Investors Lighted $228M Fire Under Massachusetts Startups in September

Xconomy Boston — 

It wasn’t just school that people got back to in September—it was startup funding. After slowing noticeably in August, the total venture investment into Massachusetts startups last month hit its highest level since we began tracking the monthly figures in June. All told, investors put $228 million into 25 deals involving Bay State startups. That was good enough to eclipse the $215 million (also involving 25 deals) seen in July—and a 27 percent jump in dollars from the $179 million invested through 21 August deals.

The tallies come from data provided to Xconomy by ChubbyBrain, a New York-based information services company developing tools for investors, startups, and aspiring entrepreneurs.

As always seems to be the case, companies in the healthcare sector accounted for the most investment dollars—$98.8 million of the total. The sector also accounted for the month’s two biggest deals. The largest was a $30 million Series C round for Seaside Therapeutics, a stealthy Cambridge biotech based on research at MIT that is out to create the first drugs designed to treat the neurological disorder underlying patients with Fragile X syndrome and autism.

That was followed by a $25 million Series I (I didn’t know the deals alphabet went that high!) round for Ironwood Pharmaceuticals, also of Cambridge, which is developing a drug to treat irritable bowel syndrome. (After that report came out, Ironwood CEO Peter Hecht e-mailed to say that deal was part of a larger milestone payment from one of Ironwood’s partners.) Verivue, a Westford-based provider of multimedia distribution switches for cable and telecom operators, brought in $20.1 million, good enough for third place. And I would be remiss if I didn’t mention MooBella, which is creating a line of make-your-own ice cream machines. The Taunton firm, which Ryan profiled, brought in $18 million in the month’s biggest A round, and the fifth-biggest deal overall.

Read on for a table of all the September venture deals in Massachusetts, as well as a list of the three debt-financing deals, all in healthcare, which tallied $4.65 million.ChubbyBoston0909charts

Other gleanings from the September data—including a few surprises:

—For the first time since we started working with ChubbyBrain in June, the majority of venture investments last month came in later-stage deals, as 13 of the 25 deals were Series C or later (two others were unspecified).

—The monthly seesaw between the healthcare and Internet sectors for the lead in the numbers of deals done continued. Internet firms, with 9 deals, came out on top this month, while healthcare was in the Avis (No. 2) position with 6 deals.

—On a dollar basis, as mentioned, healthcare led the pack, with $98.8 million total, compared to $62.2 million for Internet firms (the healthcare figure was about $10 million higher than in August, but the value of the Internet deals rose nearly threefold, from $23.65 million).

—Maybe the biggest surprise of the month was the computer hardware and services category, where four firms brought in a total of $33 million, making the sector the third biggest investment-attractor of the month. There was not a single deal in the sector in June, July, or August.

—All told, 35 different firms were identified as investing in Massachusetts startups during the month. Only one, Sigma Partners, is listed on two deals.

September 2009 MA Venture Investments


September 2009 MA debt financings


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