A look at L.A.'s leading venture capital companies.

Bastion Capital Corp.

Specialty: Communications

Amount invested in 1996: $30 million

A healthy degree of skepticism from investors awaited Danny Villanueva St. and Guillermo Bron when they set out to start a venture capital fund several years ago targeting Hispanic consumers.

"There was no precedent for this kind of fund. On a couple of occasions, (investors) questioned whether we could pull this off - whether the universe was broad enough," said Villanueva, an ex-L.A. Rams football kicker-turned-venture capitalist.

The two partners persisted, and their patience bore fruit in the form of their new company, Bastion Capital Corp., established in 1991 with its $125 million Bastion Capital Fund.

Villanueva, Bron and their third partner, Tom Clerkin, have made only three venture capital investments to date. Villanueva calls himself Bastion's "marketing guy," while the other two partners are more finance-oriented.

Aside from the Hispanic angle, Bastion targets later-stage companies that are either leaders in their industries or hold the next best position, said Villanueva.

Accordingly, Bastion's three investments to date are all industry leaders. They are Spanish language broadcasting company Telemundo Television Group Inc., wireless telecommunications firm Nextwave Communications and Renaissance Cosmetics Inc. All three are national companies, although Telemundo and Nextwave both have a major presence in Southern California.

Bastion's first fund has been so successful that Bastion is planning a second fund, Bastion Capital II, that will be more than twice the size of the first with $250 million to $300 million.

Chase Capital Partners

Specialty: Second-round venture financing

Amount Invested in 1996: $750 million

David Ferguson sees his job as looking for investment opportunities - and he figures L.A. is a good place to search.

"Los Angeles has quite a few interesting businesses," said Ferguson, general partner at Chase Capital Partners. "I look for opportunities that have or can have a national focus rather than regional."

Guitar Center and Dreamworks SKG are two examples.

Chase Capital, a sole limited partner of Chase Manhattan Corp., bought Guitar Center Inc. for $25 million in 1996. Chase then helped develop an expansion plan and took the company public.

In March, the company raised a $101 million initial public offering.

"It was a very unique and attractive specialty retail company with solid management," Ferguson said. "It took about two weeks to propose it and get the contracts signed as opposed to the usual month or two."

Chase Partners was also among the investors backing DreamWorks SKG, the new film studio being developed by Steven Spielberg, Jeffrey Katzenberg and David Geffen. Chase put in $25 million for an equity stake, Ferguson said.

Ferguson, based in Los Angeles for eight years, cultivates investment opportunities throughout Southern California and presents them to the other 11 general partners. They all must give the nod for an investment to go ahead. The investments are not aimed at a certain industry or category, but at whatever company is deemed to have good management and promise, Ferguson said.

But not all deals are so high-profile, nor are they equity investments. Chase recently signed a partnership contract with Los Angeles aerospace consultant Robert Paulson, formerly of the McKinsey & Co. consulting firm. Paulson will provide expertise and Chase will bring capital to buy and consolidate local aerospace sub-contractors and component companies.

Enterprise Partners

Specialty: First-round, information technology and health services and devices

Amount Invested in 1996: $30 million

As long-time executives in health care companies, James Berglund and Charles Martin came across a lot of people with ideas for products. Problem was, the people with the ideas seldom had the knowledge to bring them to life.

So in 1985, the two, who had been friends and business associates, founded Enterprise Partners to do just that.

"The opportunities seemed so large and venture capital seemed like the best way to take advantage of them," said Berglund, who was president of Continuous Curve Contact Lenses Inc.

Now with five partners - all one-time executives - the firm reports nurturing a string of successes such as Apria Healthcare, a large home health care company.

Enterprise Partners mostly invests in start-up operations and takes an active role in building a team around a "well-defined" product or service, said James Gauer, a general partner who specializes in developing information technology investments for the firm.

