While venture capital firms across the country are tightening their purse strings, DFJ Frontier announced this week the close of a $55.4 million fund to invest in media, information technology and other startup companies along the West Coast.
The firm also announced that it will relocate its headquarters to Los Angeles with the opening of an office in Sherman Oaks. The firm was headquartered in Sacramento, where it will maintain an office, and has branches in Santa Barbara and Portland, Ore.
David Cremin, who founded the firm in 2002 with Scott Lenet, said Los Angeles is becoming more attractive for venture capital firms, particularly those focused on emerging media technologies. He said a thriving community of entrepreneurs is helping the area gain ground on traditional venture capital hot spots such as Silicon Valley.
"We really believe there's more opportunity and will continue to be more opportunity as technology continues to enable all these media businesses," he said. "The culture from Silicon Valley has seeped in."
The firm, an offshoot of the long-established venture capital firm Draper Fisher Jurvetson, started with a $25 million fund focusing on technological development at UC Davis and UC Santa Barbara. As that strategy proved successful, the firm's three partners decided to raise this latest fund and expand DFJ Frontier's geographic footprint.
Despite a difficult fundraising environment, the firm managed to raise more than $50 million primarily during 2008 from institutional investors including the California Public Employees' Retirement System, Credit Suisse and Hamilton Lane.
Already, the firm has invested in several businesses through the fund, including Encino-based market research company United Sample and L.A. comic book company Boom! Studios.
DFJ Frontier's announcement comes just days after a pair of studies showed major declines in venture capital activity. According to the quarterly MoneyTree Report from PricewaterhouseCoopers and National Venture Capital Association, U.S. venture capital investment in the quarter fell to $3 billion, the lowest level since 1997. A similar study from Dow Jones VentureSource found investment of $3.9 billion, the lowest level since 1998.
The investment decline could actually benefit DFJ Frontier, Cremin said, because there are more quality startups looking for funding.
The Federal Reserve announced April 23 that it has settled an enforcement action against First Regional Bancorp, the Los Angeles parent of First Regional Bank.
Under the written agreement, the bank holding company has 60 days to submit a plan detailing how it intends to remain sufficiently capitalized. First Regional also is restricted from paying dividends or making distributions of principal or interest without prior approval.
In February, First Regional reported a fourth quarter loss of more than $10 million, compared with a profit of about $8 million one year prior, and upped its loan loss reserve by $26 million to $66 million. About the same time, First Regional received a cease-and-desist letter from regulators ordering it to increase its capital.
Management said in February that it exceeded the capital ratios considered "well-capitalized." Last week, Executive Vice President Steve Sweeney said that he could not comment on current capital levels, but the bank plans to release quarterly earnings this week.
GE Capital, a giant financing subsidiary of General Electric Co., announced last week that it has sold its stake in a security alarm company to Rustic Canyon/Fontis Partners LP, a private equity firm in Los Angeles.
Under the deal, Rustic Canyon will assume a majority ownership position in Safe Security, based in San Ramon, for an undisclosed sum. Bank of America Corp. has also provided a $25 million senior credit facility.
Additionally, Rustic Canyon has invested an undisclosed amount of new capital into Safe Security, one of the country's largest security alarm companies.
At a time when Wall Street firms are retrenching, online discount brokerage Scottrade Inc. announced last week that it will open two Southern California offices, including one in Los Angeles County.
With the opening this week of a branch office in San Dimas, the firm will have more than a dozen locations in the county. On May 4, it will open a Yorba Linda branch, its third Orange County outpost.
Although best known as an online brokerage, Scottrade has more than 400 offices across the country and is adding to its brick and mortar operations as more established Wall Street firms pull back. On the same day it announced the two new Southern California offices, it said that five others will open nationwide.
Scottrade said the openings are part of an ongoing strategy to increase its branch network.
Stellar Business Bank, based in Covina, announced that Kathleen Hatcher has been appointed vice president and community banking manager. California United Bank, based in Encino, has hired Kim Defenderfer as senior vice president and South Bay regional manager.
Staff reporter Richard Clough can be reached at email@example.com or at (323) 549-5225, ext. 251.
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