Orange County venture investors found a little more to like locally last year.
The top 20 venture firms operating in OC said they invested $30.7 million in local startups last year, up 4% from a year earlier, according to this week’s Business Journal list.
“2004 was the year of steady recovery,” said Randy Lunn, managing director of the Irvine office of Santa Monica-based Palomar Ventures Management LLC. “It wasn’t spectacular, but just slow and steady.”
The list ranks venture firms operating in OC by their funding of local companies. The list doesn’t include investments in OC companies made by firms that don’t have offices here.
Overall, OC startups saw a decline in funding in 2004. Privately held companies attracted $262 million in venture funds last year, down 29% from $371 million in 2003, according to the MoneyTree survey by PricewaterhouseCoopers, Thomson Venture Economics and the National Venture Capital Association. The survey measures investments from all venture firms.
Nationally, venture funding rose 11% to $21 billion last year.
OC venture funding appears to be bouncing back. In the first quarter, the MoneyTree survey said funding nearly doubled to $111 million, versus a year earlier.
The Business Journal list often sees big swings because venture investing is a spotty, drawn-out process. Many firms may find that they make few investments one year, and those that are made may be outside the county.
This year’s list is no exception for several reasons. The big one: The Business Journal decided to take last year’s top firm, ASRI LLC of Huntington Beach, off the list.
ASRI’s chief executive, Steve Kumar, didn’t return several phone calls and e-mails requesting comment on ASRI’s investments in the past two years. The firm said it made $25 million in local investments in 2003, which the Business Journal couldn’t verify.
More Active
Six firms on this year’s list didn’t make any local investments, down from 10 a year earlier.
Half of the list’s 20 venture firms upped their local investing in 2004, versus four a year earlier. Six firms invested less money in OC startups than they did a year earlier.
No. 1 Palomar said it invested a total of $6 million in two technology companies last year: Aliso-Viejo-based Datallegro Inc., which makes data storage and search systems, and Irvine-based Newport Imaging Corp., a maker of chips for digital cameras.
Palomar’s Lunn said strong management attracted Palomar to Datallegro and Newport Imaging.
“Both have experienced CEOs, and both had very focused business plans,” Lunn said.
Datallegro Chief Executive Stuart Frost ran a startup previously. He founded Britain’s Select Software Tools Ltd. in 1988, which he led to a public offering eight years later. Last month, Datallegro closed its second round of funding worth $15 million.
Newport Imaging is made up of former executives of Newport Beach chipmaker Conexant Systems Inc. It recently closed on a $5.5 million round of funding.
New to the Business List is No. 2 Tustin-based Angel Strategies LLC, which provided $4.2 million to Hispanic-targeted companies in OC last year.
North American Latino Beer Industries Inc. was one company funded by Angel Strategies, said John Garcia, managing principal.
The beer maker is looking to carve out a Latino brand with Otra Beer.
“We are making a concerted effort to look for more Orange County companies for investment,” Garcia said.
Corona del Mar-based Miramar Venture Partners LP rose five spots to No. 3 with $4 million in funding last year.
Miramar’s Deals
Miramar’s big venture deals include funding for chip designer SolarFlare Communications Inc. and Aktino Inc., a designer of telecommunications gear. Both startups are based in Irvine.
SolarFlare took $21 million of a $50 million round of funding in February, giving it about $78 million in total funds raised since last year.
In May, Aktino closed $16 million in a second round of funding. That comes on top of a $10 million round last year from several venture funds, including Miramar, No. 4 InnoCal Venture Capital of Costa Mesa and No. 9 Crosspoint Venture Partners in Irvine.
With $3.8 million in local venture funding last year, InnoCal jumped from the No. 18 position a year ago.
Local deals for InnoCal included Rancho Santa Margarita-based tech supply cabinet maker DispenseSource Inc. and Irvine-based TCI Solutions Inc., a grocery chain software maker.
TCI recently was bought by Israel’s Retalix Ltd. for $34 million in cash and stock.
Rounding out the top spots were No. 5 Odyssey Venture Partners LLC in Costa Mesa, which invested $3.6 million locally; No. 6 Domain Associates LLC in Laguna Niguel, with $2 million in funding; and No. 7 Versant Ventures in Newport Beach, also with $2 million.
No. 8 MedFocus Fund LLC in Irvine counted MiCardia Corp., Onset Medical Corp. and Triage Medical Inc. among its medical fundings last year. In all, MedFocus spent $1.6 million locally.
Newcomers on the list included No. 12 Bio Star Private Equity Fund LLC in Irvine. It was founded three years ago with Michael Henson, who also heads MedFocus.
Bio Star reported $500,000 in local fundings.
One venture firm to look out for next year is Orix Venture Finance LLC, a unit of Japan’s Orix Corp.
The company said last week it opened an office in Newport Beach.