Orange County's venture capital scene fell into a lull in the second quarter, even as funding nationwide soared to a 13-year high.
VC firms put $167 million to work in O.C. companies last quarter, almost flat with the year-earlier total. But just nine O.C. companies got funding in Q2, half the number of a year earlier, according to data firm CB Insights.
By contrast, venture capital investment hit $13.88 billion nationwide last quarter, almost double the total in the same period of 2013. The number of deals climbed 21%.
"O.C. suffered from a dearth of funding for its bread-and-butter industry, health care. Medical-device and drug firms, nurtured by UC Irvine connections, have long dominated the startup field in the county," notes Billy O'Grady, senior vice president and head of City National's Southern California Technology Group.
"The second-quarter slump may just be a temporary slowdown," O'Grady said. Although few O.C. health care firms were funded in the quarter, those on the list demonstrated the breadth of the area's medical technology.
At the top of the list: Alignment Healthcare. The Irvine company got a $125 million growth-equity commitment from investment firm General Atlantic.
Alignment is a startup company focused on helping health care providers boost efficiency as mandated by the Affordable Care Act.
The firm, formed by a group of veteran health care executives, says its know-how in technology, risk-management and other areas can improve both patient care and profitability for doctors, hospitals and payers.
No. 2 on the O.C. venture list last quarter was Sequent Medical, which got a $20 million Series D capital infusion from a VC group led by Delphi Ventures.
Sequent, launched in 2007 in Aliso Viejo, has developed new technology to treat brain aneurysms. Its devices are in use overseas, but not yet in the U.S.
The third-biggest O.C. deal was a $7.2 million Series D investment in Irvine-based Breathe Technologies. The company makes wearable devices that help patients breathe. Its CEO, Larry Mastrovich, joined in 2010 from another O.C. medical tech firm, Apria Healthcare, after Apria was bought by private equity firm Blackstone Group.
Outside the health care realm, O.C.'s PEAR Sports landed $5 million in Series A funding last quarter. The Irvine company creates apps that provide real-time coaching help and data-tracking for athletes in a wide range of sports, including running, biking and kayaking.
PEAR co-founder Kristian Rauhala previously launched H2O Audio, a designer of waterproof audio devices.
EQUITY FINANCINGS FOR ORANGE COUNTY VENTURE-BACKED COMPANIES*
|2 Q 2014||1 Q 2014||4 Q 2013||3 Q 2013||2 Q 2013|
|Number of Financing Deals||9||15||11||12||18|
|Amount Invested ($M)||$167.2||$226.5||$245.3||$128.3||$163.4|
TOP DEALS IN ORANGE COUNTY
|COMPANY NAME||DESCRIPTION||CITY||ROUND TYPE||RAISED ($MM)||INVESTORS|
|Alignment Healthcare||Continuous health care IT and service provider||Irvine||Growth Equity||$125||General Atlantic|
|Sequent Medical||Neurovascular medical devices||Aliso Viejo||Series D||$20||US Venture Partners, Delphi Ventures, Versant Ventures, Domain Associates|
|Breathe Technologies||Ventilator systems provider||Irvine||Series D||$7.2||Kleiner Perkins Caufield & Byers, Synergy Partners International|
|Insightra Medical||Medical device technology||Irvine||Series D||$6||Tekla Capital Management, Baird Venture Partners|
|PEAR Sports||Smart fitness and training system||Irvine||Series A||$5||Nordic Venture Partners, Innovate Partners, Vizio|
|vWise||Interactive media developer||Aliso Viejo||Series D||$1.5||Mosaik Partners|
|Consumer Brands||Internet domain development||Aliso Viejo||Seed VC - II||$1.4||Black Diamond Ventures|
|Cirro||Big data analysis services||Aliso Viejo||Series A||$1||GE 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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