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Venture funding in OC was down in the third quarter

Venture capital investments in Orange County companies totaled $208.4 million in the third quarter, down from the record $303 million posted in the second quarter and lower than the year-ago third quarter and prior record, $212 million, according to PricewaterhouseCoopers LLP’s Money Tree Report. Still, venture capitalists are on track for a banner year in OC, having invested $617 million during the first three quarters and already topping the previous annual high of $540 million set last year.

And the PricewaterhouseCoopers figures don’t include all third-quarter investments in local companies. One that is not included is a $15 million investment in Irvine-based Nexgenix Inc. led by Meritech Capital Partners. The Wellesley, Mass-based venture firm doesn’t supply numbers to the PricewaterhouseCoopers survey.

Nor does the survey reflect other types of investments, such as the announced $100 million in Aliso Viejo-based Enfrastructure Inc. by Microsoft Corp., IBM Corp., Lucent Technologies Inc. spin-off Avaya Inc. and Arthur Andersen.

“If Enfrastructure’s investment is correct, that would put investments for the quarter over $300 million, and it would be consistent with the second quarter,” said Richard Withrey, a global technology partner for PricewaterhouseCoopers and its chief technology officer for Southern California. A Nexgenix spokesman confirmed that the company did receive its funding in September. An Enfrastructure representative said she would check if the investment came through but was unable to do so by late last week. Later rounds of funding made up the bulk of venture investments in the third quarter as firms concentrate on managing the portfolios they already have.

Altogether, there were 21 third-quarter investments, compared to 25 deals in the second quarter. Technology companies dominated as usual, with 14 tech companies receiving funds, followed by three in healthcare services, three in medical devices and one in biotechnology. The biggest investment in the survey was $53 million for Costa Mesa-based Epoch Internet Inc., which focuses on providing high speed Internet access and is building data centers. Other large investments included $31 million in third-round financing for Aliso Viejo-based NowDocs.com, $22.7 million in fourth-round financing for Irvine-based FieldCentrix and $22 million in fourth round funding for TherOx Inc. of Irvine, a medical instrument maker.

The Money Tree Survey also said investments in Los Angeles, Ventura and Santa Barbara counties totaled $677 million, down from the $729 million reported in the second quarter. The large investments in the Los Angeles area companies were mostly for business-to-business Web sites such as the $75 million in first-round funding of El Monte-based eConnections Inc.

Investments in San Diego county companies totaled $472 million, up from $331 million in the second quarter. Here, telecommunication investments dominated, with seven deals attracting $207 million, followed by the area’s traditional lure of biotechnology companies, which attracted six deals totaling $118 million. n

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