"Many funds are interested in backing experienced management teams," Gauer said. "But we are all former CEOs and try to build a team if a product is in a hot market and the people have a way to find real-world pain relief for a business problem."

As such, the partners spend a significant part of their time interviewing candidates for management positions at the 12 companies in which they have capital invested.

The end of May saw Enterprise Partners launching its fourth fund. With $200 million in capital, it's double the size of the previous one. Gauer explained that about 40 percent of the projects Enterprise takes on involve information technology, 40 percent are medical services and medical devices and 20 percent are leveraged buyouts of established companies.

With offices in Brentwood, La Jolla and Newport Beach, the firm tries to focus its investments in the region. However, Gauer said that with interesting information technology firms increasingly found outside California, Enterprise is finding its opportunities farther and farther afield.

For example, he said, one of its hottest current candidates for an investment is a software developer in Dallas.

Kline Hawkes California L.R

Specialty: Early or mid-stage companies

Amount invested in 1996: $21.8 million

Venture capital veteran Frank Kline discovered the joys and frustrations of raising capital when he struck out on his own to start Kline Hawkes California L.P. three years ago.

Kline took his idea on the road, traveling around the country to sell his brand of venture capitalism to financial advisors for many of the nation's top institutional investors.

"My spin was Southern California, growth, expansion capital and an underserved marketplace," said Kline, whose firm concentrates on deals in both Northern and Southern California.

Many of the advisors didn't share his vision of strong potential in Southern California, and it wasn't until he met with Hamilton Lane Advisors of San Francisco that he made a breakthrough.

"My kneepads were worn out from doing all those presentations. I must have done at least a dozen before Hamilton Lane," Kline said.

Now Kline and his partners sit atop a $48 million fund, which they could leverage to as much as $128 million using their U.S. Small Business Association-supported sister fund - Kline Hawkes California SBIC L.P., according to Kline. The fund's largest contributor is the California Pension Employees Retirement System.

Kline Hawkes has invested about $29.4 million to date in eight companies, including four in Southern California and three in Northern California.

"We don't have an industry focus, but we like to invest in industries with a potential for growth," said Kline. Examples of Kline Hawkes' investments to date include Micronet Technology inc., a data storage company in Irvine, and EOS Corp., a maker of power converters in Camarillo.

The firm's investments average about $3.2 million per deal, which involve either development- or mezzanine-stage companies.

Levine Leichtman Capital Partners

Specialty: Large firms

Amount invested in 1996: $28 million

Levine Leichtman Capital Partners of Beverly Hills loves to scope out the California business world for promising entrepreneurs, and the type of industry is no object if the person is right.

Still, working with entreprenuers can be quite a challenge, said partner Arthur Levine. "I have yet to meet an entrepreneur who didn't think that his or her business was the best," he said.

Indeed, Levine and the firm's other five investment professionals sift through 250 to 300 business plans each year in their search for the five or six deals they end up funding.

The firm's Levine Leichtman Capital Partners LP Fund has only one outside investor - the California Public Employees Retirement System. CalPERS has contributed $100 million to the fund, which contains an additional $2.5 million from Levine Leichtman.

The firm focuses on late-stage funding for companies with $10 million to $350 million in annual revenues - most of those in California businesses.

One of the company's recent investments was real estate brokerage Prudential-Jon Douglas Co., which Levine Leichtman liked for its strong management team of Jon Douglas, Lou Piatt, George Ruthman and Rick Merrill.

"We were able to take these strong guys and put money behind them," he said,

Most of Levine Leichtman's current fund is already invested, and the process of raising a second "substantially larger" fund is now underway, Levine said.

Media Technology Ventures

Specialty: Start-up companies whose products meld entertainment and information technologies

Amount Invested in 1996: $2 million

Geography aside, Hollywood and Silicon Valley are moving closer together.

That's the idea behind Media Technology Ventures, a Los Angeles firm that invests in companies whose products meld technology from both places.

