Nature of L.A. Venture Deals Shifting.NEARLY $1 billion in venture capital was invested in Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. during the first nine months of 1999, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. a new report -- 30 times more than the total for all of 1993 and reflective Refers to light hitting an opaque surface such as a printed page or mirror and bouncing back. See reflective media and reflective LCD. of the area's newfound new·found adj. Recently discovered: a newfound pastime. Adj. 1. newfound - newly discovered; "his newfound aggressiveness"; "Hudson pointed his ship down the coast of the newfound sea" status as a major center of venture activity. While the number and value of L.A. deals fell slightly during the third quarter from the previous three-month period, the pace of activity remains torrid. All told, $327.7 million worth of venture deals were made in the July-September quarter, compared with $366.4 million in the second quarter and $236.7 million in the third quarter of 1998, according to a PriceWaterhouseCoopers report being released this week. For the first nine months, L.A. County had $925.6 million in venture funding, compared with $527.2 million for all of 1998 and just $29.3 million in 1993. While much of the money this year has gone into Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the ventures, the third-quarter numbers show that the nature of that funding is starting to change. Almost gone from the ranks of early-stage venture capital recipients, for example, are dot-coin retailers. That's not to say such companies are no longer getting money. In fact, they were among the largest recipients, in sheer Sheer and similar can mean:
 This article or section needs copy editing for grammar, style, cohesion, tone and/or spelling.You can assist by [ editing it] now. commerce, appear to be getting more attention. "We're we're Contraction of we are. we're we are seeing investments going into the infrastructure for using the Web, to deliver goods and services In economics, economic output is divided into physical goods and intangible services. Consumption of goods and services is assumed to produce utility (unless the "good" is a "bad"). It is often used when referring to a Goods and Services Tax. to suppliers," said Massoud Entekhabi, a partner in the Woodland Hills office of PriceWaterhouseCoopers. "Now, the kinks are out of the Internet experience." One example of the types of companies getting early-stage funding is Marina Marina “a piece of virtue.” [Br. Lit.: Pericles] See : Virtuousness del Rey-based InternetConnect Inc., which received $10 million in first-round financing during the quarter. It is focused on hooking up Hooking Up is a collection of essays and short stories by American author Tom Wolfe, a number of which were published in earlier form in popular magazines. The essays cover a number of diverse topics dating from as early as 1965, including both non-fiction and small and medium-sized Me´di`um-sized` a. 1. Having a medium size; as, a medium-sized man s>. Adj. 1. medium-sized - intermediate in size medium-size, moderate-size, moderate-sized businesses to high-speed high-speed adj. 1. Operated or designed for operation at high speed: a high-speed food processor. 2. Taking place at high speed: a high-speed chase. 3. broadband connections See broadband and wireless broadband. . In whatever form, Internet investing is pretty much the only game in town: Nearly five out of every six dollars invested during the third quarter went to such ventures. And more of those dollars are coming from Northern California Northern California, sometimes referred to as NorCal, is the northern portion of the U.S. state of California. The region contains the San Francisco Bay Area, the state capital, Sacramento; as well as the substantial natural beauty of the redwood forests, the northern . Of the 84 venture deals completed in the third quarter, nearly a dozen involved Silicon Valley money. As it gets more expensive to make deals in Northern California, "the number of really nice investment opportunities in the L.A. area is exploding," said G. Bradford Bradford, city, England Bradford, city (1991 pop. 293,336) and metropolitan district, N central England, on a small tributary of the Aire River. It is a center of the worsted industry, which dates from the Middle Ages. Jones, general partner at the L.A. office of Brentwood Brentwood, city and district, England Brentwood, city (1991 pop. 51,212) and district, Essex, SE England. Brentwood is mainly residential but produces some agricultural equipment, film, and prefabricated concrete. Venture Capital. "From commercial banks to attorneys, accounting firms and executive recruiters, the (local) infrastructure, to back early-stage investments is in place." Jones has positioned himself to benefit from Silicon Valley's increasing attraction attraction /at·trac·tion/ (ah-trak´shun) 1. the force, act, or process that draws one body toward another. 