Venture capitalists drawn to start-ups in unusual sectors
Venture capital funding in New England soared during the second quarter as investors backed sectors that do not typically draw much attention — home building and telecommunications.
Two of the largest deals for the period were some $48 million each to Affirmed Networks Inc., a mobile networking company in Acton, and Blu Homes Inc., a green home building firm in Waltham.
Overall venture funding for the period was $823 million, up 17 percent, according to the quarterly MoneyTree Report by PricewaterhouseCoopers and the National Venture Capital Association based on data from Thomson Reuters. The number of investments into New England companies for the period was 100, up from 89 deals in the previous quarter but down 5 percent from the same quarter last year, according to the MoneyTree report.
Though some outlier industries hit big during the period, the area's traditional moneymakers — software, biotech-nology, and medical devices — still drew significant money: Mevion Medical Systems Inc., a radiation therapy company in Littleton, had the biggest deal, raising $55 million.
The most prolific sector during the period was software, with 30 deals totaling $243 million, with many of those to early-stage companies. Growing investment in young companies showed a similar trend across the country.
LearnLaunchX, an accelerator program for education-focused start-ups that debuted in Boston in June, was an important source of funds to early-stage companies. It made eight seed investments of up to $18,000 into start-ups participating in the program.
"The increase in early-stage investing is an encouraging sign that entrepreneurs with innovative ideas can get the funding they need to succeed," said Mark McCaffrey, a global technology partner at PricewaterhouseCoopers, in a statement.
An uptick in acquisition activity and initial public offerings, especially in the biotechnology sector this year, could give venture capitalist more money to invest in the youngest companies.
Nationally, the number of companies that received funding for the first time during the quarter grew 24 percent to $1.1 billion, according to MoneyTree. The average deal was worth $3.7 million.
New England had the second-highest level of funding during the period, behind Silicon Valley's $2.6 billion.
Funding levels have been steady in recent years, but quarterly totals in the Boston area are far below the dot-com heyday when eager investors spent as much as $3 billion a quarter to back hundreds of companies they hoped would strike it rich.
While investors are showing greater interest in funding young Web and software start-ups, there is little evidence of a bubble, said Mark Heesen, president of the National Venture Capital Association.
Investments in technology "will continue to be the bedrock of the venture industry," he said, "but at sustainable levels."