Its investments include the Net Channel Inc., whose technology plugs the Internet into television, and Protozoa, which makes software to produce real tires, 3-D animation.

"There is an information revolution underway driven by the convergence of related technologies," said general partner Jonathan Funk, who helped start the fund last year after 15 years in the venture capital business in Southern California. Its investors include industry leaders such as Motorola, Sun Microsystems and Hearst.

Media Technology has focused on four areas of investment development: faster and cheaper computing technology; high-bandwidth communications for fast information delivery; on-line information; and the integration of television, telephone and personal computer.

In order to get a look at leading edge technology, the fund has teamed up with the University of Southern California's four media centers, including EC2, a center for multimedia and electronic communications. The school holds a profit-sharing economic interest in the fund, Funk said.

"USC is a core of activity for new technology," Funk said. "If one of the students or professors is working on something interesting, it might end up as an investment."

For example, the 25 young companies in the EC2 program, a testbed and "incubator" for start-up multimedia firms, is of particular interest, he said.

The fund has three general partners, including Funk and Robert Ackerman, Jr., former president of The Ackerman Group, a merger and acquisitions/corporate partnering firm serving the venture capital industry. The third partner is the Silicon Valley-based AVI Capital, a venture capital partnership.

AVI Capital specializes in seed and early stage investment in computer and information technology. It has invested about $200 million "more traditional, non-multimedia" companies such as Apple Computer, Microchip and Cypress Semiconductor.

Peregrine Ventures

Specialty: Technology start-ups

Amount Invested in 1996: $3 million

Peregrine Ventures has found its niche in traditional venture capital financing, with only a general industry focus and a preference for early-stage companies.

"If you talk about a personality, ours is classic venture capital as opposed to narrowly defined niches that other people get into," said Peregrine General Partner Gene Miller.

Indeed, when other venture capital firms are focusing on specific areas such as software or biotech, Peregrine has invested in companies that range from a tool shed producer to a maker of multimedia graphics editing equipment.

One of the firm's most successful ventures was Quarterdeck Corp. - a computer software firm in Marina del Rey that became one of L.A.'s leading software producers before falling on bad times last year.

"They're not doing too well now, but we got out of them" when the company was still booming, Miller said.

With offices in L.A. and Cupertino, Peregrine is currently investing funds from its second venture fund, Peregrine Ventures II, which was formed in 1984 with $25 million in capital: Most of that money came from pension funds and insurance companies, Miller said.

Miller is the sole partner in Peregrine's L.A. office, while two other partners are in the Northern California office.

Miller estimates that 90 percent of Peregrine's investments are still in technology-related firms, and between 60 percent and 65 percent of those are in California.

"What might differentiate us from other venture capital firms is we don't demand that (the companies we invest in) have an initial public offering in their plans. We need to have an exit vehicle, but not necessarily an IPO," he said.

William E. Simon & Sons Private Equity

Specialty: Later stage manufacturing, logistics, real estate, specialty retailing, shipping, oil and gas

Amount Invested in 1996: $50 million

William E. Simon & Sons Private Equity is the second largest venture capital organization in Los Angeles and has one of the most varied portfolios in town.

The names on the fund's investment roster - Wolfgang Puck Food Companies Inc., Pacific Precision Metals, Creative Optics Inc. and Chapdelaine Corporate Securities - illustrate its spectrum.

The firm was founded in New Jersey in 1988 by former U.S. Treasury Secretary William E. Simon. The L.A. office was established two years later because of investment activities in the West and across the Pacific.

And things have gone well as of late: "It's been difficult not to do well in the country's economic climate," said William E. Simon, Jr., executive director of William E. Simon & Sons, LLC, the parent company. "The last six months have been the best ever for us in terms of investments which have matured and new acquisitions we've made. There have been no dogs here."

Last week, two of its investments went public. One was an oil field services company which brought in a 40 percent return on the firm's original investment seven years ago, Simon explained.

