Venture funding up 77%

Utah companies captured $53 million in venture capital money in this year's third quarter, a 77 percent increase from $30 million in the third quarter of 2005, according to the MoneyTree survey.

The survey reported that eight Utah companies received funding, up from five in the same quarter last year.

Linux NetworX Inc., a supercomputer company based in Bluffdale, led third-quarter deals at $27 million. Investors included Lehman Brothers Inc., Oak Investment Partners, Tudor Ventures and Wasatch Venture Fund.

In a September news release, Linux NetworX stated that it had received $37 million in funding, but Joe Strain, a manager at PricewaterhouseCoopers' Salt Lake office, said the MoneyTree survey only counts actual dollars funded.

"I know they got a bigger commitment than this $27 million," Strain said. "But if some of that is going to come in funding next quarter, we only count it in the quarter in which the money is received by them."

Draper-based Venafi, which provides encryption services for the financial industry, took in $6 million, funded by Highway 12 Ventures and Foundation Capital.

S5 Wireless Inc., a Sandy-based company that specializes in wireless tracking devices, received $4.5 million.

Strain said Utah venture capital deals continued to fall within the $20 million to $60 million range.

"While the bulk of the dollars still went to software and Internet, this is the first time I've ever seen us get VC money coming into the energy industry," said Strain, who was referring to a $3.7 million startup deal to Midway-based H2 Oil Recovery Services, which recycles crude oil from truck tank bottoms.

Utah ranked 18th among all states for the most venture funding during the third quarter. California was first at $2.8 billion.

Nationally, venture capitalists invested $6.2 billion during the third quarter, up from $5.6 billion during the same period a year ago.

It was the third consecutive quarter that U.S. venture dollars topped $6 billion, according to the report. In 2005, there were three quarters that VC funding fell below the $6 billion mark.

"We are pleased to see deal and dollar levels remain relatively stable, as this is indicative of the discipline being applied to investment decisions," Mark Heeson, president of the National Venture Capital Association, told the Associated Press.

Heeson, who was in Salt Lake City in July, praised the state for its VC network and said Utah was light-years ahead of states such as Florida and Tennessee but could improve in commercializing more ideas from its universities.

"We've got a good mix of start-up, seed, expansion and late-growth investments," Strain said. "It's a good sign for all of the businesses here in Utah that it's not just software and Internet that's dominating the VC market."

The MoneyTree survey is produced by Thomson Financial, PricewaterhouseCoopers and the National Venture Capital Association.

---

E-mail: danderton@desnews.com

Comments