A record $366.4 million in venture capital poured into the L.A. area during the second quarter, with three quarters of that going to Internet firms.

But at a time when Net stocks are facing a tougher time on Wall Street, and few of those companies have yet to prove the viability of their business models, is that such a good thing?

“Yes, Internet stocks have come down a lot, but relative to what?” said Massoud Entekhabi, a partner with PriceWaterhouseCoopers in Woodland Hills. “AOL is down to $90. But a year ago it was at $30. The Internet is here to stay. It is changing the terrestrial experience and the local companies that are getting the money are the ones enabling that process.”

Other venture capitalists were more cautious.

“I continue to believe there are a lot of interesting Internet companies out there,” said Tony Hung of Torrance-based DynaFund Ventures. “But I am seeing a lot of marginal, ‘me-too’-type Net companies getting funded. That worked fine when the IPO market was going gangbusters. But now the supply-demand ratio has evened out.”

The latest venture capital figures for the period ended June 30 were compiled by PriceWaterhouseCoopers.

Along with L.A., the venture capital numbers include Ventura and Santa Barbara counties. But unlike previous quarters, nearly all the firms receiving money in the April-June period were based within Los Angeles County.

The $366.4 million in investment brought the 1999 venture capital total to $598.8 also a record that surpasses total investments for all of 1998.

“We’re in a hot spot. I don’t see business slowing down for the foreseeable future,” said Frank Creer, managing director of Zone Ventures, which financed five new deals. “Venture capital firms inevitably focus somewhere. Right now it’s the Internet.”

One reason investors are willing to risk their money on yet-untested Internet firms is the promise of ever-faster returns. Venture capitalists once expected to wait at least three years between the time they made an investment and the point at which initial public offerings were issued. Today that cycle is often shorter than 12 months.

With money at risk for shorter periods, investors seem willing to take chances on more speculative ventures.

One example is NetZero Inc., a Westlake Village-based firm that’s offering free Internet access if subscribers provide detailed demographic information to marketers and are willing to view Internet-based advertising.

The company launched its service in November and as yet there are few indications about whether the business model will work in the long term.

But that didn’t stop Idealab Capital Partners, Draper Fisher Jurvetson, Foundation Capital and Compaq Corp. from pumping $33 million into the young firm during the second quarter. The investors still might see a quick profit because the company announced in July that it is preparing to launch a $115 million IPO.

Another winner this quarter was Pasadena-based DrDrew.com. The Web site of celebrity doctor Drew Pinsky received $1 million in seed money from Palo Alto-based Garage.com Investments.

Pinsky is a specialist in addiction medicine and co-host of “Loveline” on MTV and KROQ-FM 106.7. The Web site is seen as the Gen-X equivalent to DrKoop.com, the site established by former U.S. Surgeon General C. Everett Koop. Since going public in June at $9 a share, DrKoop’s share price went as high as $45 before dropping to $16 last week.

“Koop was a success, if managing to go public is your measure of success,” said Hung. “But whether it can become a lasting success is yet to be seen.”

Other local Internet companies receiving early-stage financing last quarter include Allpets.com, an online service that provides pet-related information, online talent agency WhyNotU.com Inc., and Showbiz Data Inc., which offers data on the entertainment industry.

With so much money going to Internet firms, there have been concerns that less capital will be available for companies in other sectors. But second-quarter figures show those fears may be overstated.

Non-technology businesses in the L.A. area took in $33 million in venture capital, up from just $13 million in the previous quarter.

But investment bankers do say it’s getting increasingly difficult for non-Internet companies to get the attention of investors.

“We’ve seen a lot of good companies out there that cannot get the interest of venture capitalists because they are not related to the Internet. That’s unfortunate,” said Lorne Goldberg, president of West Coast Capital, a boutique investment bank in Beverly Hills.

Los Angeles wasn’t the only area to do well in the second quarter.

Orange County saw a record $147 million, almost three times what it received in the first three months of the year. Meanwhile, firms in San Diego County picked up almost $200 million, a total that surpasses the amount invested in all of 1998.

But in each of those counties, Internet firms collected less than 50 percent of the total investments.

The venture deals in Orange and San Diego counties also differ from L.A. County in that they tend to be later-stage investments in more established companies.

Much of the money going to Orange County went to health care firms, while San Diego’s biotechnology sector saw major investment.