Venture Capital Pool Is Growing
Southern California is no longer an also-ran when it comes to venture capital--good news for entrepreneurs from Santa Barbara to the Mexican border.
All told, at least 19 venture capital firms now operate here, among them 10 newcomer firms described in this space in recent weeks. At least three more venture capital firms now forming expect to join the competition before midyear.
The newcomer firms already have committed, or expect to commit, nearly $3.4 billion in venture backing to businesses in Southern California over the next two or three years, focusing chiefly on new-economy companies in the life sciences, information technology, Internet media content and related industries, plus a handful of old-economy companies.
The firms compete with at least nine other funds operating here, including some with deep roots in the Southland economy. In the last year alone these funds pooled something like $2 billion in venture capital, much of it targeting businesses in Southern California.
The nine funds:
* Crosspoint Ventures (https://www.cpvp.com), with $700 million in a fund closed in April plus $300 million in a fund closed in December. Crosspoint invests in business-to-business and e-commerce ventures, according to Eric Harrison, one of two partners running operations for the firm out of Irvine.
* Media Technology Ventures (https://www.mtventures.com), with two funds totaling $231 million formed in 1997 and 1998 plus a third with $170 million formed in January. With an office on the USC campus, Media Technology Ventures targets commerce, computing, communications and Internet content enterprises. Among its portfolio companies: BizRate.com of Culver City, an aggregator of customer information for online vendors; and Sandpiper Networks Inc. of Westlake Village, which sells adaptive content distribution services to Web publishers and content providers.
* Mellon Ventures (https://www.mellon.com/inst/venture), with $500 million invested in venture capital and private equity deals nationwide, including $43 million in Southern California in the last two years. With offices in downtown Los Angeles, Mellon invests in business-to-business and communications businesses, among others.
* Enterprise Partners Venture Capital (https://www.ent.com), with $725 million invested over the last quarter century through five funds, including a $310-million fund formed in October. Enterprise Partners, based in La Jolla, does start-up and early-stage investing in information technology and communications businesses, health care and some consumer product and services ventures. It also participates in management and leveraged buyouts. Among its portfolio companies: Cinetech Labs of Los Angeles, Stamps.com and EPIC Solutions Inc. of San Diego.
* Idealab Capital Partners (https://www.icp.com), with more than $450 million invested, or likely to be invested, in Southern California. Founded in 1996 by Bill Gross, a trustee of Caltech and a Southern California entrepreneur, the firm operates in tandem with an incubator of the same name. Idealab focuses on Internet commerce companies, many of them coming out of the Idealab incubator. It has invested in such new-economy companies as GoTo.com, CarsDirect.com, EToys, Tickets.com and NetZero.
* Windward Ventures (https:// www.windwardventures.com), with $20 million already invested in Southern California and an additional $60 million in a fund now forming. Founded by entrepreneurs James A. Cole and David Titus, the San Diego firm backs companies engaging in telecommunication and data communication services, electronic manufacturing, systems engineering, software, medical devices and the life sciences. Among its portfolio investments: Accelerated Networks of Moorpark, a maker of high-speed access equipment for local telephone and data providers; Propertyfirst.com, an online residential multiple listing service in Alhambra; and Tandem Medical Inc., a San Diego developer of an infusion therapy system for the delivery of antibiotics in home-care settings.
* Mission Ventures (https://www.missionventures.com), with $63 million invested in more than a dozen Southern California companies. Mission Ventures focuses on information technology, health care and service ventures. Founded in San Diego by Robert Kibble, formerly a Silicon Valley venture capitalist, Mission Ventures has invested in BizRate.com and Complexions Rx of San Diego, a retailer of skin-care products.
* Innocal (https://www.innocal.com), with $75 million committed in one fund and $125 million pooling in a new fund, 75% of which probably will target Southern California companies. Innocal, based in Costa Mesa, is funded by the California State Teachers Retirement System; it invests in software, electronics, communications and health-care companies. It was an investor in GeoCities Inc., a developer of online “themed communities.” * Domain Associates, (https://www.domainvc.com), with $476 million pooled in four funds since 1985, of which about 30% went into Southern California businesses. With offices in Laguna Niguel, the firm focuses on health-care companies. Among its portfolio companies: Amylin Pharmaceuticals Inc., San Diego, a developer of medicines for treating metabolic diseases; and Microvention Inc., a developer of devices for the treatment of diseases of small cerebral blood vessels.
Put together, these nine funds, along with the 10 profiled in this space in recent weeks, already have invested, or expect to invest, something like $7.3 billion.
In the last year alone, Southern California’s venture capitalists raised more than $2 billion --more than the $1.9 billion they invested over the previous three decades.
What’s more, these numbers--collected from the funds themselves--reflect only the activity of venture capital firms with permanent presences here.
They do not reflect investments made here by venture capitalists in Silicon Valley, much less the activity of the many angel investor and private equity groups active here.
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NEXT WEEK: How to get your idea in front of a venture capitalist.
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Juan Hovey can be reached at (805) 492-7909 or at jhovey@gte.net.