2. to L.A.-area investments. In September September: see month. , Jones teamed up with Silicon Valley-based venture firm Institutional venture Partners to form Redpoint 1) 0.5 oz Raspberry Sour Puss 2) 6 oz Red Bull (3/4 can) 3) 1.5 oz Crown Royal. For best results, serve on ice. Ventures, a firm that will focus on investments in broadband Internet See broadband. , e-commerce e-commerce, commerce conducted over the Internet, most often via the World Wide Web. E-commerce can apply to purchases made through the Web or to business-to-business activities such as inventory transfers. and digital media. Its first investment was in Procter
Jones' firm was involved in the second-largest local investment of the quarter: a $42 million second-round of financing for Propertyfirst.com, a commercial real estate Web site. Jones said he likes the company because "it's it's 1. Contraction of it is. 2. Contraction of it has. See Usage Note at its. it's it is or it has it's be ~have not just a listing service. (Brokerages) can also use the system for inventory management." Brokerage BROKERAGE, contracts. The trade or occupation of a broker; the commissions paid to a broker for his services. firms that sign up for the service can use the site as a secure online location to keep track of the properties they are marketing for lease or sale. Agents from large regional or national brokerage firms no longer have to be physically present at a local real estate office to know precisely what's available. Propertyfirst.com is yet another example of the shift toward business-to-business Web sites and away from "me-too" online shopping services. Of the nine L.A. deals closed in the third quarter for $10 million or more, only two were to Web-based retailers. In dollar value, almost half of the third-quarter investments went into business service companies. That trend is continuing this fall. Jones said he helped close a new round of financing in the fourth quarter for BizBuyer.com Inc., another hot, business-to-business operation that lets companies buy everything from office furniture to legal services legal services n. the work performed by a lawyer for a client. online. Some consumer-oriented Internet companies still attract capital, but the vast majority of them are focused on making online shopping easier, rather than selling products online. Reflective of the trend is PeopleSupport PeopleSupport Inc. (NASDAQ: PSPT) is a US-based offshore multinational business process outsourcing (BPO) company that provides customer management services, transcription and captioning, and back office support. Inc., which sprang from the Idealab Idealab (formerly known as idealab!) is a technology incubator — possibly the most famous business incubator of the dot-com era. It is based in Pasadena, California. History Idealab was founded by Bill Gross in March 1996. incubator incubator, apparatus for the maintenance of controlled conditions in which eggs can be hatched artificially. Incubator houses with double walls of mud, a fireroom, and several compartments each holding about 6,000 hens' eggs were developed in ancient times; the and received $6.1 million in second-round funding during the third quarter. "Surveys show that 90 percent of (online) shopping carts The online equivalent of the supermarket cart. You place your merchandise in the cart and then check out when you are all finished. are abandoned by consumers," largely because people are frustrated frus·trate tr.v. frus·trat·ed, frus·trat·ing, frus·trates 1. a. To prevent from accomplishing a purpose or fulfilling a desire; thwart: with their shopping experiences or just aren't aren't Contraction of are not. See Usage Note at ain't. aren't are not aren't be sure what they're they're Contraction of they are. they're be buying, said Bill Elkus, managing director of Idealab Capital Partners. "PeopleSupport gives consumers live customer support, over the Net," he said. "That concept has been unheard-of in e-commerce." Another active area has been consumer service sites like Traffic Station Inc., which provides traffic reports. Subscribers to the service can do more than check out current freeway conditions online, and also have the option of listing their