PhillyInc: Venture capital is looking up

Mirroring the frustratingly slow recovery in the broader economy, the venture capital sector cheered improved, if somewhat simmering, activity in the first quarter.

Nationally, about $5.9 billion was invested in 736 deals in 2011's first three months, according to the PricewaterhouseCoopers/National Venture Capital Association MoneyTree Report, released Friday.

In the fourth quarter, venture capital firms poured $5.6 billion into 827 deals.

Based on data from Thomson Reuters, the MoneyTree Report tallied 22 deals for the Philadelphia region totaling $149.6 million for the first quarter. By contrast, 33 area companies raised $95.9 million in the fourth quarter.

The biggest local deal of the first quarter was a $23.3 million equity financing of BioNanomatrix Inc., a Philadelphia company that's trying to cut the cost and time involved in analyzing the human genome.

At least, that's the biggest deal for a company I'd consider in the Philadelphia region. The data gatherers have an expanded notion of the region that includes Lehigh County to the north and Mercer County across the river.

Ordinarily, it's no big thing to isolate companies in counties that border the Philadelphia region. However, in the first quarter of 2011, three such companies were among the six biggest venture capital transactions:

CyOptics Inc., of Breinigsville, raised $45.7 million to help expand its design and manufacturing of optical-networking components.

Ophthotech Corp., of Princeton, raised $15 million to help fund its development of treatments for certain eye diseases.

Lightwire Inc., of Allentown, raised $14 million to support its development of optoelectronics, for use in networking, communications, and server/storage systems.

Together, those three Philadelphia-ish companies accounted for about half the $149.6 million invested in the region as defined by the MoneyTree Report.

It's a pet peeve of mine that there is an inclination among economic-development types to annex other regions to the Philadelphia area, especially Mercer County, rich in offices of Fortune 500 companies. I understand why they'd rather incorporate Princeton, with its gilded name, into this region rather than the nearly equidistant Bear, Del.

I don't need to reach quite so far to find companies that are interesting, and BioNanomatrix, which has been trying to come up with a way to sequence the human genome for about $100, is a good example.