With a small burst of venture finance activity in December, the prospects for startup financing in Fairfield County appeared to strengthen heading into 2011.
In late December, Odyssey Logistics & Technology Corp. revealed a $20 million tranche of financing, with Odyssey aiming to tack on another $8 million at a future date. The Danbury-based company handles logistics for shipments of hazardous materials such as chemicals. Spun out from the former Union Carbide Corp., the company had 350 employees at last report.
The only other major round of financing for a local company occurred in early December, after HCPlexus Inc. quietly secured $10 million in equity funding, more than a year after the Darien-based company acquired WebMD Corp.”™s former Little Blue Book product line, which is used by more than 300,000 doctors in the United States to refer patients to specialists.
Under CEO David Shrier, HCPlexus is working to build out the database into a larger information exchange resource for doctors, and is pitching its website as a resource for pharmaceutical marketers and others who want to reach physicians with their marketing messages. In addition to new mobile and online versions of The Little Blue Book, HCPlexus is introducing several other products, including formulary information, patient education materials, an online search desktop application, and an iPad lease program, among others.
Shrier previously led the acquisition of the iconic consumer products company Ronco, and before that worked for General Electric”™s NBC Universal unit; Dun & Bradstreet; Disney; and Starwood Hotels & Resorts Worldwide Inc.
Another notable financing occurred early in the fourth quarter, when Stamford-based XLerant Inc. reported it had raised roughly two-thirds of a planned $1.3 million round of financing, including $500,000 from the Connecticut Innovations financing arm of the Connecticut Department of Economic and Community Development.
A developer of budgeting software both for small businesses and larger corporations, this past fall XLerant became one of the first companies in the state to qualify for a new angel investor tax credit authorized this year by the Connecticut General Assembly.
Under the program, qualified angel investors may take a credit against their Connecticut state income tax for certain investments made in qualifying, early-stage technology businesses that apply to participate in the program. The program was established to spur private sector investments in early-stage technology ventures.
Nearly four in five people in a recent National Venture Capital Association poll expect health-care information technology investments to increase in 2011, versus just over half expecting an overall increase in venture capital activity, with Dow Jones VentureSource also sponsoring the poll of more than 500 industry participants.
Two-thirds of VCs expect more venture-backed companies going public, and most expect an increase in acquisition activity. CEOs are more upbeat about company valuations than VCs ”“ more than 75 percent of CEOs polled believe their company valuations will increase next year, but only half of VCs see start-up valuations rising.
“The market was so troubled in 2009, the sentiment was that things had to get
better in 2010,” said Mark Heesen, NVCA president, in a prepared statement. “The improving ”˜exit market”™ and a renewed excitement in the IT sector have engendered a confidence among VCs.”
The information technology sector is expected to draw investments in digital media and “cloud computing” startups, but many venture capitalists also expect a minor investment bubble in those sectors with VC dollars pushing up company valuations.
