For the second year in a row, the amount of venture capital dollars invested into L.A.-area companies fell, dropping 8.6 percent to $3.2 billion from the year prior, according to a report by Dow Jones VentureSource.
The drop in investment comes after a high point in venture capital funding to the region in 2015 when companies raised $4.17 billion. Still, investment into corporations in the region remains healthy, said Jeff Grabow, U.S. venture capital leader at Ernst & Young, in an email.
“I would characterize (this) as a strong year for the region overall,” he said.
Funding was also down in the fourth quarter of last year compared to the third, according to the report. There were 39 companies in the L.A. area that raised $361 million in the fourth, compared to 69 companies that raised $1.1 billion in the third quarter of last year.
“Quarterly decreases like this can be attributed to several factors: a lack of large deals, perhaps some seasonality, as well as the market adjusting to the large volume of capital that has already been raised,” Grabow said.
Across the U.S., venture capital-backed companies received $18.88 billion in the fourth quarter, which was flat compared to the third quarter.
One bright spot: The number of companies receiving investment in Los Angeles last year rose to 225 from to 177 in 2016.
Technology reporter Garrett Reim can be reached at firstname.lastname@example.org. Follow him on Twitter @garrettreim for the latest in L.A. tech news.
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