Local venture capital rebounds in fourth quarter vs. year-ago.

LOCAL venture capital funding reversed from last year's low levels, with Los Angeles tech firms countering a nationwide trend among venture capitalists, who've been pouring money into health care startups elsewhere.

Eight firms in Los Angeles County garnered $126 million in venture capital during the fourth quarter of 2003, according to Grow-think Research, a Venice-based researcher. That's nearly double the $64.2 million invested locally during the year-earlier period, but down from the $138 million invested during the third quarter.

Los Angeles continues to trail San Diego in luring VC money. It commanded just 30.2 percent of the $416.6 million raised by firms in Southern California during the fourth quarter. San Diego firms raised $180 million, or 43.2 percent of the total. The region itself ranked fifth in funding nationwide, trailing a group that includes Silicon Valley and New England.

The so-called "connectivity" sector, which includes wireless outfits, were the big winners in the hunt for dollars as investors decided to pull the trigger on long-simmering deals. Five such firms in L.A. County commanded $51.3 million from venture capital outfits during the fourth quarter, including Nexsan Technologies, which hauled in the biggest single investment during the period. A group led by eUniverse Inc. investor VantagePoint Venture Partners poured $17 million into the Woodland Hills-based electronic storage firm.

Wireless entertainment startup JAMDAT Mobile received the second-biggest investment in December when Benchmark Capital invested $11 million during a Series D round.

Just $14 million went to health care firms in L.A., which may explain why it lagged smaller San Diego County.

Because Los Angeles has become more of a home to wireless startups, the healthcare venture dollars have passed it by; San Diego, with its contingent of biotech firms, continues to command most of those dollars in Southern California.

Nationwide, the health care sector commanded the lion's share of investments, and also most of the all-important "new money" as well. While health care firms attracted $2 billion during the fourth quarter--versus $1.7 billion for connectivity firms--most of the health care dollars were new investments while most tech investments were already in venture capitalists' portfolios.

Nationally, health care has commanded more money thanks to the resurgent appetite for initial offerings by healthcare firms. Eight new health care IPOs were issued during the last six months of 2003 versus none during the first half, said Grow-think President Corey Lavinksy.

"If I've invested $15 million in one company and it's doing fine, then I'll continue to pour money. But in the case of health care, people are pouring in new money because of the success of the IPO market which is a sign of exit," he said.

Suit Settled

Torrance-based Summa Industries agreed to settle a lawsuit in which it accused a customer, Cooper Industries Ltd., of copying products made by one of its subsidiaries.

Summa, manufacturer of plastic products, filed suit last March claiming Cooper infringed patents and the design of the Reflexor brand prismatic reflector made by Summa's LexaLite International Corp. unit.

Cooper, which produces Halo light fixtures, acknowledged certain LexaLite patents, said Summa Chief Executive James Swartwout. LexaLite also agreed to make Cooper's product under a long-term license of LexaLite's patent, Summa said in a statement. Swartwout declined to disclose terms of that agreement, and said terms of the overall settlement were not disclosed.

Cooper remained a customer during the litigation, Summa said.

Summa shares, which closed at $9.21 on Jan. 29, have risen 3.3 percent year to date.

Cooper, which also makes Crescent tools, is based in Bermuda and operated from Houston.