Senior Vice President
Southwest Market Manager
City National Technology Group
Orange County's venture capital investment scene reignited last quarter after cooling markedly over the previous year. Two promising young cybersecurity companies topped the VC funding list.
O.C. businesses received a total of $326 million in VC financing in the third quarter, up 147% from $132 million in the second quarter and more than double the $153 million of a year earlier, according to data firm CB Insights.
In a switch, the $326 million that O.C. firms took in last quarter exceeded the $286 million in VC funding for startups in Los Angeles County's hot Silicon Beach area, centered in Santa Monica, but not the $581 million invested in Los Angeles County companies as a whole.
The number of O.C. venture deals rose to 14 in the third quarter from 10 in the second quarter and 12 a year earlier.
The biggest O.C. deal was a $100-million Series C infusion for CrowdStrike, a four-year-old Irvine company that says it has redesigned cybersecurity architecture to foil increasingly sophisticated attacks by hackers. CrowdStrike's investor group includes Google Capital.
Another Irvine firm, Cylance, got $42 million in Series C financing last quarter. The company, launched in 2012, designs systems that use artificial intelligence to expose and halt cybersecurity threats.
CrowdStrike and Cylance share ancestry: Both were founded by former top execs at McAfee, the cybersecurity firm that Intel Corp. bought in 2011.
O.C.'s second-biggest VC deal last quarter was in the county's mainstay industry: health care. Kareo, an Irvine company that provides cloud-based systems to manage small medical practices, won $55.4 million in growth-equity financing. Kareo, launched in 2004, handles duties such as scheduling, billing and records-management for doctors.
Seven of the top 10 O.C. venture deals in the third quarter were in the health care field. They included a $38 million Series D investment in ReShape Medical of San Clemente. ReShape makes inflatable balloons that are implanted in patients' stomachs, without surgery, to help with weight loss. The U.S. Food and Drug Administration just approved ReShape's system in July for obese adults.
EQUITY FINANCINGS FOR ORANGE COUNTY VENTURE-BACKED COMPANIES*
|3 Q 2015||2 Q 2015||1 Q 2015||4 Q 2014||3 Q 2014|
|Number of Financing Deals||14||10||6||7||12|
|Amount Invested ($MM)||$326.44||$132.22||$139.65||$143.44||$152.93|
TOP DEALS IN ORANGE COUNTY
|COMPANY NAME||DESCRIPTION||CITY||ROUND TYPE||RAISED ($MM)||INVESTORS|
|CrowdStrike||Cybersecurity SaaS for endpoint protection||Irvine||Series C||$100||Accel Partners, Warburg Pincus, Rackspace, Google Capital|
|Kareo||Cloud-based medical office solutions platform||Irvine||Growth Equity||$55.4||Montreux Equity Partners, Western Technology Investment, OpenView Venture Partners, Stripes Group, Silver Lake Partners, Greenspring Associates|
|Cylance||Provider of cybersecurity products utilizing predictive intelligence||Irvine||Series C||$42||Dell Ventures, DFJ Growth Fund, Kohlberg Kravis Roberts & Co, Ten Eleven Ventures, Capital One Ventures|
|ReShape Medical||Medical device company developing a dual intragastric balloon for weight loss||San Clemente||Series D||$38||US Venture Partners, SV Life Sciences, Venture Investors, New Leaf Venture Partners, HealthCor Management, Endeavour Vision|
|Enevate||Advanced rechargeable energy storage technology||Irvine||Series B - II||$30||Mission Ventures, Tsing Capital, Presidio Ventures, Infinite Potential Technologies|
|Concerto Healthcare||Provides healthcare to Medicare, Medicaid and complex-needs patients||Irvine||Series E||$15.25||Versant Ventures, Arboretum Ventures, CHL Medical Partners|
|Cold Genesys||Clinical stage immuno-oncology company||Santa Ana||Series B||$10||WI Harper Group, Ally Bridge Group, Whitesun Healthcare Ventures|
|Harbor MedTech||Advanced wound therapy technology||Irvine||Series B||$10||Arsenal Capital Management|
|Endurance Biotech||Stealth biotechnology company||Orange||Series A||$8.84||Care Capital|
|Clearflow||Medical device company solving problems related to obstructed catheters||Anaheim||Series C||$5.5||California Technology Ventures, Flare Capital Partners, Aphelion Capital|
|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.|