Reports

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Digital Media

Digital Media funding continued to decline, as in the previous quarter. Digital Media companies for the purposes of VentureDeal's definition are either video/casual game producers or advertising networks. Funding declined by 10% to $297 million among 32 companies.

Spot Runner secured $51 million during the quarter. The company is an Internet-based advertising agency that makes it easy for local businesses to advertise on television. Federated Media raised a $50 million venture capital financing round. Federated operates an online advertising network that aggregates blogging verticals to allow advertisers to market their products or services by blogging market segment.

A notable gaming funding during the quarter was for Turbine, a producer of online subscription entertainment and games, which received $40 million. Also, D2C Games secured a little over $1 million to assist it in providing its direct-to-consumer game publishing services for arcade sports and action games.

eCommerce

The eCommerce sector showed renewed activity, with 14 companies receiving a total of $93 million in venture funding, a roughly fivefold increase over activity in Q1.

Two companies received $20 million during the quarter, which represented 43% of the entire funding activity - MarketLive and Obopay. MarketLive provides a retail eCommerce solution specifically designed to meet the requirements of catalogers, direct marketers and brand manufacturers.

Obopay has created a cell phone based system that allows users to pay friends, get cash or otherwise have person-to-person transactions via its wireless networking system.

Also in the retailer space, Demandware raised a little over $9 million to fund its enterprise class eCommerce platform. The platform is sold as an application suite, which is billed on a usage-based pricing model.

Software

During the quarter, Software fundings edged out Internet sector fundings by raising $1.3 billion allocated among 201 companies. This activity represented an increase of 3% in total funding amount and a 5% increase in the number of companies funded.

The largest funding of the quarter, $100 million for Rearden Commerce, was an expansion round funding. Rearden has developed a web-based personal assistant and related online platform that it says will revolutionize the way people and businesses buy and sell services.

In the financial services space, Yodlee secured $35 million to scale its online bill payment solutions and services. For many years, Yodlee has primarily been a financial account aggregation service sold to financial institutions. From this financing it appears it has changed its focus to be more of a consumer bill payment play.

Cloud computing company rPath garnered $10 million in its series C venture capital round. Raleigh, North Carolina-based rPath has created Linux platform appliances that assist application developers in transitioning their technology to on-demand solutions.

In the virtualization space, DataCore Software received $30 million for sales and marketing expansion. DataCore provides storage virtualization SAN software applications that it says dramatically changes the economics of managing storage.

Table 1

Venture Funding Activity – 2nd Quarter 2008


Industry Total
Amount
Funded
% Change
Vs. Prior
Quarter
Number of
Companies
Funded
% Change
vs. Prior
Quarter
Internet $1.24 Billion - 16 % 172 - 8 %
Digital Media $297 Million - 10 % 32 + 10 %
eCommerce $93 Million + 547 % 14 + 250 %
Software $1.30 Billion + 3 % 201 + 5 %
Total $2.93 Billion + 16 % 419 + 2 %

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