The state raked in $103 million in venture capital during 2005's second quarter, according to PricewaterhouseCoopers' MoneyTree report. This time around, only four Utah software and computer services companies - led by Oakley Networks, a Salt Lake City e-commerce security company with $12 million - received investments.
Not to worry, said Joe Strain, manager of PricewaterhouseCoopers' Salt Lake City office.
"When you look at it over the past few years, we have hovered in the $20 million to $60 million range per quarter in VC activity," he said Wednesday. "Obviously, this time we are at the bottom end of that. The [first] quarter we were at the top end [$60.5 million]."
Strain said especially big deals, such as the nearly $16 million Control 4 Corp. got last quarter, can skew the VC survey one way or another simply with their timing. "They often taken 18 to 20 months to close, so coming in later [than expected] can make a huge difference," he said.
Bottom Line, Strain says, is "if we're getting even $20 million a quarter, that's a pretty significant investment, and things are looking good."
Other companies reporting investments during the quarter ending June 30 were Vision Bankcard Inc. of Orem ($7 million), iArchives Inc. of Lindon ($1.99 million) and Salt Lake City's LinuxNetworx ($400,000).
PricewaterhouseCoopers reported that the most active venture capital firm during the quarter was C3 Capital LLC of New York, with $4 million, followed by Duff Ackerman & Goodrich LLC, and Fidelity Ventures and Kleiner Perkins Caufield & Bye at $2 million each. Century Capital Management Inc. and Canopy Group added $1 million apiece to account for the quarter's major investors.
Steven Stauffer, an audit partner at Grant Thornton, said he was neither surprised nor discouraged by the quarter's VC results.
"Over the past few quarters we've had some especially big deals that made the quarters look really good overall. There simply wasn't that 'really big deal' this quarter," he said. "But the VCs are still very active. This quarter is more like an aberration" than representative of the sector.
Not directly reflected in the MoneyTree report was the long-anticipated public offering by Omniture Inc. on June 28. The Orem-based Web analytics company raised $69.5 million when it debuted on the Nasdaq exchange under the "OMTR" ticker symbol.
If Utah follows national venture capital trends, its upcoming quarters might show improvement. Nationally, second-quarter investments grew to $6.3 billion in 856 deals - the highest level since 2002.
Mark Heesen, president of the National Venture Capital Association, said the performance bodes well for the confidence of investors, especially in technology and biotechnology sectors.
"It appears as if the venture capital industry is slowly ratcheting up investment levels for the first time in four years," he stated. "We are encouraged by the upswing in the number of seed and early stage deals [because] these companies represent the future of our industry."
