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Hed — Venture shortfalls

One of the more striking and distressing numbers to come out of the Business Journal’s Investing special report (pages 23-30) is the still-limited amount of venture capital flowing into Los Angeles.

In the fourth quarter of 1996, nine L.A.-based companies were reported to have received just $35.6 million in such investment capital, which, given the breadth and scope of this business community, can hardly be considered an impressive number.

What’s more, L.A. continues to lag behind Orange and San Diego counties in venture capital activity not to mention Silicon Valley to the north.

Venture capitalists have shied away from L.A. for some time and with some justification. Besides the higher costs and hassles of doing business here, much of the area’s economic growth has involved small businesses that often aren’t suited to venture investment. While this pattern is quickly changing, the perception remains largely the same.

By contrast, Orange and San Diego counties long have established themselves as technology-oriented havens. Investing in such areas becomes a more conventional bet.

Getting the venture capital community more aware of the new Los Angeles is a challenge that falls on the area’s business leaders, elected officials and most of all, on the companies themselves.

Given the exciting work being done in biomed, multimedia and even light manufacturing, we can’t help believe that there’s investment money to be had for L.A.