DC-area Venture Capital Flowing North

images2.jpgEarlier this week, PriceWaterhouseCoopers and the National Venture Capital Association released the disclosed venture capital totals for the second quarter. $271.8 million poured into the Washington area for the quarter, though, yet again, none of it found its way into my glass. The total held up well relative to the same period last year, when a trio of gigantic deals propped up the number.

Among the 52 area companies that received venture capital, there were both expected and unexpected trends. The expected: Biotech/Medical Devices and Equipment snagged 4 of the top 9 raises, with Blacksburg, Va.-based Intrexon, taking top honors. According to their Web site, Intrexon “…is developing novel human therapeutics for fighting complex, intractable diseases such as advanced cancers, progressive neural disorders, and cardiac failure.” After reading through that impressive and daunting list of goals I have a feeling they will need every last dollar of the $25 million.

Other big winners for the quarter included familiar names such as Parature, Rivermine, and Ruckus Network. Washington area venture capital flowed heavily into software and seed/early stage investment, mirroring the national trend where both categories turned in their strongest quarters since 2001.

I was struck less by which companies the money flowed to and more by where these companies were located. When I think of Germantown, MD, a hidden gem sushi restaurant called Yuraku comes to mind. In sifting through the quarter’s VC deals, it seems that Germantown is attracting a few hidden gems in the wireless industry. Eka Systems, which provides Internet-enabled wireless device networking technology for monitoring, control, and integration of the utility and energy infrastructure, calls Germantown home and raised $12,500,100. They are joined by Cognio, a wireless communications component firm that pulled in a cool million.

Beyond firms raising money in the quarter, Germantown also hosts Telkonet, a leading provider of in-building broadband access over existing electrical wiring that announced strong revenue growth during this same quarter, and CURRENT Communications Group, a broadband over powerlines provider that has attracted in the neighborhood of $200 million from Google, Goldman Sachs and Earthlink. Whether it is premature to anoint Germantown as a telecom hub remains to be seen, but it is clear many promising companies are settling there, and the venture capital hasn’t been far behind.

In the hit movie Wedding Crashers the following is offered: “Crabcakes and Football, that’s what Maryland is about.” Based on the Venture Capital report Maryland is also about attractive investment targets. Beyond Germantown, the money found its way to several other Maryland suburbs and areas as well. Reactive NanoTechnologies in Hunt Valley, MD, Towne Park in Annapolis, First Service Networks in Linthicum Heights, and firms in New Market, Silver Spring and Cumberland also received funding.

While venture capital doesn’t guarantee success, the 2nd Quarter Report highlights dozens of promising companies poised for success, and I look forward to tracking their results through 2008.

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