Venture investment rises

Md. broadband company is No. 3 in nation in drawing dollars

January 23, 2007|By Tricia Bishop | Tricia Bishop,Sun reporter

A Germantown company that transfers high-speed data over power lines drew one of the country's biggest venture-capital investments last year, tying an Arizona business for third place, according to year-end information being released today.

The $130 million that Current Communications Group raked in last spring from investors including General Electric Co., Goldman Sachs & Co. and Earthlink Inc. was more than twice the next largest deal for a Maryland company.

"That's cool," Jay L. Birnbaum, Current's vice president, said upon hearing the news. He says he's already working on a way to top it.

The big investment in Current reflected the headway that businesses tied to energy are making in getting venture investment, leading analysts to predict alternative power and fuel sources might be the next big thing down the road.

Four of the seven largest venture capital investments last year, including Current's, were energy-related, according to the quarterly Money Tree Report.

Nationwide, venture capitalists invested more money than they have since 2001, investing $25.5 billion in 3,416 deals in 2006, both of which represent an increase of about 10 percent. Fourth-quarter investment, however, remained flat year over year at about $5.7 billion.

The Money Tree Report chronicles U.S. venture capital investment based on data from Thomson Financial. The report will be released today by PricewaterhouseCoopers and the National Venture Capital Association.

"This was a very positive year for [venture capital] investment," Darrel Pinto of Thomson Financial said during a conference call yesterday to discuss the results.

This is the third consecutive year of increased investment, and - unlike the rises during the dot-com bubble - the "levels look to be sustainable," Pinto said.

In Maryland, investment leaped 26 percent to $636.2 million in 2006, compared with $504.1 million in 2005, though it fell sharply for the quarter ending Dec. 31.

State companies raised $75.3 million through 22 deals during the fourth quarter last year, compared with $138.6 million raised in 31 deals in the final quarter of 2005.

"The fourth quarter numbers didn't look that great to me [at first]," said William S. Corey Jr., managing partner of PricewaterhouseCoopers' Baltimore office.

But after a second look, he found a few noteworthy points, namely that businesses in the Baltimore region took home the bulk of the quarter's dollars, rather than their counterparts in Maryland's Washington suburbs.

"[That] is kind of neat," Corey said.

Software and biotechnology industries drew most of the investment in Maryland, with Current Communications being a notable exception.

Birnbaum's company uses power lines to provide a broadband connection that rivals those of cable, telephone and other competitors. It also allows homeowners to control their appliances via the Internet and lets electric companies know what's happening on their lines. The company has a demonstration house in Potomac and customers in Ohio and Texas.

"We make the electric grid a smart grid. We can't help but make the grid smarter by building our network," Birnbaum said.

He's hoping a new deal in Texas will soon help him highlight Current's technology, which he says allows electric companies to keep tabs on outages, irregularities and usage.

tricia.bishop@baltsun.com

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