Rebound in L.A. Venture Scene Has a Telecom Twist
By CHRISTOPHER KEOUGH
Staff Reporter
Don’t give up on telecom.
That appears to be the message from those investing in Los Angeles County companies through the first quarter of the year. Better than 50 percent of the venture capital invested in the first three months was in telecommunications related firms, according to a report from venture tracking firm Growthink.
The $131.9 million doled out to companies in what Growthink identifies as the connectivity sector was almost as much as the combined funding in all other categories healthcare, business applications, e-content and others. Growthink lumps networking, semiconductors, broadband and wireless under the connectivity banner.
Dave Lavinsky, Growthink’s president, said connectivity and healthcare would remain the big magnets of venture investment in Los Angeles.
Local activity was anchored by two large deals: Santa Monica biotech company Agensys Inc., which recorded a $42.8 million private placement, and TelePacific Communications Corp., which landed a $40 million equity investment.
That a regional biotech company would pull in a substantial investment is not unusual. A telecommunications company attracting $40 million is.
TelePacific’s funding came mostly from affiliates of Investcorp, TelePacific’s largest shareholder. TelePacific Chief Executive Dick Jalkut said the investment likely isn’t an indication that the investment community has changed its reversed the recent trend to stay away from telecoms.
“We’re the man bites dog story,” Jalkut said. “We have done a good job keeping our cash and the market is rewarding people today for managing their cash.”
Total VC investment in Los Angeles County was up 61 percent over the previous quarter, the report indicated. Twenty five companies attracted $266.2 million in the first quarter, compared to a fourth quarter in which 16 companies raised $104 million.
That’s the good news, but there’s reason for concern in Los Angeles, Lavinsky said. The ratio of venture capital raised in Southern California had been 65-35 L.A. to San Diego. There’s been a complete reversal in that ratio over the last several quarters, mainly due to the proliferation of biotech companies in San Diego.
The Southern California region, from Santa Barbara to San Diego, led the nation in raising healthcare funds. The area pulled in 20 percent of the $8.1 billion national total.
