Venture Capital Report: 1996

There's good news for entrepreneurs - and investors - doing business in North Carolina's Research Triangle region. Respondents to CED's annual investment survey reported $118,513,163 in venture capital investments in 1996. This represents a 65% increase over the 1995 total and is the highest amount reported to date. The number of companies reporting investments increased as well, from 21 to 45 -- a rise of 119%.

Begun in 1986, the CED Annual Research Triangle Venture Capital Investment Survey is an indicator of availability of capital and entrepreneurial activity. The CED survey focuses on equity venture investments and excludes LBO, MBO or acquisition transactions.

Research Triangle Venture Interesting Facts:

  • A total of $118,513,163 was invested in 46 Triangle companies, a 65% increase in money invested and a 119% increase in the number of companies receiving investments over 1995.

  • Life Science companies, which include biotechnology, pharmaceutical and biomedical firms, received a total of $47,645,000 - 40% of the total amount invested.

  • Thirty-one percent of the 1996 dollars invested and 50% of the number of deals were done by early stage companies. In 1995, 76% of the dollars and 86% of the deals were early stage.

  • The average financing was $2,576,373. The median deal was $1,080,000.

  • Sixty-five percent of the investment funding came from outside of North Carolina - a total of $76,977,425, while North Carolina based funds provided the remaining $41,560,738.



Size of Investment
The size of investments reported ranged from $20,000 to $18,500,000. This is in contrast with the 1995 range of $200,000 to $12,000,000. The average investment in 1996 was $2,576,373. The median investment in 1996 was $1,080,000.

In-State vs. Out of State Investments
Sixty-five percent of the deals were done by North Carolina-based venture funds for a total of $76,977,425. The percent of in-state funding increased from 13% in 1995 to 35% in 1996.



Industry Investments by Dollars
Life Science companies let the pack with 44% of the dollars invested - $52,468,175. Computer and Software companies followed with $34,344,988 - 29%.

Industry Investments by Deals
Twenty-two of the deals - 47% - were with Computer and Software companies. Life Science companies followed with 11 deals, representing 23%. Telecommunication companies had four deals at 9%, and the other three industry categories each claimed 7% with 3 deals each.

Stage of Investment
The 46 companies were split evenly by stage of investment. Twenty-three were early/seed companies and 23 were late/expansion companies. Late-stage companies received 69% of the total financing, or $81,860,000.



Among the companies receiving venture capital in 1996 were:

A&J Publishing
Access Point, Inc.
Accipiter
Alternate Realities Corp.
Circuit Board Assemblers
Claw Island Foods, Inc.
Computer Aided Marketing
Engineous Software
Ganymede Software
Interactivisions

Lambda Technologies, Inc.
Matrix Corp.
MiCELL Technologies, Inc.
MicroMass Communications, Inc.
Protein Delivery, Inc.
ReadyCom, Inc.
Secant Network Technologies
Xanthon, Inc.

Among the funds making investments in 1996 were:

Blue Ridge Investors
Capital Investment Partners, LLC
Centura Capital
Domain Partners
Dominion Ventures
Fairview Capital
Hickory Venture Capital
Hummer Winblad Venture Partners
IAI Ventures, Inc.
Intersouth Partners
Kleiner Perkins Caufield & Byers
Menlo Ventures
NationsBank Capital Corporation
NCTDA

Primus Venture Partners
RFE Investment Partners
Ruffin Woody & Associates, Inc.
Schroder Ventures Life Sciences
Senmend Medical Ventures
Southeast Interactive
S.R. One Limited
TDH III Limited
Technology Leaders
Tristate Investment Group II
Venrock Associates
The Woodlands/Essex Venture Fund II