L.A.’s high-tech sector has been the Rodney Dangerfield of the industry: Next to Silicon Valley, it just doesn’t get any respect.
That perception, however, might finally start to change in 1998.
“My office is fielding a lot more inquiries than any year before from both companies interested in working here and from investors,” said Bill Manassero, executive director of the Software Council of Southern California.
Indeed, L.A.’s major universities and their respective technology incubators are poised to emerge as key players in attracting and producing successful companies.
“UCLA, USC and Caltech are busy spinning out companies from their incubators into the private sector,” said Ahmed Enami, executive director of the Southern California Biomedical Council. “Already several such firms have emerged, and more are likely to follow. This fuels both investment and company growth across the board in the technology field.”
Most of the new companies popping up are Internet-related. Even large software companies like Cendant Software, formerly CUC Software, are entering the field. This could mean a Darwinian round of shut-downs for Internet-development companies.
“However, the very fact that companies in L.A. are reaching the point that start-up companies have to shut down, merge or consolidate means that the market is maturing,” said Rohit Shukla, director of the Los Angeles Regional Technology Alliance.
While garnering less attention than new Internet opportunities, the software industry is entering another year of solid if not meteoric growth.
Cendant Software has been a big participant in L.A.’s software industry, having acquired Davidson & Associates and Knowledge Adventure in the last year. Cendant is reported to be looking for other acquisition targets in the coming year.
“In general our company is very acquisitive by nature,” said Larry Gross, president of Davidson & Associates and Knowledge Adventure. “It’s part of Cendant’s growth strategy.”
Biomedicine also will maintain its rapid growth, but not at the meteoric pace that analysts had predicted last year. And because of high rents and taxes, Los Angeles might see an exodus of several large biotechnology companies.
Moreover, certain projects intended to entice more biomedical companies are struggling. The General Motors auto plant in Van Nuys was not turned into a biomedical industrial park as intended, held up by contractor problems.
Similarly, the Pasadena biotechnology zone was set back when its proposed size was slashed from 120 acres to 25.
“Los Angeles will continue to see the departure of large biomedical companies from the area due to cost pressures,” said Enami.
Shukla does not agree.
“Yes, these companies are moving out, but other companies are constantly moving in,” he said. “Alfred Mann is a good example.”
Biotechnology entrepreneur Mann plans to build a business park on a 65-acre area of the California State University at Northridge and relocate his biomedical companies Advanced Bionics Corp., MiniMed Inc. and MRG Inc. there.
The West Valley will consequently become even more of a haven for biotech companies, with more than 30 already in the area.