Venture capital funding to L.A. region jumps 22% in second quarter


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A large investment in a renewable energy firm helped Los Angeles-area companies record a 33% jump in venture capital funding in the second quarter, bucking the national downward trend, according to a report scheduled for release Saturday.

The greater Los Angeles region received $415 million in investment, compared with $313 million in the same period last year, research firm Dow Jones VentureSource said.


The biggest investment in the region was $148 million toward renewable energy companies, up sharply from $16 million last year.

ESolar, a Pasadena solar energy company that sells power to Southern California Edison, took in $130 million, the second-highest amount raised by a company in the nation during the quarter. Among ESolar’s investors was, the philanthropic arm of Web giant Google.

The region benefited from four chief industries: technology, bio-pharmaceuticals, consumer business services and energy, said Michael Schoenfeld, Ernst & Young’s director for the Pacific Southwest venture capital advisory group. He said the diversity was key to the rise in investment, the highest amount since the third quarter of 2006, when the region saw $416 million.

“You don’t have all these industry sectors outside this area,” Schoenfeld said. “This could have been easily a bad quarter.”

Nationally, investors poured $6.6 billion into companies, 12% less ...

... than the $7.5 billion invested in the same period last year.

As usual, Bay Area firms received the bulk of that — $2.17 billion, down 9% from $2.4 billion.
Southern California remained the second most popular region for venture investment, with $868 million, a 2% slip from $889 million.

Overall, the information technology industry received $2.6 billion, a 26% decline from $3.5 billion. One bright spot was information services, which includes Internet start-ups. They received $688 million, up 20% from $572 million. However, the money went to 15% fewer companies: 80, compared with 94 last year.

In the Los Angeles area, investment in information technology companies dropped 35% to $94 million, from $144 million. Investment in Internet firms fell 21% to $56 million, from $71 million. Business support services firms received $87 million, up 16% from $75 million.

Spot Runner, a Los Angeles-based advertising and technology company, is using the $51 million it raised to, among other things, build new technology and expand globally, spokeswoman Rosabel Tao said.

“In these economic times, having a war chest doesn’t hurt,” Tao said.

-- Michelle Quinn