Venture Capitalists Increase Lending to Southland Firms : Finance: A survey suggests a positive fourth-quarter trend for Southern California companies seeking high-risk capital.

As computer programs get more complex and more costly each year, John Wark finds it tougher to raise enough cash to spur the growth of his young software company.

Although Continuus Software Corp. of Irvine has grown since receiving $1.5 million in seed money in 1991, it’s still too small to attract the cash it needs through bank loans or a public offering of its stock.

“As a technology company, you usually can’t get loans from banks, and if you could get one, the rates would be very high,” Wark said. “You’re not making a profit, you’re not cash-positive, you’re not all the things that bankers like to see before they give you money.”

So when venture capital firms opened up their wallets wide in the fourth quarter of last year, it was good news for Continuus. It collected a tidy $2.5 million from investors to move the firm along.

The company was one of 23 in Southern California that raised a total of $141.1 million from venture capitalists during the last quarter of 1994, according to a nationwide survey by the Big Six accounting firm of Price Waterhouse. That is a whopping 68% increase over $84.2 million raised in the third quarter.

The big leap from quarter to quarter was not regarded as meaningful in itself because a few major deals can skew the percentages, but the trend was positive for Southern California.

“When people put money into venture funds, it’s an indicator that there’s a positive feeling about the economy, a feeling that it will be growing,” said Mike Larrenaga, managing partner of Price Waterhouse’s high-technology group for Southern California.

The fourth-quarter funding went to a wide range of privately held companies from low-tech to high-tech and from start-ups to young, growing operations. More than half the money went to software, health and biotechnology companies.

The totals included $62.2 million for 13 firms in the greater Los Angeles-Orange County area, and another $79 million invested in 10 San Diego County operations.

“In Los Angeles and Orange County, the consistent winners have been software, information technology companies and communication firms,” Larrenaga said. “And in San Diego and Orange County, it’s health care and life-sciences companies.”

For Continuus, which produces business software for corporations, the capital infusion enables it to keep in sight a rival, publicly held Atria Software Inc. in Atria, Mass., which earned $800,000 in 1993--results that Continuus doesn’t expect to equal until next year at the earliest.

Continuous got its first $1.5 million in 1990 from two private investors, Sol Zechter and Fred B. Cox, who remain on the company’s board. But the company soon ran out of that money and figured it wouldn’t find additional investors fast enough to help it open European offices and develop new products.

So it began courting venture firms last year, eventually picking up $7.5 million for all of 1994 from three groups led by Norwest Venture Capital, a subsidiary of the large Norwest Corp. banking company in Minneapolis.

Continuus will probably need to post several consecutive profitable quarters before it is ready to offer its stock publicly, said Kay Church, the company’s chief financial officer. That probably means it will seek at least one more large venture investment, she said.

Times staff writer Don Lee contributed to this report.