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Silicon Valley investors discover LA's star appeal
After two decades watching their neighbours in Silicon Valley attract more venture capital investment than anywhere else in the US, companies in Southern California are making a comeback.
- By Matthew Garrahan, Financial Times
- Published: 00:35 April 26, 2008
- High-rise buildings in Los Angeles. A new generation of internet companies has established headquarters in Los Angeles, which has become a magnet for investors.
- Image Credit: Bloomberg News
After two decades watching their neighbours in Silicon Valley attract more venture capital investment than anywhere else in the US, companies in Southern California are making a comeback.
Successive technology booms have made the northern California technology corridor the undisputed leader when it comes to start-up investment.
But a new generation of internet companies specialising in content management, online advertising and search optimisation has established headquarters in Los Angeles, which is acting as a magnet for investors.
First-quarter figures released last week by the National Venture Capital Association show that Southern California, which includes Los Angeles, San Diego and Orange County, leapfrogged New England by attracting more venture capital investment, lifting it to second place behind Silicon Valley.
Most dominant
Silicon Valley is still the most dominant region, attracting $2.58 billion of investment in the first quarter compared with $857 million for Southern California, according to the NVCA. But Silicon Valley investors are increasingly looking south for new opportunities.
San Diego has a vibrant biotech industry and Orange County's medical device sector has also attracted investment. However, the concentration of digital media companies in Los Angeles has made the city "the rising star" in the region, according to Randy Churchill, director of business development at PwC, which compiles the quarterly figures with the NVCA.
"We are increasingly seeing venture capitalists based in Silicon Valley hop on a plane and go to Los Angeles," says Mark Heesen, president of the NVCA. "And they're setting up shop there."
Dealmaker, a San Francisco group that organises networking events for entrepreneurs and technology investors, recently opened a Los Angeles branch and has held two over-subscribed events in the city this year. The inaugural party took place at the offices of Michael Ovitz, the former Hollywood super-agent who founded the Creative Artists Agency.
"In the 1980s, all venture capital investment in Southern California was driven by defence contracts at companies like Boeing and Lockheed," says Jack Kennedy, executive vice-president of strategy and corporate development at Los Angeles-based Fox Interactive Media, the digital arm of News Corporation.
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