Venture capitalists were a bit more aggressive in betting on Connecticut companies during the third quarter, but signs of a full-fledged recovery in the investment world remain to be seen.
In all, investors injected about $34.4 million in Connecticut companies during the third quarter of 2010, double the nearly $17 million invested in the year-ago period.
That sum represents 15 deals, compared to nine deals a year ago, according to the latest MoneyTree report, a joint effort of PricewaterhouseCoopers and the National Venture Capital Association.
Nationwide, venture capitalists invested $4.8 billion in 780 deals in the third quarter of 2010, a 31 percent decrease from the fourth quarter of 2009.
Connecticut’s $34.4 million investment total was a 40 percent increase from the second quarter of 2010, when 16 deals totaled $25 million.
There were three deals, however, for which investment totals were not disclosed, including one “confidential” deal involving an Orange-based business products and services company, and two other deals involving Rib-X Pharmaceuticals in New Haven and Shelton-based Cervalis.
Those investments would have improved the state’s dollar amounts even further.
Even though Connecticut outpaced the national average in the third quarter, venture funding in the state has been seesawing for the last few years. Venture funding, for example, jumped 81 percent in the first quarter to $130 million, but then plummeted in Q2 to $25 million.
The numbers indicate that investors still remain skittish about putting capital to work in Connecticut and around the country, although the environment has stabilized a bit.
Biotechnology company Cara Therapeutics, Inc. scored the biggest deal, getting $15 million from a consortium of investors including Connecticut Innovations, Devon Park Bioventures and MVM Life Science Partners. The Shelton-based company develops therapeutics to treat human diseases associated with pain and inflammation.
Preferred Brands International in Stamford, a manufacturer of specialty foods, got the next biggest chunk, totaling $7.5 million. Four other companies — New-Haven-based Ikonisys Inc., TransEngen Inc. in Norwalk, Madison-based Welltok Inc. and Semantifi Inc. in Stamford — also received at least a million dollar investment.
No Greater Hartford companies received funding in the quarter, the report said.
CI was the most prominent investor in the quarter and was involved in at least seven deals totaling $18 million. CI didn’t invest all that money, but it did provide some funds in each of those deals.
In Connecticut, the biotechnology sector saw the most funding in the quarter — $19 million — spurred by the Cara Therapeutics deal. Retailing and distribution, financial services, and media and entertainment received the next largest chunks of cash, raking in $7.5 million, $2.5 million, and $2.5 million respectively.
Four other industries — including IT services, medical devices, software, and networking and equipment — also received funding in the quarter.
Nationally, the biotechnology sector received the highest level of funding — $1.3 billion, from 139 deals during the quarter.
The Software industry regained its position as the No. 1 sector for investment, receiving $1 billion from 190 deals during the quarter. Still, that represented a 13 percent decrease in dollars and a 21 percent decline in deal volume from the second quarter when $1.1 billion went into 242 rounds.
Farmington Firm Joins Partnership
A new Pennsylvania-based financial advisory firm has added a Farmington-based wealth management company to its roster.
Farmington firm Medallion Wealth Advisors has joined Merion Wealth Partners, a Pennsylvania-based advisor owned, independent wealth management firm. The move comes as Merion announces its official formation and partnerships with two other firms outside Connecticut.
Merion Wealth Partners is acting as a holding company for its subsidiary units, which are looking for independent registered investment advisors and break away wirehouse advisors.
The formation of Merion, and its subsidiary units, represents a continuing trend of financial advisors moving away from big wire houses, toward independent practices.
The goal of the firms is to achieve lower operating costs, improved profitability and greater competitive advantage over their larger counterparts.
Thor Cheyne, who is the president Medallion Wealth Advisors, said his firm is looking for growth minded financial advisors and potential equity partners. His firm provides wealth management services to ultra high net worth and high net worth investors.
“Many advisors feel they could better serve clients in a smaller financial advisor-client relationship,” Cheyne said.
Merion Wealth Partners has $250 million in assets under management. Cheyne said the goal is to reach $1 billion by the first quarter of 2011.
Merion Wealth would also like to build its investment advisor ranks to 80 or 85 over the next three years. Within all its subsidiary units, it has eight advisors.
Greg Bordonaro writes the Financial Sense column every other week. Reach him at gbordonaro@HartfordBusiness.com.
