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Big deals drive region's venture growth

By   /   Monday, July 26th, 2010  /   Comments Off on Big deals drive region's venture growth

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Companies in the Tri-Counties raised $146.5 million in venture capital in the first half of this year, already close to double the amount raised in the region in all of 2009.

About 77 percent of this year’s total came in major funding rounds for five companies in different branches of the technology sector.

Ceres Bioscience, an energy crop company in Thousand Oaks, topped off the action on July 8 when it announced a $20 million round of financing.

According to a summary compiled for the Business Times by Randy Churchill, director of emerging company services at PricewaterhouseCoopers, the rest of the top five were: Eucalyptus Systems, a software firm in Goleta that raised $20 million in June; Transphorm, a clean energy startup in Goleta that took in $20.2 million in April; Sonos, the Santa Barbara digital music player company, with a $25 million funding round in March; and Row 44, a Westlake Village telecommunications company with the biggest haul of all: $27.8 million, in a deal that closed in April.

Ceres has now raised more than $100 million in private financing since it was founded in 1997. The company also has a $137 million product development agreement with the agribusiness giant Monsanto, signed in 2002, that made Monsanto a minority owner.

The new funding round represents another step in Ceres’ move away from food crops and into alternative fuel research. The company is now focused on the biofuels and biopower markets, including making ethanol from sorghum, said Ceres spokesman Gary Koppenjhan.

“Ceres was founded as a plant genomics company, and we were very successful with that,” he said. “Since then we’ve taken this technology platform and applied it toward dedicated energy crops.”

The company has about 100 employees, three-quarters of whom are in the Thousand Oaks headquarters.

Row 44 has now raised close to $50 million over the past two years. The company makes wireless broadband systems for commercial airlines, and its technology is already in use on jets from Southwest and other airlines.

Row 44 is the second biggest supplier in a growing market; one in three planes are now equipped with some type of wireless Internet service, and Southwest plans to have Wi-Fi on its entire fleet by 2012.

Though it wasn’t one of the five biggest deals, a $10 million financing round by Calient Technologies could be among the most important. That’s because Calient is using the investment to help restructure and rethink its entire strategy, said David Rodewald, a spokesman for the company.

On July 21, the same day it announces its $10 venture finance deal, Calient announced that it had named a new chairman, Arjun Gupta, and a new CEO, Gregory Koss.
Calient is a photonic switching company, founded by UC Santa Barbara Engineering Professor John Bowers in 2002. Until recently, its engineering facility was in the Bay Area.

“Part of what they’re doing with this whole organizational change is restructuring everything in Santa Barbara,” Rodewald said. “They have the facility here, it’s close to the university and so they have access to the engineering talent they need.”

Venture capital is on the rebound nationwide, though not as dramatically as in the Tri-Counties. According to the latest report from PricewaterhouseCoopers, U.S. companies raised $6.5 billion in the second quarter of 2010. The total for the first half of the year was $11.4 billion, a 49 percent increase over the first half of 2009.

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