NEW YORK – Although August didn’t bring any record-breaking computer hardware or software venture deals to the table, the investing pace was nonetheless steady as the sector actually placed second to the Internet-specific sector in the final funding tally. Indeed, software and hardware companies attracted more than 16% of the total August VC disbursements, pulling in more than $990 million out of a total of almost $3 billion disbursed, according to data from Venture Economics.
Of course, it’s been no secret that firms providing behind-the-scenes services for the Internet – such as software, access, infrastructure and Web hosting – are being aggressively funded. Two companies within that genre that really stood out last month were Asera Inc. and Authoria Inc.
For its part, Asera’s Series C offering weighed in as the heftiest deal, with $115 million raised from investors Bowman Capital, AC Ventures, Kleiner, Perkins, Caufield & Byers and Morgan Stanley Dean Witter.
Even though investors were certainly bullish on the firm, its No. 1 unique quality is the exact thing that could keep it from seeing a quick payoff. More specifically, in contrast to the way most software developers make money by getting licensing fees upfront, Asera charges activation and monthly subscription fees from its customers.
“We actually liked that aspect of the company,” said Matthew Cowan, a general partner at Bowman Capital. “It seems to set them apart from their competitors and it has proven to be successful.” Bowman Capital has committed itself to making similar future investments.
“While many believe the information technology revolution is over-hyped, we believe that it’s as fundamental and profound as the Industrial Revolution,” Cowan said. “The Internet and other computer networking technologies have the potential to dramatically accelerate worldwide economic activity and productivity growth.”
Authoria receives second place honors for attracting $75 million in venture capital during August. The Waltham, Mass.-based application service provider of employee benefits information over the Internet received third round funding from Capital Z Financial Services, Van Wagoner Capital Management, Unum Provident and AFLAC. Previous funding partners, Fidelity Ventures, Norwest Venture Partners, Menlo Ventures and Pequot Capital also participated in this round.
Authoria has been ranked by Inc. Magazine and Deloitte & Touche as one of America’s fastest-growing private companies. According to a statement released by the company, Authoria will use the proceeds to bolster its sales and marketing functions, establish and scale strategic partnerships and intensify its next generation product development activities.
Overall, VCs invested in 74 computer software and hardware companies during August, for a total of just under $1 billion. That compares with almost $500 million for 53 firms in July and a whopping 187 companies funded in June for over $2 billion.