normal daily commute TO COMMUTE. To substitute one punishment in the place of another. For example, if a man be sentenced to be hung, the executive may, in some states, commute his punishment to that of imprisonment. routes and having Traffic Station phone them with alternatives when traffic is particularly congested con·gest·ed adj. Affected with or characterized by congestion. congested ENT adjective Referring to a boggy blood-filled tissue. See Nasal congestion. . Traffic Station received seed money from Zone Ventures, the local affiliate Affiliate Relationship between two companies when one company owns substantial interest, but less than a majority of the voting stock of another company, or when two companies are both subsidiaries of a third company. See: Subsidiaries, parent company. of the Silicon Valley venture capital giant Draper Fisher Jurvetson Draper Fisher Jurvetson (DFJ) is a venture capital firm based in Menlo Park, California with affiliate offices in more than 30 cities around the world and over $4.5 billion in capital commitments. . "We're seeing some really creative technology coming from veterans of the entertainment industry, not just great content," said Zone Ventures partner David Cremin Cremin is a municipality in the district Moudon in the canton of Vaud in Switzerland. . "As the Net becomes less static and a much greater medium, what better place to launch this than Hollywood Hollywood. 1 Community within the city of Los Angeles, S Calif., on the slopes of the Santa Monica Mts.; inc. 1903, consolidated with Los Angeles 1910. ?" To be sure, the volume of venture capital investment going to Silicon Valley dwarfs Dwarfs Fannie Mae issued mortgage-backed securities pools that have an original maturity of 15 years. the rest of the country. Through the first three quarters of this year, nearly $8 billion was invested in Silicon Valley firms, or about 50 percent more than flowed into the next three regions combined (New England New England, name applied to the region comprising six states of the NE United States—Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and Connecticut. The region is thought to have been so named by Capt. , Southern California Southern California, also colloquially known as SoCal, is the southern portion of the U.S. state of California. Centered on the cities of Los Angeles and San Diego, Southern California is home to nearly 24 million people and is the nation's second most populated region, and Texas). But Southern California is challenging New England for the No. 2 spot. New England attracted about 23 percent more venture capital than Southern California in the third quarter. In percentage terms, that's the closest the regions have been since the fourth quarter of 1997. "The quality of the investment environment in the L.A. area is staggering," said Entekhabi. "An early generation of (technology) entrepreneurs raised money, created wealth and set up networking opportunities. A new generation can now take advantage of the first group's management knowledge and expertise."
Venture Capital Accelerating
L.A.-area investments climb Region moves up in third quarter.
(in millions)
Total Calif. $4,098
New England $927
So. Calif. $754
N.Y. Metro $688
Southeast $654
Midwest $332
Northwest $294
D.C. Metro $638
Colorado $307
Texas $485
No. Central $241
Philly Metro $163
Southwest $125
Upstate N.Y. $53
South Central $18
Third-Quarter Venture Capital Investments In Los Angeles County
BUSINESS SERVICES
Capital Recipient Investors
Ad-Star Services, InterEquity
Marina del Rey Capital Partners L.P.
HealthAllies.com, Idealab Capital Partners,
Glendale individual investors
iAm.com (formerly Adler & Co.,
WhyNotU.com), Comdisco Venture
Santa Monica Group, Enterprise
Partners, Lehman
Brothers, Sierra Ventures
Intellisec Inc., Patricof & Co.
Santa Monica Ventures Inc.
Latitude 90, Dime Capital Partners,
Santa Monica Keystone, Venture
Capital Management Co.
Online Retail Partners, Comcast Interactive
Los Angeles Capital, GRP, Liberty
Advisors, Oak
Investment Partners
& others
PeopleSupport.com, Idealab Capital
Los Angeles Partners, TMCT
Propertyfirst.com, Brentwood Venture Capital,
Alhambra Oak Investment Partners,
Times Mirror,
Windward Ventures
Static Online, Wasatch Venture Fund,
Santa Monica Zone Ventures
SupplySolution, Enterprise Partners,
Santa Barbara Sigma Partners
What's Hot Now, Comcast Interactive
Los Angeles Capital, Dawntreader LP,
and others
Total Sector Investment: $163.4 million
No. of Deals: 11
Percent of 3rd Qtr. Total: 49.8%
COMMUNICATIONS
Assuresat Inc., Ampersand Ventures,
El Segundo SpaceVest Fund L.P.
