Reports

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Venture Capital Funding and M&A Quarterly

Internet • Digital Media • eCommerce • Software

4th Quarter, 2007 – United States

Published by: VentureDeal

Contributors
Internet • Digital Media: Jackson West
eCommerce • Software: Dennis Howlett

Summary

During the quarter, the Internet and Digital Media sectors raised a total of $1.45 billion in new venture capital investment between 169 companies. That represents an increase of 14% in Internet total investment over the previous quarter and a 2% decrease for Digital Media. While venture funding is up, merger and acquisition activity is down, with significantly fewer M&A deals in the sector and only $103,000,000 in total reported consideration.

The eCommerce sector was quiet in the last quarter with only two M&A transactions, both of which were for undisclosed amounts and five funding transactions totaling $55.7 million, down 76% on the previous quarter on 55% fewer deals. (Table 2) The Software sector by comparison saw plenty of transactions but total values were also down. The total amount of finance raised in the quarter was $956 million from the 148 transactions for which data was made available. While the absolute number of transactions was down by 12%, the total value of transactions completed was 41% higher than the previous quarter. The numbers are skewed by 14 deals totaling $272.5 million. On the M&A front, the number of deals was down 10% at 45 and the total value changing hands was also down 61% to $1.69 billion. (For all sector financings, see Table 1.)


Funding Activity

Internet

Social networking site Facebook received a total of $300 million in new investment, including $240 million from Microsoft and $60 million from private investor Li Ka-Shing. The investments bought shares in the company, the relative proportions calculated based on a widely reported Facebook valuation of $15 billion. Microsoft's investment is presumed to guarantee the company a role in any future Facebook nascent advertising models.

Airfare and travel bargain meta-search site Kayak.com raised $196 million in credit and venture equity a Series D round led by Sequoia Capital. The company promises to use the money to fund their merger with competitor SideStep and to fund expansion into more markets worldwide.

A number of smaller companies also received two installments of funding in as many quarters, suggesting rapid growth.

Clickable received a total of $6 million in Series A funding; Company Loop received $5 million in Q4 after receiving an undisclosed amount in Q3; Edvert received a total of $5.4 million; Scrapblog raised $2.75 million and TechTribe Networks raised $2 million.

Video-related companies continued to attract investment interest, with Vuze, Inc. receiving $20 million in a Series C funding round led by New Enterprise Associates. The company leverages the BitTorrent protocol and open-source Azureus software client to distribute video and other bandwidth-intensive content.

TubeMogul.com, which enables content creators to distribute video content and track views across a number of sites, received an undisclosed round of funding. Live, online video broadcasters Ustream.TV and Justin.tv, which attracted significant media interest, also received undisclosed amounts of funding.

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