L.A. County takes lead in venture capital.

For the first time in at least five years, Los Angeles County has emerged as the venture capital champion of Southern California, far outstripping Orange and San Diego counties.

And it's happening with more than just high-tech firms.

L.A.-area companies attracted $424.3 million in venture capital in 1998, far outpacing the $372.2 million invested in San Diego and the $265.9 million in Orange County, according to PricewaterhouseCoopers LLP, which has released an extensive study on local and national venture activity. PricewaterhouseCoopers has been surveying venture capital since 1993.

The fourth quarter was not the strongest of the year for L.A.; it garnered $88.2 million in that period - about half the amount raised in the third quarter. But it was significantly more than what Orange County firms raised, at $56.5 million. San Diego County, which had dominated venture capital investment in Southern California since the start of the decade, took in $74.1 million.

The region's $1.2 billion in venture capital investments in 1998 is almost 10 times the $190.9 million invested here five years ago, but it is still dwarfed by the $4.6 billion invested in Northern California companies.

"It's taken a long time and we've got a long ways to go," said Massoud Entekhabi, a Pricewaterhousecoopers partner. "As a whole, more and more money is coming to Southern California relative to a few years ago."

Wesley Hein, a member of the Acorn Group, a venture fund established last year to invest in local media-technology startups, said Los Angeles has become especially strong in e-commerce, life sciences and digital entertainment firms.

"There are more opportunities than capital. I would expect more and more capital to be directed down here," he said. "In general, things take a little time. Venture capital was focused initially on technology and it took awhile for people to look (here)."

About a third of Southern California venture capital investments are in non-tech firms. In fact, the largest L.A. County-based recipient of venture capital in the fourth quarter was Aspen Youth Services of Cerritos, which provides education and treatment to at-risk youth. It raised $22.5 million.

"Northern California is all technology. Here, we have a variety of investment opportunities," [TABULAR DATA OMITTED] Entekhabi said.

Aspen Youth Services was considered attractive because 40 percent of its revenues come from private-sector sources, and it has been profitable for a number of years, said Elliot Sainer, Aspen's president and chief executive.

Its venture capital infusion from Seattle-based Frazier Healthcare Investments LP and New York-based Sprout Group make those two firms majority owners, although both are hands-off managers, Sainer said.

Other non-tech firms receiving venture funding in the fourth quarter include Torrance-based Pelican Products Inc., a manufacturer of flashlights and cases, which raised $8.5 million, and Culver City-based Careside Inc., a diagnostic products company, which raised $1.5 million.

Still, much of the action has been tech-related, including Real Select Inc., which has three Web sites that allow users to view forsale property listings, and eToys Inc., an online toy retailer.

The phenomenal success of Internet-related initial public offerings, such as GeoCities, has further fueled the venture capital market. IPOs are often the primary means of recouping a venture investment.

Among L.A.'s major fourth-quarter venture capital recipients are GoTo Technology ($22.2 million) in Pasadena, a market-driven search directory; Santa Monica-based Stamps.com ($3.9 million), which offers postage over the Internet; Peoplemovers Inc. ($5 million), a Hermosa Beach software firm; and Kidsonline.com ($2.5 million), a Pasadena-based firm that specializes in online services for kids.

"I think this area is starting to grow and a lot of good talent is down here," said Peter Selda, president and chief executive of Westlake Village-based Internet Dynamics, which raised $505,000 last quarter. The company develops network-security software, and plans to use its venture capital to cover sales and marketing expenses.