9 Utah firms funded

Venture capital funding to Utah companies fell to $60 million in this year's first quarter from $90 million during the same quarter a year ago, according to the latest MoneyTree survey.

Nine Utah companies representing six industries received funding in this year's first quarter, according to statistics scheduled for release today by Thomson Financial, PricewaterhouseCoopers and the National Venture Capital Association.

Control 4 Corp., a Salt Lake-based home automation company, led the quarter at $15.8 million in funding from Foundation Capital, Thomas Weisel Partners, vSpring Capital and Fraser Health Care and Technology Ventures and Co.

Other deals included Supercomputer maker Linux NetworX, based in Bluffdale, which captured $10 million. SliceX Inc., a Salt Lake-based Internet protocol provider, also received $10 million.

"If you look historically, first quarter has been one of the worst quarters for VC funding other than last year," said Joe Strain, a manager at PricewaterhouseCoopers' Salt Lake office. "Last year's first quarter was a bit of a fluke. And it really was just one big deal that boosted it up."

While year-over first-quarter investments were down, investments more than doubled from the $26 million raised by Utah companies in the fourth quarter of 2005.

Strain said this year looks good, given the number of deals that closed in the first quarter.

The average Utah deal, at $6.7 million, fell below the average U.S. deal size of $7.4 million. Strain blames the decrease on two early stage investments — $988,000 to Lingoteck Inc. and $1.4 million to Cymphonix Inc. — which lowered the first-quarter average.

Devin Thorpe, founder of Thorpe Capital, a Salt Lake-based investment bank that helps clients find venture capital, said a three-month sample size in Utah's economy is too small to understand underlying investment trends.

"There just aren't enough deals," Thorpe said. "One big deal can skew the data, and so the focus should be on longer term."

Thorpe said venture capital funding in the state is poised to take off with the launch of the state's $100 million "fund of funds," created by the Legislature to increase venture capital investment in the state.

"I expect that they will literally be putting money into venture funds in the next two to five months," Thorpe said. "That will bring about a dozen new venture funds into focus on Utah. By virtue of getting the money, we know we have their attention. It should increase venture capital funding, especially in the latter half of this year and next year."