Reports

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Digital Media

Digital Media funding reversed its previous quarterly declines by showing a slight increase in the total amount funded and a slight decrease in 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 3% to $236 million, with 29 companies being funded, three fewer companies than the previous quarter.

IndoorDirect received the largest funding by far, raising $22.5 million from a syndicate of venture capital firms. The company said it would use the funding proceeds to increase its restaurant and digital television national footprint to over 1,000 locations.

Digital content producer JibJab Media secured a $7.5 million series C round of financing from venture capital and strategic investors. Proceeds purposes from the financing were not disclosed.

Gaming development engine company Emergent Game Technologies secured $12.5 million in a new venture capital round in February, from a syndicate of five venture capital firms. The company develops and sells the software application tools that enable interactive game development.

eCommerce

The eCommerce sector reversed its previous downward funding trend, with two companies receiving a total of $74 million in funding.

The two companies that raised funding were Obopay ($74 million) and Mercantila ($4 million).

Obopay raised its financing from a new strategic partner, Nokia Growth Partners. Obopay has developed a mobile system that allows users to send and receive payments via their cellular handset.

Mercantila has developed a network of hundreds of specialty Internet sites that are each focused on only one product category. The company raised funding from Lightspeed Venture Partners, with longtime partner Jeremy Liew as board member.

Software

During the quarter, Software company fundings represented the largest sector, raising $617 million between 124 companies. This activity represented a decrease of 20 % in total funding amount and a 21% decrease in the number of companies funded versus the previous quarter.

The average financing round size was unchanged from the previous quarter, at $4.9 million.

The largest funding of the quarter was a $34 million round for Quadriserv. The company has developed technology that provides “price transparency and efficiency to the securities lending industry."

E-mail system productivity company Xobni raised $3.2 million in its second round of financing from corporate investors Blackberry Partners and Cisco Systems. The company enhances the features and functionality of Microsoft’s Outlook e-mail client.

In the Internet search space, ChaCha Search secured $30 million in its series C venture funding round. The company has developed online technology that it believes enhances the ability of users to find answers to their search queries.

Trader Tools, a financial services software company, garnered $7.5 million in late stage financing. The company said it would use the funding proceeds to expand its sales and marketing efforts in the financial services industry.

Table 1

Venture Funding Activity – 1st Quarter 2009


Industry Total
Amount
Funded
% Change
Vs. Prior
Quarter
Number of
Companies
Funded
% Change
vs. Prior
Quarter
Internet $488 Million - 48 % 100 - 23 %
Digital Media $236 Million + 3 % 29 - 10 %
eCommerce $74 Million -- % 2 - 60 %
Software $617 Million - 20 % 124 - 21 %
Total $1.42 Billion - 27 % 255 - 21 %

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