Venture funding rises 13.9 percent in Washington

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Washington: A Bethesda company that makes organic treats for kids received $15 million in venture funding. A hip-hop-themed social-networking site out of Reston that allows musicians to sell music downloads got $1.5 million, reported

Venture capitalists invested $264.6 million in the Washington area in the first three months of 2008, up 13.9 percent from the comparable period a year earlier, according to a MoneyTree report from PricewaterhouseCoopers and the National Venture Capital Association. The report was based on data from Thomson Reuters.

"In spite of strong headwinds, the venture market is still pretty robust," said Don Rainey, a general partner with Vienna based Grotech Ventures, a venture capital firm. "It is doing well locally."

Information technology services and software companies got the biggest slices of the local venture capital pie, with $68.5 million and $54.2 million, respectively. Nationally, biotechnology companies received the most funding in the first quarter, with $1.27 billion. Washington area companies received $5.4 million of that.

Elaine Romanelli, a professor at the McDonough School of Business at Georgetown University who specializes in entrepreneurship, said only about one in 10 start-ups make it beyond five years. While getting venture funding is often an important step, it does not guarantee success, she said.

"A lot of what an entrepreneur gets from a venture capitalist is contacts and help with hiring key personal," Romanelli said. "While money counts, finding the right money is absolutely key."

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