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Philadelphia-area firms have impressive 3Q for VC

Philadelphia-area companies got more venture capital in the third quarter than in any quarter since the fourth quarter of 2008, according to the latest MoneyTree report.

Venture capitalists invested $170.4 million in 26 deals involving companies in the Philadelphia Metro area, which the report defines as South Jersey, including Princeton, eastern Pennsylvania and Delaware.

The amount invested was the highest since $182.1 million in the last quarter of 2008, when the VC industry, like the rest of the financial sector, was going into hibernation.

It also pushed the amount invested after three quarters to $363.5 million. That’s the highest it has been since $686.9 million in 2008, according to the report, which was put out Friday by PricewaterhouseCoopers and the National Venture Capital Association using data from Thomson Reuters.

The strong third-quarter showing was both impressive and welcome because the second quarter was atrocious. The amount invested in it was only $57.5 million, the lowest since $44.1 million in the first quarter of 2009, which was the first to show the effects of the financial-industry meltdown in late 2008. As a result, after the second quarter, the area was on pace to record the least VC investment since 1996.

The rebound was fueled by investment in biotechnology companies, traditionally an area strength when it comes to attracting venture capital. Four of the seven largest deals involved biotechnology companies, as did the two largest—a $50 million investment in Onconova Therapeutics Inc. that was part of a licensing deal for the Newtown, Pa., company’s rigosertib anti-cancer compound; and a $23.4 million investment in Agile Therapeutics Inc., a Princeton, N.J., company that has a pipeline of women’s contraceptive products in late-stage clinical development.

The third largest investment, $17.5 million, went to Newgrounds Inc., a Glenside, Pa., social site for gamers that features a lot of user-generated content.

The number of deals involving area companies in the third quarter, 26, was the highest since the fourth quarter of last year, but was lower than the number of deals in all but the first quarter of last year, all the quarters in 2010 and half the quarters in 2009.

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Kristen Fitch

Senior Director, Marketing