,031.5 $898.9 $972.9

TOP 10 DEALS IN BOSTON

COMPANY NAME DESCRIPTION CITY ROUND TYPE RAISED ($MM) INVESTORS
Moderna Messenger RNA therapeutics Cambridge Series E $450.0 Invus Group, Wellington Management, AstraZeneca, Alexion Pharmaceuticals, RA Capital Management, Viking Global Investors
Thinking Phone Networks Assists enterprises in deploying cloud UC services Cambridge Series D $56.7 Bessemer Venture Partners, Technology Crossover Ventures
Syros Pharmaceuticals Therapeutics company focusing on gene control to revolutionize the treatment of cancer and other diseases Watertown Series B $53.2 Atlas Venture, ARCH Venture Partners, Flagship Ventures, Alexandria Real Estate Equities, Fidelity Biosciences, Aisling Capital, Redmile Group, Polaris Partners, WuXi Corporate Venture Fund
Kaminario Provider of enterprise-class all-flash storage Newton Series E $53.0 Sequoia Capital, Globespan Capital Partners, Pitango Venture Capital, Tenaya Capital, Lazarus Investment Partners, Mitsui & Co. Global Investment
Blueprint Medicines Developing highly selective kinase inhibitors for genomically defined cancers Cambridge Series C $50.0 Fidelity Biosciences, Tavistock Life Sciences, Redmile Group, Wellington Management, Third Rock Ventures, Biotechnology Value Fund, Perceptive Advisors, RA Capital Management, Nextech Invest, Casdin Capital, Sabby Capital, Partner Fund Management, Cowen Investments
Seres Health Developing novel products to treat disease conditions based on findings related to the human microbiome Cambridge Series C $48.0 Flagship Ventures
Credorax Online payment processing and acquiring bank services Southborough Growth Equity - II $40.0 Blumberg Capital, Columbus Nova Technology Partners
Chiasma Develops oral drug products based on its Transient Permeability Enhancer Newton Center Series E $33.5 MPM Capital, ARCH Venture Partners, 7 Health Ventures, F3 Ventures, Abingworth
Aileron Therapeutics Developing drugs called stapled peptides that have the ability to penetrate cells Cambridge Series E - II $33.0 Novartis Venture Funds, SR One, Lilly Ventures, Apple Tree Partners, AJU IB Investment, Roche Venture Fund, Excel Venture Management
Rapid7 Security analytics software and services Boston Series D $30.0 Bain Capital Ventures, Technology Crossover Ventures

 

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