Arizona firms gain venture capital boost
July 25th, 2006 . byRuss Wiles
The Arizona Republic
Jul. 25, 2006 12:00 AM
Venture capitalists showed their confidence in Arizona innovators by spreading $51 million among six upstart firms during the second quarter.
While the deal count was down from nine companies funded during the first quarter, the amount of money invested rose from $43 million in the January-March period.
“This quarter is definitely an improvement over the first quarter,” said Andy Coumides, a partner in Phoenix for PricewaterhouseCoopers, which released the numbers as part of its MoneyTree Report. “The main thing is that the deal size is quite a bit larger.”
Coumides said another favorable sign was deals were spread among companies in four different Arizona cities and diverse industries.
Halfway through 2006, PricewaterhouseCoopers counted 15 Arizona investments worth $94 million, compared with 17 deals worth $87 million in the first half of 2005.
Ernst & Young LLP also keeps tabs on venture-capital trends in Arizona. Kevin McHolland, a partner in the company’s Phoenix office, characterized the quarter as positive. “Over the last six or so quarters, it seems like we’ve hit out stride,” he said.
Venture capitalists invest in companies deemed fairly risky for conventional bank loans and too unproven to sell shares in the stock market through initial public offerings. Venture capitalists often provide management expertise to the companies in which they invest.
“That’s part of what these guys bring to the table: proven management skills or contacts in an industry,” McHolland said.
Venture capitalists try to prepare the firms for an eventual stock-market IPO or sale to another firm perhaps three to seven years down the road.
Nationally, venture capitalists invested $6.3 billion in 856 deals, the highest amount since the first quarter of 2002, according to the MoneyTree Report, which PricewaterhouseCoopers produced in conjunction with the National Venture Capital Association using data from Thomson Financial.
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