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Venture

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BEN SULLIVAN Staff Reporter

Many were called, few were chosen, and none may actually wind up with a deal.

Nine L.A. technology firms made their pitches for funding at last week’s Los Angeles Technology Venture Forum, and owners of the fledgling ventures said just having an opportunity to address venture capitalists was welcome, considering the shortage of financing available for local start-ups and early-stage firms.

“I have no idea what the outcome will be,” said Cupid Expert Software President Michael Leigh, who sought $6 million to take Cupid’s sales and marketing software national. “We’ve done a lot of hard work, but if we’re not successful (at securing funding from the venture forum) it’s not going to stop us,” he said.

The annual forum, sponsored by the Los Angeles Regional Technology Alliance and the Economic Development Corp. of L.A. County, brings together venture capital investors to hear pitches from small California technology companies, generally with fewer than 10 employees and seeking between $2 million and $6 million.

The 17 companies chosen to give presentations this year were selected from a pool of 50 applicants, and were tutored for weeks by forum organizers on how to refine their presentations.

The nine selected companies from L.A. included six software firms, an Internet security products manufacturer and a maker of industrial robots.

“It’s been a long and grueling process,” said Kevin Klingler, president and chief executive of Sonic Desktop Software Inc. in Chatsworth.

While the companies have no guarantee that financing will be forthcoming, the forum gives Cupid, Sonic Desktop and the others more contacts in their quest for investors, Leigh said.

And that, someday, could lead to the sort of financing the companies are after.

“It’s not an instance where at the end of the day you have a check for $6 million,” Leigh said.

Venture capital is a mainstay of young technology firms, letting them develop innovative research into viable commercial products.

But the four-county greater Los Angeles region with more technology-driven companies than any comparably sized region in the country is home to just five venture capital firms actively investing in technology start-ups, according to a national survey by accounting firm Price Waterhouse LLP.

That’s a far cry from the 49 venture capital firms in Santa Clara County’s Silicon Valley and the 25 such firms in the New York metropolitan area, the study found.

In last year’s fourth quarter, Los Angeles County firms attracted $35 million in 11 venture capital deals, according to the Price Waterhouse survey. With Orange, Riverside and Ventura counties added in, the figure rose to $88 million in 23 deals.

Silicon Valley, by comparison, attracted $571 million in 153 different deals in the same period.

Beset by expansive geography and intense competition from around the country for cash, industry representatives say wooing technology venture capital to L.A. is difficult.

Forums such as the one last week and others in coming months sponsored by Southern California Edison and the Los Angeles Venture Association can help, according to Jim LoPresti, who oversaw the Price Waterhouse survey.

“(Such forums) give entrepreneurs an opportunity to make contact with providers of capital, and other service providers like lawyers and accountants all of whom can help,” LoPresti said.

The forums are often best judged not by the funding that emerges immediately, LoPresti said, but by the degree to which they make L.A.’s technology and financial sectors more cohesive.

By making the forum selective, organizers try to ensure that L.A. puts its best foot forward to the dozen or so venture capital investors who attend, said Brent Rider, chairman of the Southland Venture Alliance and an organizer of last week’s event.

The selection process eliminated companies that were “not quite ready, or may never be ready” for venture funding, said Rider. “We picked the ones most likely to succeed because we want a good track record ourselves.”

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