Bay Area outshines Los Angeles in finance arena.

Regardless of the financial service, the bottom line is always the same: Many Southern California firms are geographically challenged when it comes to accessing capital and investing.

The difference is biggest in the venture capital arena, but the San Francisco Bay area also dominates L.A. County in investment banking, securities and, to a lesser extent, the commercial banking industry.

"When there's a good investment opportunity, people get together one way or another no mailer where the opportunity is," said Torn Lieser, associate director of the UCLA Anderson Forecast. "But a startup venture looking for capital in Southern California is going to have to push just a little bit harder."

Venture capitalists agree. Whereas Northern California has about 130 major venture firms, only between five and 10 such firms are based in Southern California, according to Jim Gauer, a general partner in the L.A. office of venture firm Enterprise Partners.

"The action is up north, and that's where people are going," he said, adding that most of the action for venture capitalists is in the Silicon Valley. "We think there's a lot of opportunity here, but Southern California in 1997 is much like Silicon Valley was in 1975."

The scarcity of venture capital firms in Southern California means that young companies in the northern part of the state may have an caster time raising capital than those in L.A., Gauer said. Likewise, it means that L.A. might have a tougher time attracting entrepreneurs and skilled managers to local startup firms with high growth potential.

"If you have equal caliber companies, it's much easier to recruit management talent to a Bay area company," he said. "In mainstream technology, it has become increasingly difficult to recruit management talent (in Southern California), because management talent is afraid to leave the Bay area. They're afraid to step out of the mainstream and come to the provinces."

Investment banking services in Southern California also lag behind Northern California, according to industry officials. The difference is particularly pronounced in the high technology field.

"There's no doubt that (an expertise at working with technology firms) is a selling focus for investment banks in Northern California," said Harold Harrigian, director of corporate finance at Crowell Weedon & Co. "The firms down here may have tech as part of their bag of tricks, but they're probably more generalists."

While high-tech may be a weakness among Southern California investment banks, Harrigian noted that L.A. firms have more experience with entertainment, manufacturing and aerospace deals than those in Northern California. As a result, it is often easier for companies from those sectors to raise money in L.A. compared with the Bay area.

But regardless of sector, California's current economic climate - flush with investment capital in search of good deals - means that well-run companies in any location can usually get funds with relative ease, Harrigian said.

"My feeling is that when I have a good deal, I can expose that company or transaction to anyone worldwide," he said. "If it's a good deal (investors) will be on an airplane and come down to Southern California."

While Southern California clearly lags behind the Bay area in investment banking and venture capital services, one area where the differences are less dramatic is commercial banking. That owes largely to sophisticated information and telecommunications technology, which lets bank managers in Northern California make quick decisions about deals anywhere in the state.

In fact, the lack of major bank headquarters in Southern California has had little if any impact on the accessibility of commercial bank-related financial services to L.A. firms, said Tom Decker, executive vice president at San Francisco-based Bank of America. Decker said the Northern vs. Southern California issue is largely one of civic pride when it comes to commercial banking and the accessibility of financial services.

"Once you get over the ego and pride hump, you can't make the argument that" financial services available in L.A. are negatively impacted by a lack of major commercial bank headquarters in the area, he said.

Similar views were expressed by Vernon Kozlen, executive vice president of City National Investments, a division of Beverly Hills-based City National Bank, the largest independent commercial bank headquartered in Southern California.