"L.A. now has pockets of technology companies stretching from Westlake to Pasadena to Hollywood and Long Beach," said Joe Stubbs, a partner at Century City law firm Troop Steuber Pasich Reddick and Toby, who has specialized in representing high-technology firms looking for VC investments. "Demand for what these companies are producing is increasing and that is being recognized by venture capitalists throughout the country."

Los Angeles' growing number of Internet-commerce as software companies are particularly attractive, venture capitalists say.

"What we are starting to see is a lot of Internet and software startups he in Los Angeles," said Tony Hung, a partner at Torrance-based VC firm DynaFund Ventures, which has $60 million to invest primarily in Internet-relates companies. "When you are a venture capitalist, those two areas are at the top of the list."

That demand has been fueled this year by the phenomenal success of Internet related initial public offering,

A strong IPO market is vital to venture capitalists as a public offering is the most common "exit strategy" by which the investors can sell, usually at a large profit, their stake in a company they invested in years earlier.

Typically, venture capitalists expect to wait three to five years or longer before recouping their investment through an IPO. However, with the faster growth cycles for high-tech firms, combined with the stock market's appetite for such companies, that waiting period has in some cases shrunk to as little as one year.

As such, the wildly successful IPO's of local stars Earthlink Network Inc. and GeoCities is prompting venture capital firms to scour the L.A. area for future success stories.

"These were landmark deals that proves there is real value in Internet space," said Entekhabi. "There is an energy here. People who are finally doing something with the Web other than pornography and E-mail."

With that in mind, it is not surprising that the biggest local recipient of venture capital in the third quarter was Westlake Village-based Real Select Inc., which received $50 million worth of investment from J.H. Whitney & Co., Morgan Stanley Venture Partners and others.

Real Select has benefited from two quite different factors: the popularity in Internet commerce companies, and the booming residential real estate market.

Real Select has three Web sites Realtor.com, HomeBuilder.com and CommercialSource.com -- that allow users to view residential and commercial property that is for sale. According to Real Select's Vice President David Rosenblatt, Realtor.com lists 95 percent of the for-sale inventory in the U.S. and attracts four million visits a month.

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