Los Angeles Business Journal

Tech Helps L.A. Beat National Venture Capital Trend

By James Rufus Koren Friday, January 18, 2013

The tech-heavy startup scene in Los Angeles helped the region buck a national trend last year, drawing more venture capital investments as the nation saw an overall decline.

VC investments in the Los Angeles area, including Orange, Ventura and Santa Barbara counties, rose 13 percent to about $1.3 billion in 2012, up from $1.1 billion the previous year, according to figures released Friday by Pricewaterhouse Coopers and the National Venture Capital Association.

Nationally, venture capital investment fell by about 10 percent last year, driven by big declines in investments in clean technology and life sciences companies.

Meanwhile, tech investment – which is more than a quarter of all VC investment – was up by 10 percent nationally, and Los Angeles tech and software companies attracted $354 million in venture funds last year.

But while venture capital investment was up, total investment by venture-backed companies – including investments by corporations and private equity firms – fell nearly 20 percent last year from $3.8 billion to $3 billion. That’s according to figures complied by Dow Jones VentureSource.

Mark Sogomian, a partner in the downtown Los Angeles office of Ernst & Young, said big investments made in 2010 and 2011 coupled with a slow market for mergers and acquisitions last year means investors have lots of capital tied up already, hence the decline in investment last year.