$103.8 million in funding makes for a celebration

Triangle companies raised more than $100 million in venture capital funding in the third quarter, another positive sign for the region's entrepreneurial economy.

It was the second consecutive quarter that the influx of new capital has exceeded the century mark.

The $103.8 million attracted by nine young technology and life sciences companies in the third quarter fell just short of the $112.2 million raised in the preceding quarter but was nearly four times the abysmal total raised a year ago.

The latest data are being released today by the accounting firm PricewaterhouseCoopers and the National Venture Capital Association, based on data compiled by Thomson Reuters.

So far this year, Triangle companies have raised $279.5 million, versus $252.5 million raised in all of 2009. The amount of money raised last year during the recession was the worst since 2004.

And Triangle companies likely will do well in the fourth quarter as well, said Laura Hoke, a partner in PwC's Raleigh office.

One reason she's optimistic is that the third-quarter numbers weren't dominated by any one industry. Software companies accounted for 45 percent of the total, and life sciences companies accounted for 35 percent.

The local picture was brighter than the national trend. Across the country, the amount of venture capital raised fell 31 percent from the second quarter to the third quarter.

Dozens of Triangle companies rely on venture capital dollars to fund research and development or expansion. Still, the amount of venture capital raised by local companies can fluctuate significantly from quarter to quarter, since the region lacks the critical mass of venture-backed companies found in regions such as Silicon Valley and Boston.

Leading the local companies that attracted venture capital in the third quarter was e-mail marketing company iContact, which raised $42.5 million.

"It wasn't difficult to raise the money, but it definitely took a lot of effort," said iContact co-founder and CEO Ryan Allis.

Allis said his company benefited from being "a high-growth company with a lot of opportunities." IContact's revenue jumped 81 percent to $26 million last year and is on track to hit $39 million or so this year.

Nevertheless, given the state of the economy, Allis said he had to accept a lower valuation - based on the company's revenue - than he would have obtained before the recession.

When companies raise venture capital, how big an ownership stake the venture capitalists receive in exchange for their dollars hinges on the company's valuation. So a lower valuation means that the venture capitalists get a bigger piece of the business for their money.

Several early-stage Triangle companies also raised funding.

"I think we're definitely seeing ... the next wave of entrepreneurs here in North Carolina," especially in downtown Durham, said venture capitalist Jason Cap lain of Southern Capitol Ventures in Raleigh.

Robbie Allen, the founder of StatSheet, a Durham Internet company that collects and sells sports statistics, felt fortunate to raise $1.3 million in his first round in the current environment.

"I hear a lot of people are having a hard time right now," he said.

Allen said at first he talked to many out-of-state venture capitalists who balked at the travel involved with being the lead investor in a Triangle company. Lead investors typically take a seat on a company's board of directors.

So he began focusing on venture capital firms that already had invested in one or more local firms and attracted Valhalla Partners of Vienna, Va., as a lead investor. Valhalla previously invested in Triangle companies Blue Stripe Software and Geomagic.

Although Triangle companies can successfully raise money from out-of-state venture capitalists, Caplain said, the dearth of local venture capital funds is an issue.

"I think this area would do a lot better if we had a direct flight to the Bay Area," he added. "I think that would really help strengthen theinterest from the West Coast venture capital community to be more active than they are today in North Carolina."