InternetConnect, Crosspoint Venture
Los Angeles Partners, Spectrum
Equity Investors
Malibu Networks, Polaris Venture
Calabasas Partners
Soft Aware, Alta Communications/
Marina del Rey Burr Egan Deleage & Co.,
and others
Virtualis Systems, Adobe Venture L.P.,
Studio City H&Q Venture Associates
WebVision, TL Ventures
Torrance
Total Sector Investment: $47.4 million
No. of Deals: 6
Percent of 3rd Qtr. Total: 14.5%
DISTRIBUTION/RETAILING
Dunk.net, Technology
Santa Monica Crossover Ventures
E4L Inc., TL Ventures
Encino
Expert City, Dawntreader L.P.
Santa Barbara
Total Sector Investment: $11.9 million
No. of Deals: 3
Percent of 3rd Qtr. Total: 3.6%
INDUSTRIAL
Performance First Analysis Corp.
Materials,
Camarillo
Transtar Metals, First Union Capital
Redondo Beach Partners
Total Sector Investment: $0.70 million
No. of Deals: 2
Percent of 3rd Qtr. Total: 0.2%
CONSUMER
101 Communications, Frontenac Co.
Chatsworth
Cooking.com, DynaFund Ventures, Eagle
Santa Monica New Media, Forrest Binkley &
Brown, Idealab Capital Partners,
Mellon Ventures, netWorth
Partners, Phillips-Smith Specialty
Retail Group, SBIC Partners, Times
Mirror, Vanguard Venture Partners
Lighting Ampersand
Technologies Int'l., Ventures
Baldwin Park
Perks.com, Access Technology
Los Angeles Ventures, Hambrecht &
Quist Venture Capital, New
Millenium, Wasatch Venture
Fund, Zone Ventures
Traffic Station, East West,
Los Angeles Zone Ventures
Total Sector Investment: $47.3 million
No. of Deals: 5
Percent of 3rd Qtr. Total: 14.4%
ELECTRONICS
MEM Solutions, Enterprise Partners,
Westlake Village Sierra Ventures
Total Sector Investment: $7.0 million
No. of Deals: 1
Percent of 3rd Qtr. Total: 2.1%
HEALTH CARE
Arcadia ADHC, Myriad Capital Inc.,
Arcadia and others
Preferred Health Essex Woodlands
Management, Health Ventures
Woodland Hills Fund III LP
Total Sector Investment: $0.79 million
No. of Deals: 2
Percent of 3rd Qtr. Total: 0.2%
SOFTWARE & INFORMATION
3 GA Corp., Wasatch Venture Fund,
Thousand Oaks Zone Ventures
Cinebase Software, Constellation Venture
Los Angeles Capital, Wasserstein
Adelson Ventures
Enfish Spencer Trask Securities,
Technology, Womens Growth
Pasadena Capital Fund
Nomadix, Avalon Technology,
Westlake Village BancBostonCapital and
Ventures, Encore Venture
Partners, Point West Capital,
Smart Technology Ventures,
Spinner Asset, Xeron Capital
Lightspan Accel Partners,
Partnership, Comcase Interactive Capital,
Santa Monica Kleiner Perkins Caufield &
& Byers, Nassau Capital Inc.
