Internet companies dominate top 10 Q2 network venture deals

Venture funding for networking companies took a small dive in the second quarter, but a few innovative Internet, wireless and hardware vendors raised boatloads of cash from investors.

There were 401 investment rounds totaling $2.68 billion in the second quarter, according to data provided to Network World by PricewaterhouseCoopers, author of the quarterly MoneyTree Report. That's the lowest dollar amount for network companies in any quarter since 2006, but not by much. Total investments have remained steady between $2.5 billion and $3 billion for 15 consecutive quarters.

"This quarter's not really that much out of whack with what you're seeing in previous years," says Tracy Lefteroff, global managing partner of the venture capital practice at Pricewaterhouse Coopers.

Software and services are the main targets of investors, he notes. Hardware companies, such as those making routers and fiber-optic cables, are suffering because enterprises have limited capital budgets. Customers are focusing on "providing applications over the existing backbone," he says. "Capital equipment cycles haven't recovered."

Software-as-a-service and other Internet-related companies dominated the top 10 venture deals of the second quarter, with a few wireless and hardware vendors also cracking the top ten. Here's the full list:

1. Rearden Commerce, Foster City, Calif. 

Description: Maker of a Web-based productivity tool that manages the "everyday details" of work and personal life, as well as a mobile service for business travelers.

Funding: $100 million

Investors: Foundation Capital, Oak Investment Partners, undisclosed firm

2. Fingerhut Direct Marketing, Eden Prairie, Minn. 

Description: An e-commerce destination selling electronics, jewelry, home items and products in numerous other categories.

Funding: $55.9 million

Investors: Bain Capital Ventures, Battery Ventures, L.P.,Brookside International Incorporated, Goldman, Sachs & Co., three undisclosed firms.

3. GreatCall, Del Mar, Calif. 

Description: Maker of "Jitterbug" cell phones, a simplified phone for the elderly.

Funding: $38 million

Investors: Charles River Ventures, Court Square Ventures, Nauta Capital, Steelpoint Capital Partners, Sumitomo Corporation.

4. Xelerated, Santa Clara 

Description: Semiconductor vendor that says it combines the efficiency of ASICs, which are customized for particular uses, with the programmability of traditional network processors.

Funding: $35.8 million

Investors: Atlas Venture, undisclosed firm.

5. (tie) Xactly Corporation, San Jose 

Description: Provider of online service that helps companies automate sales performance management.

Funding: $30 million

Investors: Alloy Ventures, Bay Partners, Glynn Capital Management, Outlook Ventures, Rembrandt Venture Partners, undisclosed firm.

6. (tie) MediaBank, Chicago 

Description: Maker of procurement technology and analytics for the advertising industry.

Funding: $30 million

Investors: New Enterprise Associates, undisclosed firm

7. (tie) Veoh Networks, San Diego 

Description: Online TV service showing full episodes and clips of various shows.

Funding: $30 million

Investors: Adobe Systems, Goldman, Sachs & Co., Intel Capital, Shelter Capital Partners, Spark Capital, Time Warner Investments, undisclosed venture firm.

8. Fulcrum Microsystems, Calabasas, Calif. 

Description: Sells 10G Ethernet routers and switches and accompanying software.

Funding: $29.2 million

Investors: Granite Ventures LLC, Infinity Capital LLC, New Enterprise Associates, Palomar Ventures, TI Ventures, Worldview Technology Partners.

9. ExteNet Systems, Lisle, Ill. 

Description: Helps wireless service providers extend the reach and capacity of their networks with distributed antenna systems and related services.

Funding: $27.5 million

Investors: Centennial Ventures, CenterPoint Venture Partners, Columbia Capital LLC, Palomar Ventures, Sevin Rosen Funds.

10. Bullhorn , Boston 

Description: Delivers Web-based front office applications for the staffing and recruiting industry, including business intelligence and e-mail that's integrated with CRM and other systems.

Funding: $26.9 million.

Investors: General Catalyst Partners, Highland Capital Partners.