Exton’s iPipeline is among the nation’s 10 largest venture deals

Posted: April 23, 2012

The Philadelphia region finally was home to one of the nation’s biggest venture capital deals last quarter.

Unfortunately, what the company does won’t set imaginations afire because, I’m sorry to say, developing software for the insurance industry just isn’t as sexy as, say, software to help you organize and share your digital photos.

Still, Exton-based iPipeline Inc. did raise $71.44 million in January, good enough to place No. 8 on a list of the nation’s largest venture deals included in the PricewaterhouseCoopers/National Venture Capital Association MoneyTree Report, released Friday.

Sandwiched around iPipeline were San Francisco-based Yammer Inc., which talked its way into $85 million for its social networking-for-the-office business, and San Jose-based PlayPhone Inc., which scored $67.25 million for its mobile-device social gaming network.

Yes, iPipeline’s business description would appear dauntingly dull. But there can be big money in boring. For proof, look at San Francisco’s SquareTrade Inc., which raised a head-scratching $238 million for a business that provides extended warranty services for electronics.

Any way you cut it, though, venture capital activity was down by double-digit percentages nationally in the first quarter. Based on data from Thomson Reuters, the MoneyTree Report said venture firms invested $5.8 billion in 758 deals in the January-through-March period, down from the $7.1 billion put into 889 deals during the fourth quarter.

At $1.6 billion, software attracted the most funding in the quarter. Biotechnology — generally the sector that accounts for most of the venture dollars invested in the Philadelphia region — was second with $780 million. Investment in software was down 18 percent, while biotech was down 43 percent.

The number of deals declined, but the total amount invested rose in the Philadelphia region from the fourth quarter to the first quarter, according to the MoneyTree Report. But activity has remained fairly steady at a low level for the last 10 quarters.

Of the $141.56 million raised by 22 companies identified as being in the Philadelphia region by the MoneyTree Report, iPipeline and two other companies attracted nearly $107 million. Promedior Inc., a Malvern biotechnology firm, raised $21.76 million in March, and Tarsa Therapeutics Inc., a Philadelphia drug company working on an osteoporosis treatment, raised $13.77 million of a planned $28 million equity financing.

But I’ve always been a stickler for what I consider the region’s boundaries, and the MoneyTree Report more broadly defines it as eastern Pennsylvania, South Jersey and Delaware. Sometimes, companies from outside that area get lumped into Philadelphia.

So I removed the $8 million raised by Noble Biomaterials Inc., a Scranton advanced-materials firm; $1.1 million for Immunomic Therapeutics Inc., a Lancaster biotech firm; $400,000 for Distil Inc., a Falls Church, Va., firm that helps companies protect their Web content; and $150,000 for SimpleRegistry L.L.C., a Cincinnati firm that operates an online gift registry service.

By my calculation, that left 17 Philadelphia-area companies reeling in at least $131.91 million. That’s as precise as I can be because two of those companies did not say how much investment they had received.

(A third eastern Pennsylvania company that did not have an investment amount attached was CyOptics Inc., an optical networking equipment maker based in Breinigsville, Lehigh County, that first filed for an initial public offering last August.)

Now it may seem unfair for three companies to collect four times as much as 14 companies, which must stretch a total of $24.95 million among themselves. But remember that many software and information technology services firms simply require less capital to ramp up now than they did 10 to 20 years ago.

So early-stage companies such as Fort Washington’s GroupAppz Inc. and Philadelphia’s PeopleLinx L.L.C. can make a lot of progress with a $150,000 round of financing.

Contact Mike Armstrong at 215-854-2980 or marmstrong@phillynews.com, or @PhillyInc on Twitter. Read his blog, “PhillyInc,” at www.phillyinc.biz.

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