TriVida Corp., Idealab Capital
Culver City Partners, InnoCal,
Woodside Fund III
Total Sector Investment: $49.4 million
No. of Deals: 6
Percent of 3rd Qtr. Total: 15.1%
BUSINESS SERVICES Amt. Invested Funding
Capital Recipient (millions) Stage
Ad-Star Services, $0.85 Bridge
Marina del Rey
HealthAlliec.com, $4.1 First
Glendale
iAm.com (formerly $12.1 Second
WhyNotU.com),
Santa Monica
Intellises Inc., $7.0 Second
Santa Monica
Latitude 90, $12.9 Second
Santa Monica
Online Retail Partners, $62.0 Initial/Seed
Los Angeles
PeopleSupport.com, $6.1 Second
Los Angeles
Propertyfirst.com, $42.2 Second
Alhambra
Static Online, $1.0 First
Santa Monica
SupplySolution, $7.1 First
Santa Barbara
What's Hot Now, $8.0 Second
Los Angeles
Total Sector Investment: $163.4 million
No. of Deals: 11
Percent of 3rd Qtr. Total: 49.8%
COMMUNICATIONS
Assuresat Inc., $14.0 Not
El Segundo Categorized
InternetConnect, $10.0 First
Los Angeles
Malibu Networks, $3.2 Initial/Seed
Calabasas
Soft Aware, $7.9 Second
Marina del Rey
Virtualis Systems, $8.75 First
Studio City
WebVision, $3.5 First
Torrance
Total Sector Investment: $47.4 million
No. of Deals: 6
Percent of 3rd Qtr. Total: 14.5%
DISTRIBUTION/RETAILING
Dunk.net, $10.0 Second
Santa Monica
E4L Inc., $0.06 Not
Encino Categorized
Expert City, $1.8 First
Santa Barbara
Total Sector Investment: $11.9 million
No. of Deals: 3
Percent of 3rd Qtr. Total: 3.6%
INDUSTRIAL
Performance $0.2 Third
Materials,
Camarillo
Transtar Metals, $0.5 Mezzanine
Redondo Beach
Total Sector Investment: $0.70 million
No. of Deals: 2
Percent of 3rd Qtr. Total: 0.2%
CONSUMER
101 Communications, $8.0 Not Categorized
Chatsworth
Cooking.com, $27.6 Third
Santa Monica
Lighting $4.15 First
Technologies Int'l.,
Baldwin Park
Perks.com, $5.06 Second
Los Angeles
Traffic Station, $2.5 Initial/Seed
Los Angeles
Total Sector Investment: $47.3 million
No. of Deals: 5
Percent of 3rd Qtr. Total: 14.4%
ELECTRONICS
MEM Solutions, $7.0 Bridge
Westlake Village
Total Sector Investment: $7.0 million
No. of Deals: 1
Percent of 3rd Qtr. Total: 2.1%
HEALTH CARE
Arcadia ADHC, $0.4 First
Arcadia
Preferred Health $0.39 Follow-on
Management,
Woodland Hills
Total Sector Investment: $0.79 million
No. of Deals: 2
Percent of 3rd Qtr. Total: 0.2%
SOFTWARE & INFORMATION
3 GA Corp., $1.5 First
Thousand Oaks
Cinebase Software, $0.46 Bridge
Los Angeles
Enfish $1.2 Second
Technology,
Pasadena
Nomadix, $8.0 Second
Westlake Village
Lightspan $32.0 Fourth
Partnership, & Beyond
Santa Monica
TriVida Corp., $6.2 Follow-on
Culver City
Total Sector Investment: $49.4 million
No. of Deals: 6
Percent of 3rd Qtr. Total: 15.1%
BUSINESS SERVICES Nature of
Capital Recipient Business
Ad-Star Services, developing a one-stop
Marina del Rey marketplace on the Web for
advertisers to buy classified ads
HealthAllies.com, Provider of online medical-related
Glendale financial services to consumers
iAm.com (formerly Internet community for artists,
WhyNotU.com), actors and musicians,
Santa Monica Online talent agency
Intellisec Inc., Provider of both fire/life safety
Santa Monica systems & integrated security
systems for commercial,
industrial & government
accounts. The company is not
a manufacturer of these
systems, but rather is a
provider of installation &
on-going maintenance services
Latitude 90, Provider of Internet
Santa Monica advertising solutions
Online Retail Partners, Provides leading branded
Los Angeles retailers w/a venture capital
management infrastructure.
Creates exclusive partnerships to
execute their e-commerce strategies
PeopleSupport.com, Provider of Internet
Los Angeles customer support.
