Monday, April 24, 2006

Investors Seem to Recognize Value of PBT

Venture capitalists are returning to their old sweethearts, high tech and Internet companies, according a survey of investment activity in the first quarter of 2006. Young technology companies raised $3.36 billion nationwide, up 13 percent from $2.98 billion a year ago. In the Bay Area, technology startups raised $1.26 billion in the first quarter, up from $1.10 billion in the same quarter last year. "I see a continuation of the interest in Internet business models," said Joe Muscat, Americas director of Ernst & Young Venture Advisory Group. Ernst & Young publishes the quarterly report with Dow Jones VentureOne. "I think it started to pick up last year and has accelerated in 2006.

The biggest Bay Area deals featured several companies benefiting from the convergence of telecom, media and Internet technologies. San Mateo's Sling Media, which delivers media content to mobile users via broadband, raised $46.6 million, while Claria, a Redwood City provider of consumer Internet services, raised $40.25 million. The largest deal was Pay By Touch, the San Francisco biometric electronic payment system that raised $60 million.

The Bay Area companies that received the largest VC investments in the quarter were both technology companies:

Pay By Touch
, the San Francisco company that allows consumers to buy things biometrically, with only a fingerscan for identification, and Sling Media, the San Mateo maker of a product that beams television programming to computers and handheld devices. Pay By Touch, in its second round of funding, raised $6o million in January, and Sling Media raised $46.6 million.Pay By Touch has biometric identification systems in 2,000 stores, including Albertsons and Supervalu. Pay by Touch has contracts that put them in 10,000 plus stores by year end. It also plans to offer a version of its product for Internet shopping as well as a health care application.

The company (Pay by Touch) set out to raise just $25 million, but interest was so strong that investors offered four times that. It closed on $60 million in January, after raising $130 million just 90 days earlier.

"It definitely shows that there is an appetite in the market with institutional investors for great inventions, and they will write big checks for great opportunities," said Gus Spanos, Pay By Touch chief financial officer and executive vice president. "I think that our success and the amounts of money we've raised ... really is more specific to investors' recognition that Pay by Touch could truly could be a transformational company."

Original Article Appeared in San Francisco Chronicle and SF Gate.

Related Links

To access the EuroMoney report on the $130 million Pay by Touch raised from hedge funds:

Below is a Reprint of the Wall Street Journal Report on PBT and Hedge Funds:

Pay By Touch

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