Less Ventured, Less Gained? Capital Financing Fell in ’96

Venture capital financing in Orange County retreated to $113 million in 1996 after a banner year in 1995.

That’s what Greg Ross, a partner at the accounting firm Ernst & Young in Irvine, found in a survey of venture capital firms, banks, newsletters and other industry sources.

Ross has been tracking investments in young, growing companies since the early 1980s, and has found that the level of private money raised in the county has remained fairly constant over the years--in the $100-million to $140-million range.

But in 1995, venture capital financing spiked up to $220 million, he said, because of a few big deals. They included $18.25 million in financing for Platinum Software Corp. and $44 million raised by hamburger chain Johnny Rockets Group Inc.

Last year, venture capital activity returned to a level more normal for the county. The decline probably reflected the surging stock market, which provided a more attractive means for many young companies to raise money, Ross said.

However, he cautioned that any survey on venture capital funding is likely to understate the total amount of money raised. Many deals are very small and hard to detect, he said. And some businesses are more secretive about their financing arrangements.

“I’ve reported every one I can find,” he said. “I know darn well there’s more.”