The gods of venture capital finally appear to be smiling on Los Angeles.

Blessed with a growing number of Internet, software and communication firms, L.A., once seen as a poor relative to Orange County and San Diego in terms of venture capital investment, it now receiving as much, if not more of the precious investment capital that its neighbors.

That’s good news for local high-tech industries, which could get the financial boost they need to eventually compete against the giants of Silicon Valley.

“The fruits of the labor of the last few years are finally coming to fruition,” said Massoud Entekhabi, partner at PriceWaterhouseCoopers LLP, who produced the latest venture capital figures. “In the past we didn’t have the infrastructure of academia, successful high-tech firms that are spinning out talent, and a network of venture capital groups. But all that is now starting to come together.”

“It is a case of the chicken and the egg,” said Wesley Hein, vice president at Glendale-based digital-media firm Synctrix Inc. and a member of the Acorn Group, a VC fund established this year with the intention on investing in local media-technology startups. “There have to be the opportunities before the investment capital arrives. In the case of L.A., there are now so many unique opportunities that it has become fertile ground for venture capital.”

In the third quarter of this year, Los Angeles, Ventura and Santa Barbara Counties took in $236.7 million worth of venture capital. L.A. County accounted for $155 million, or 66 percent of the total. That ratio has remained relatively constant throughout the year, PriceWaterhouseCoopers said.

By comparison, Orange County, which until the mid 1990’s outpaced L.A. in terms of VC inflow saw investment of $53 million in the third quarter. While San Diego, which has dominated venture capital investment in southern California since the start of the decade, took in $70 million.

Since the start of the year, the L.A. area has taken in $448.5 million, compared with $197.2 million for Orange County and $295.7 for San Diego.

If the trend continues, Los Angeles County, even without the aid of Ventura and Santa Barbara, could be the biggest recipient of venture capital in Southern California this year, the first time that has happened since PriceWaterhouseCoopers began compiling its VC figures in 1993.

So why is L.A. now starting to hold its own in terms of VC investment?

“L.A. now has pockets of technology companies stretching from Westlake to Pasadena to Hollywood and Long Beach,” said Joe Stubbs, a partner at Century City law firm Troop Steuber Pasich Reddick and Toby, who has specialized in representing high-technology firms looking for VC investments. “Demand for what these companies are producing is increasing and that is being recognized by venture capitalists throughout the country.”

Los Angeles’ growing number of Internet-commerce as software companies are particularly attractive, venture capitalists say.

“What we are starting to see is a lot of Internet and software startups he in Los Angeles,” said Tony Hung, a partner at Torrance-based VC firm DynaFund Ventures, which has $60 million to invest primarily in Internet-relates companies. “When you are a venture capitalist, those two areas are at the top of the list.”

That demand has been fueled this year by the phenomenal success of Internet related initial public offering,

A strong IPO market is vital to venture capitalists as a public offering is the most common “exit strategy” by which the investors can sell, usually at a large profit, their stake in a company they invested in years earlier.

Typically, venture capitalists expect to wait three to five years or longer before recouping their investment through an IPO. However, with the faster growth cycles for high-tech firms, combined with the stock market’s appetite for such companies, that waiting period has in some cases shrunk to as little as one year.

As such, the wildly successful IPO’s of local stars Earthlink Network Inc. and GeoCities is prompting venture capital firms to scour the L.A. area for future success stories.

“These were landmark deals that proves there is real value in Internet space,” said Entekhabi. “There is an energy here. People who are finally doing something with the Web other than pornography and E-mail.”

With that in mind, it is not surprising that the biggest local recipient of venture capital in the third quarter was Westlake Village-based Real Select Inc., which received $50 million worth of investment from J.H. Whitney & Co., Morgan Stanley Venture Partners and others.

Real Select has benefited from two quite different factors: the popularity in Internet commerce companies, and the booming residential real estate market.

Real Select has three Web sites Realtor.com, HomeBuilder.com and CommercialSource.com — that allow users to view residential and commercial property that is for sale. According to Real Select’s Vice President David Rosenblatt, Realtor.com lists 95 percent of the for-sale inventory in the U.S. and attracts four million visits a month.

Another local firm that has seen a flurry of venture capital investment so far this year is StampMaster Inc., a Santa Monica-based firm whose software allows users to print postage directly onto envelopes without any additional hardware.

“We’re an Internet E-commerce company at a time when Internet commerce companies are a hot item,” said John Payne, StampMaster’s president and chief operating officer.

The firm crossed its most important hurdle in August when it won approval from the U.S. Postal Service, which will allow them to start marketing the product early in 1999.

The concept has struck a cord with venture capitalist. The firm has raised six million dollars since the start of the year, from Southern California-based VC firms Enterprise Partners, Brentwood Venture Capital and Forrest Binkley & Brown.

Payne said that they will raise another $15 million in the first quarter of 1999, at which time they plan to team up with a strategic partner, such as an already established E-commerce firm.

But not everyone who took home a big chunk of VC money is computer related.

Transtar Metals Inc., an L.A.-based firm that produces specialty metals for the aerospace industry, took in $43 million worth of investment from a number of VC firms, including Chase Capital Partners.

Venture capitalists say that the most recent figures put to rest a long held contention that Los Angeles’ high-tech community is being held back by a drought of venture capital investment.

“The notion that L.A. isn’t getting enough venture capital is false,” said Bradford Jones, general partner at Brentwood Venture Capital, one of L.A.’s biggest VC firms. “The people who usually complain about the lack of venture capital are the ones who can’t qualify to get it. The quality companies are getting the money.”