Utah firms' venture deals leapt 32% from '04 to '05

Venture capital investments to Utah companies rose to $249 million in 2005, a 32 percent increase from $188 million raised in 2004, according to the MoneyTree Survey.

In 2005, there were 27 venture deals in Utah, up from 24 deals in 2004. Utah's average deal size of $9.2 million represented a five-year high, surpassing the national average of $7.4 million.

In the fourth quarter, four Utah companies captured $26 million in venture funding, including Logan-based Facet Solutions Inc., a medical-device company, which received $16.5 million; and Carbylan Biosurgery, also a medical-device maker, at $7.8 million.

Fourth-quarter Utah investments represented the lowest amount of funding of any quarter in 2005 and showed a 47 percent drop compared to the fourth quarter of 2004, when Utah companies captured $49 million.

Brad Bertoch, chief executive officer of the Wayne Brown Institute, a Salt Lake-based nonprofit that helps businesses find venture funding, said the state's new $100 million venture capital "fund of funds" is attracting a great deal of interest.

"I think that is going to have a nice impact moving forward in 2007-08," Bertoch said. "They're just now going to start to examine where to place the money."

Nationally, venture capitalists invested $21.7 billion in 2,938 deals in 2005, up from $21.3 billion in 2,910 deals in 2004, according to the survey.

The life-sciences sector, which includes the biotechnology and medical-devices industries, accounted for $6 billion in 608 deals in 2005 compared to $5.8 billion in 589 deals in 2004. The sector made up 28 percent of all venture capital investments in 2005.

The Internet is again a growing attraction for first-time investors.

The report noted the most notable jump in first-time financings was among Internet-specific companies. A total of $840 million went to 161 companies, increases of 89 percent and 68 percent, respectively, compared to 2004's $443 million in 96 companies.

Mark Heesen, president of the National Venture Capital Association, said in a statement that consumers are in for an exciting ride.

"Many of the investments made today will change the way we play and live our lives," Heesen said. "Not only will we witness tremendous strides in areas such as mobile computing in terms of richer, faster, more ubiquitous content, but we will also see fundamental breakthroughs in how we treat chronic and life-threatening diseases."

According to a Bloomberg News story, an aging population is generating demand for devices used to treat cardiovascular disease and products such as artificial joints.

"The demographics long term are extremely promising," said Bob Higgins, managing general partner of Highland Capital, on a conference call organized by the NVCA. "All the major industrialized nations are entering their highest user years for health care, and medical devices are on the forefront of that."

The MoneyTree Survey is made in cooperation with PricewaterhouseCoopers, Venture Economics and the National Venture Capital Association.

The survey captures equity investments but excludes debt, bridge loans, recapitalizations and initial public offerings.

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