North Bay venture capital on rise |
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July 31, 2007 From THE PRESS DEMOCRAT By STEVE HART Venture funding in the North Bay is on track for its best year since 2002, with five companies raising more than $100 million during the first half of 2007. "That's on pace for a good year," said Adam Wade of Dow Jones VentureOne in San Francisco, which tracks private equity deals. Companies in the 707 area code, including Napa and Sonoma counties, raised just $60 million in venture capital during all of 2006. Nationwide, venture funding is at its highest level since 2001, according to Ernst & Young, a business consulting company. U.S. companies raised $7.4 billion in the second quarter of 2007, 8 percent above the same period last year. The number of deals also rose 8 percent over 2006, with information technology and medical technology two of the fastest-growing sectors. So far this year, Petaluma tech company Calix Networks has attracted the most venture cash in the North Bay. The telecom equipment vendor raised $57.5 million from Foundation Capital, an equity fund based in Menlo Park. The deal closed June 22. Founded in 1999 by former executives of Cisco Systems and Cerent Corp., Calix makes broadband technology that lets telecom providers deliver voice, video and Internet service to homes and offices. Calix has doubled its annual revenue since 2005, adding larger carriers such as Sprint Nextel to its customer list. So far, Calix has raised more than $300 million in venture capital. Officials at the company didn't return calls seeking comment. Last month, Calix said it was expanding its platform to support a host of new features, including high-definition Internet TV over optical fiber or advanced DSL networks. Calix, which has about 250 employees in Petaluma, is ripe for an initial public stock offering or buyout, according to telecom industry analysts. Three other Sonoma County companies and one Napa company received venture funds in the first half of 2007, according to the report by VentureOne and Ernst & Young. Petaluma's HydroPoint Data Systems Inc., which makes water-saving irrigation controllers, got $19 million in venture funding to expand its sales and marketing efforts. HydroPoint's WeatherTRAK irrigation controllers use daily weather reports, downloaded from satellites, to run automatic sprinkler systems. The technology cuts water use up to 59 percent, according to company officials. As California communities adopt mandatory water conservation measures, HydroPoint's sales have soared, said Chris Spain, the company's chief executive. "We're seeing a huge increase," he said. "We'll continue growing over the next couple of years." The privately held company doesn't release revenues, but Spain said HydroPoint's sales are up 200 percent from 2005. HydroPoint, which was founded in 2002, has about 40 employees in Petaluma. The venture deal was led by RockPort Capital Partners, with participation by Chrysalix Energy Venture Capital and four other private equity funds. Another Sonoma County startup, Sonoma Orthopedic Products, received $10 million in a deal led by MedVenture Associates, a medical technology fund based in Emeryville. The Santa Rosa biotech company is developing bone implant technology for common fractures, said Charles Nelson, the company's president. The technology for orthopedic surgery is designed to be less invasive and shorten recovery time from fractures, he said. The medical device hasn't yet been approved by the U.S. Food and Drug Administration, but Sonoma Orthopedic is in clinical trials and hopes to have its product on the market "in the near future," Nelson said. The company has fewer than 20 employees. Another startup, Petaluma's Cyan Optics Inc., raised $8.7 million to develop technology for next-generation broadband networks. Cyan, founded last November by Telecom Valley pioneer Mike Hatfield, hasn't released details of its system, but said it's addressing "ever-increasing demand for high-bandwidth, real-time services" on digital networks. A Napa company, Inertia Beverage Group, received $8 million from venture backers. Inertia provides Web-based technology to wineries for direct sales and marketing. You can reach Staff Writer Steve Hart at 521-5205 or steve.hart@pressdemocrat.com. |
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