In May, the firm bought an equity stake in an Indiana flexible staffing firm called Corporate Staffing Resources. The Simon group is convinced that flexible staffing is set to grow a from a $39 million a year industry in 1996 to $69 million a year by 2000. The acquisition is expected to be the first step toward a national network of such businesses.

The elder Simon continues to play an active role in managing the firm, along with sons William and Peter. The trio oversees a team of managers that run the equity fund, a municipal securities group, a capital markets group, a Hong Kong-based merchant bank and a real estate investment group.

Trident Capital Inc,

Specialty: Information and business services in the expansion stage

Amount Invested in 1996: $50 million

Silicon Valley doesn't have all the venture capital cards, according to Todd Springer, vice president of Trident Capital Inc.

"There is a big multimedia component which L.A. is good for," Springer said. "While there are more opportunities in Northern California, there are also a lot more venture capital firms, so it's nice for us here that there's not so many."

The firm, which has offices in Los Angeles, Menlo Park and Chicago, invests in businesses that move, organize and store information.

"The demand and uses for information products are increasing," Springer said. "There are many fast-growing markets (that) we're investing in. The need for things like data mining and online and Internet applications is opening this up."

All three offices specialize in farming local investments, though their nets are cast much farther.

One of the Trident L.A. office's investments, Springer said, is Denver-based CSG Systems Inc., which contracts with cable television companies to perform "back office" functions like billing pay-per-view programming.

Until 1994, CSG was a division of the credit card processing firm First Data Corp. Attracted by a growing market for billing services, Trident worked with the division's management to conduct a leveraged buyout.

Trident invested $15 million in the transaction, its upper limit for investing in companies. CSG went public in February of last year, and Trident has so far distributed about a third of the stocks to investors.

Four friends and associates with long histories in finance and investment formed Trident in 1993 and are now its general partners. General partner Rockwell Schnabel was president of the Bateman, Eichler, Hill, Richards Group. He was also the Acting Secretary of Commerce and Deputy Secretary of Commerce during the Bush Administration and was the U.S. Ambassador to Finland during President Reagan's second term.

Springer said the firm focuses on later stage investments because those firms have assets and revenues whereas early stage investments with no revenues take as much or more time to manage.

Union BanCal Venture Corp.

Specialty: Customers and potential customers of Union Bank of California 

Amount Invested in 1996: $1 million

Union BanCal Venture Corp. is not your traditional venture capital firm. Established in 1967, the company is a wholly owned subsidiary of San Francisco-based Union Bank of California, which was formed last year following the merger of Union Bank and Bank of California.

Even before the merger, Union BanCal was largely dormant from 1990 to 1994, doing only three deals during that time. But the sleepy firm has recently emerged from its slumber, funding six new deals in the last 18 months.

"It wasn't an activity that was generating a lot of activity for the bank," said Union BanCal President Robert Clarke, explaining the decision to go dormant in the early 1990s. "But now we've begun to find opportunities and focus on (venture capital funding) again."

All of Union BanCal's $17 million in capital under management came from the Union Bank of California, unlike other firms that usually raise their funds from multiple institutional investors.

About half of the $17 million has been invested to date, although the firm has another $10 million available to it from the parent company when its current funds are exhausted.

Union BanCal is the arm of Union Bank of California that invests money in firms with high growth potential that are either customers or potential customers of the bank, said Clarke.

Nearly all of those firms have come from the communications field, including several small cable companies and radio and TV broadcasters. Clarke declined to give any specific names of companies.

"We like to invest in companies with a two- or three-year operating history. We haven't done any start-ups in the past three years," said Clarke. Union BanCal's deals range 'from $500,000 to $3 million.

Most ventures funded by Union BanCal are in California. The firm's venture capital recipients in the state are divided about 50-50 between Northern and Southern California.

Union BanCal also funds out-of-state companies, which make up about 30 percent of its investments, Clarke said.

Operating out of an office in downtown L.A., Union BanCal has a small staff with only one investment professional.