Third-quarter venture capital funding in the Los Angeles area jumped sharply from a year ago, with 26 companies in the region hauling in $207.5 million, according to a new survey.
The companies, in Los Angeles, Ventura and Santa Barbara counties, received 50 percent more funding than in the third quarter of 2004 as venture capitalists displayed eagerness to put their dollars to work, according to the latest MoneyTree Survey by PricewaterhouseCoopers, Thomson Venture Economics and the National Venture Capital Association.
“People have really have started to work out the problems in their portfolio from the tech bubble, and now they’re ready to start looking at new opportunities,” said John Babcock, a partner at Santa Monica-based Rustic Canyon Partners, which closed several modest deals with Internet-related businesses.
The funding level was 15 percent off from the second quarter, but the third quarter is a traditionally slower period as it includes the vacation-filled summer months. Year-to-date funding for the first three quarters of 2005 was $672 million, also up 50 percent from a year ago.
Among significant local investments in the July-September period was $14 million raised by Los Angeles-based Amp’d Mobile Inc., which plans to launch a mobile-phone entertainment service by the end of the year. The largest single amount was received by Torrance-based Primarion Inc., which makes mixed-signal integrated circuits and received $22.4 million.
The MoneyTree survey doesn’t detail which venture firm made those and other investments. It primarily surveys professional venture capital practitioners about their cash-for-equity investments, with some VCs providing only partial information on a deal for proprietary reasons.
The Amp’d investment, as well as $22.2 million in expansion funding for Los Angeles-based eStyle Inc., owner of the Babystyle.com e-commerce site, were typical of venture investments popular in Los Angeles information technology companies with an entertainment or lifestyle emphasis.
“If you’re an entrepreneur it’s a good time to seek funds,” said Randy Churchill, director of business development at PricewaterhouseCoopers’ Los Angeles office. He noted that several venture companies who have funds dating back to waning days of the tech boom now are in a fund-raising mode for new offerings.
Elsewhere in Southern California, $204.6 million was given to 36 San Diego County companies. That’s down 19 percent from a year ago when $252.5 million was invested. In Orange County, $132.4 million was given to 18 companies, up 129 percent from a year ago when $57.8 million was invested.
Nationally, venture capitalists invested $5.3 billion in 714 companies in the third quarter, up 15 percent from the like period a year ago. The survey projects that total venture investing this year across the nation could meet or exceed 2002’s $21.7 billion level the highest level in the prior three years.
A separate survey using different criteria, conducted by Venture One and Ernst & Young LLP, recorded $88.7 million in venture commitments to 15 companies in Los Angeles during the third quarter, with some recipients overlapping with MoneyTree’s list. The figure was up 19 percent from the year-ago third quarter.
“There were a lot of mid-size deals in the quarter and that’s typical for Los Angeles,” said Don Williams, leader of Ernst & Young’s Southern California Venture Capital Group. “We don’t get the kind of large bio-med deals you see in San Diego or medical device investments in Orange County.”
The average deal was valued at $8 million in the Money Tree survey.
