Reports

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Digital Media

Digital Media funding reversed the previous two quarterly declines by showing strong gains in both total amounts funded and the number of companies funded. Digital Media companies for the purposes of VentureDeal's definition are generally either video/casual game producers or advertising networks. Total funding increased by 18% to $350 million, with 37 companies being funded, an increase of 16%.

Big Fish Games received the largest funding by far, raising $83.3 million from Europe-based Balderton Capital and General Catalyst Partners. Big Fish operates an online portal that it says is the world's largest distributor of games. The company also is an active developer of games.

Venture capital firm Draper Fisher Jurvetson was active in the Digital Media sector during the quarter. The company participated in investments in 4INFO, Ripple and ContextWeb.

4INFO improves mobile phone utility by enhancing the user's ability to find relevant and meaningful content. Ripple is growing a network of over 400 digital entertainment and news locations, and claims nearly 10 million unique customers every month. ContextWeb provides context sensitive advertising solutions.

VC firm Kleiner Perkins Caufield & Byers also participated in two funding events:

ngmoco $5 MillionSeries A
MEVIO $15 MillionSeries C

eCommerce

The eCommerce sector resumed its downward trend, with only nine companies receiving a total of $57 million in funding, a decrease of 39% in financing amounts versus the previous quarter.

Two companies raised a total of $30 million during the quarter, eBillMe and Plimus. eBillMe secured $12 million to continue rollout of its online payment integration system.

Plimus garnered $18 million to expand sales and marketing efforts to reach the independent software developers and digital product vendors who are the target market for its eCommerce system.

Payoneer landed $8 million for its second venture capital funding, from Carmel Ventures and Greylock Partners. Payoneer’s focus is on simplifying the international payments process by providing enterprises with prepaid MasterCard cards.

Software

During the quarter, Software company fundings again represented the largest sector, raising $1.2 billion between 161 companies. This activity represented a decrease of 8% in total funding amount and a 20% decrease in the number of companies funded.

The average financing round size grew from $6.5 million in Q2 08 to $7.4 million for the current quarter, suggesting a greater number of later round funding events.

The largest funding of the quarter was a $50 million round for healthcare software provider Medefinance. The company provides hospital health systems with what it calls "business intelligence” software that helps improve their internal operations.

Also in the "intelligence" space, Business Intelligence Advisers pulled in $12 million in funding from Frontier Capital and .406 Ventures. BIA has developed what it calls “unique intelligence-based training and information collection solutions” for accounting audit professionals.

In the related education sub sector, Regent Education received $7.5 million in expansion round financing. Regent, which was founded in 1979, provides financial aid management software to higher education institutions. The company has created an off-the-shelf solution that integrates with many existing ERP systems.

Table 1

Venture Funding Activity – 3rd Quarter 2008


Industry Total
Amount
Funded
% Change
Vs. Prior
Quarter
Number of
Companies
Funded
% Change
vs. Prior
Quarter
Internet $900 Million - 28 % 143 - 17 %
Digital Media $350 Million + 18 % 37 + 16 %
eCommerce $57 Million - 39 % 9 - 36 %
Software $1.20 Billion - 8 % 161 - 20 %
Total $2.5 Billion + 14 % 350 - 16 %

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