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By SARA FISHER

Staff Reporter

Could L.A.’s new-media industry become as big as aerospace was in its heyday?

That’s what local boosters are projecting over the next few years and even now, L.A. hosts a thriving new-media start-up scene, with creative ideas stampeding out of the proverbial garages across town. This is especially true in the exploding arena of e-commerce, where L.A.-based online companies sell everything from pots and pans to concert tickets.

But while the area is rich in imagination, it lacks staying power. Often the most promising new-media start-ups leave, languish, or sell out to out-of-town giants.

For the new-media hothouse to evolve into a more lasting industry, it must undergo a series of passive-aggressive steps. On the passive side, it needs the freedom and time to mature. On the aggressive side, it needs to develop a better infrastructure including a strong venture capital network, trade groups, comprehensive broadband wiring in the ground, and training programs.

To be sure, a handful of small, hot new-media companies have bailed for Northern California most recently, Bigwords.com and major players like Atlanta-based iXL Corp. and Santa Clara-based USWeb/CKS have gobbled up numerous local companies. But all technology hotbeds, including the Silicon Valley and Boston, are characterized by similar comings and goings.

Not surprisingly, money is at the heart of the issue, and more venture capitalists’ eyes and wallets have been drawn here. The greater Los Angeles area took in $448.5 million in venture funding for the first three quarters of 1998 a pittance compared with Northern California’s year-to-date venture investment of $3.4 billion, but higher than L.A.’s full-year 1997 performance of $274 million.

In addition, new venture capital groups are forming locally such as Pasadena-based Idealab Capital Partners. In addition, more Northern California-based venture capital groups are setting up shop in Los Angeles such as Zone Ventures, an arm of the respected Silicon Valley firm Fraper Fisher Jurvetson.

Meanwhile, a slew of local trade organizations has been hosting workshops designed to coach relatively unseasoned management teams.

“We’re one of the first venture capitalists to come down from Silicon Valley, and I have no doubt that more will follow,” said David Cremin, a partner at downtown L.A.-based Zone Ventures. “There will be more money coming in, more companies following the money, and more companies being nurtured. That’s why we’re here and we’re going to work to make this happen.”

One area still needing work is the development of a digital infrastructure. High-tech companies in general, and new-media ones in particular, rely on a wired world. Modern office buildings need to offer extensive broadband capacity, and cities need to tear up streets to put the wires in the ground. Some cities, including Glendale and Santa Monica, have invested substantially to attract tech companies. Specific projects like Playa Vista also are building heavily wired environments. The city of Los Angeles has finally gotten the ball rolling, but much more needs to be done.

Most importantly, the industry needs time to nurture solid hits. Silicon Valley has an obvious edge, with companies like Oracle Corp. and Sun Microsystems routinely spinning off start-ups that are funded by well-entrenched venture capital and staffed by that region’s talented labor pool.

L.A. houses some potential giants, namely Marina del Rey-based GeoCities, Pasadena’s Ticketmaster Online-Citysearch, and Santa Monica’s eToys. If those companies continue on their respective fast tracks, they could become the monoliths needed to anchor the local new-media industry.

“This is going to be called an overnight success that really took years to realize,” said Jon Goodman, chief executive of USC’s tech incubator EC2. “Over time, I think new media will become the strongest local element of the economy. Once all the technical bumps in the road are ironed out, it will all come down to talent. No matter how you slice it, Los Angeles is where the bright-eyed, big-dream, creative kids in America target. The new-media industry is attractive now, but in 10 years wow, brace yourself.”

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