Propertyfirst.com, Electronic listing
Alhambra service for the commercial
real estate industry
Static Online, Internet media company
Santa Monica
SupplySolution, Application service provider
Santa Barbara for supply chain management
for automotive industry
What's Hot Now, Designer of comprehensive Web
Los Angeles pages, specializing in building,
hosting and managing Web-
based commerce stores for sports-
& entertainment-related entities
Total Sector Investment: $163.4 million
No. of Deals: 11
Percent of 3rd Qtr. Total: 49.8%
COMMUNICATIONS
Assuresat Inc., Provider of a fleet of rental
El Segundo satellites placed in orbit to
provide backup cover for
satellites that either fail to be
properly launched or suffer
problems while in orbit
InternetConnect, Internet solutions for small
Los Angeles and medium-sized businesses
(broadband connectivity)
Malibu Networks, Wireless access systems,
Calabasas telecommunications
Soft Aware, Internet content
Marina del Rey distribution company
Virtualis Systems, Provider of Internet services
Studio City including Web hosting & support
WebVision, Application service provider
Torrance giving customers the ability
to establish a fully functional
Internet presence
Total Sector Investment: $47.4 million
No. of Deals: 6
Percent of 3rd Qtr. Total: 14.5%
DISTRIBUTION/RETAILING
Dunk.net, Online retailer of
Santa Monica athletic footwear
E4L Inc., Worldwide leader in
Encino selling consumer
products through direct
response TV programming,
infomercials
Expert City, Online marketplace for
Santa Barbara person-to-person services
delivered online, on
demand, from anywhere
Total Sector Investment: $11.9 million
No. of Deals: 3
Percent of 3rd Qtr. Total: 3.6%
INDUSTRIAL
Performance Manufacturer of performance
Materials, composite products for use
Camarillo in the medical podiatric and
athletic footwear markets
Transtar Metals, Manufacturer & marketer
Redondo Beach of aerospace
metals--commercial
and government
Total Sector Investment: $0.70 million
No. of Deals: 2
Percent of 3rd Qtr. Total: 0.2%
CONSUMER
101 Communications, IT-focused trade journal
Chatsworth publishing company
Cooking.com, Developer of online cooking
Santa Monica site for shopping,
advice and recipes
Lighting Specialty discharge lighting
Technologies Int'l.,
Baldwin Park
Perks.com, Internet customer loyalty
Los Angeles branded sites
Traffic Station, Traffic information and
Los Angeles services on the Internet
Total Sector Investment: $47.3 million
No. of Deals: 5
Percent of 3rd Qtr. Total: 14.4%
ELECTRONICS
MEM Solutions, Develops microelectrical,
Westlake Village mechanical systems
and products
Total Sector Investment: $7.0 million
No. of Deals: 1
Percent of 3rd Qtr. Total: 2.1%
HEALTH CARE
Arcadia ADHC, Adult day
Arcadia health care center
Preferred Health MRI diagnostic imaging
Management, and financing
Woodland Hills
Total Sector Investment: $0.79 million
No. of Deals: 2
Percent of 3rd Qtr. Total: 0.2%
SOFTWARE & INFORMATION
3 GA Corp., Design cad-cam software,
Thousand Oaks automation software MDA
Cinebase Software, Software database
Los Angeles for digital media
Enfish Software creator that works
Technology, as an intelligent assistant
Pasadena by automatically organizing
files, e-mails and Web
pages into personally
defined categories
Nomadix, Developing innovative
Westlake Village hardware platforms &
software modules that realize
the Internet's potential to
create a transparently
networked world
Lightspan Interactive/online
Partnership, educational
Santa Monica programming for
digital/video marketplace
TriVida Corp., Developing data analysis
Culver City software to improve
usefulness in using
corporate data to
transact business
Total Sector Investment: $49.4 million
No. of Deals: 6
Percent of 3rd Qtr. Total: 15.1%
All data subject to change. Survey data has been obtained from venture capitalists Venture Capitalist An investor who provides capital to either start-up ventures or support small companies who wish to expand but do not have access to public funding. Notes: Venture capitalists usually expect higher returns for the additional risks taken. responding to the questionnaire questionnaire, n a series of questions used to gather information. questionnaire, n a form usually filled out by patients that provides data concerning their dental and general health. and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. from capital recipients identified by the venture capitalists. Source: PricewaterhouseCoopers survey Research Center - Bethesda Bethesda, city, United States Bethesda, uninc. city (1990 pop. 62,936), Montgomery co., W central Md., an affluent residential and commercial suburb of Washington, D.C. The area was settled in the late 17th cent. , MD |
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