Venture capital firms based in Orange County increased their local investments 47% last year, led by Toba Capital and Okapi Venture Capital.
The six ranked firms made 43 deals totaling $78.3 million, up from 30 deals for $53.4 million in 2015.
• No. 2, Okapi of Laguna Beach, invested in nine deals totaling $21.5 million in 2016, compared with 11 deals for $12.5 million in 2015.
Okapi has a $47 million fund and typically invests from $100,000 to $3 million. It may soon close its third round of fundraising, said Managing Director Marc Averitt, who is co-founder along with Sharon Stevenson.
OC Advantages
Among Okapi’s recent successes are Connectifier, a Costa Mesa-based recruiting firm using artificial intelligence that was acquired last year by LinkedIn Corp., and CrowdStrike Inc., an Irvine-based cybersecurity firm that recently raised $100 million for a valuation topping $1 billion.
“Orange County is starting to make a name for itself in enterprise software,” Averitt said. “You’re starting to see companies from San Diego, Los Angeles and even the Bay Area move to Orange County.”
One key reason is that Orange County is about 30% to 45% cheaper than the Bay Area in areas like payroll and housing for employees.
• Newport Beach-based Toba Capital, OC’s other big dealmaker last year, closed 22 deals totaling $35 million, up from six for $23 million the year before.
Vinny Smith created Toba in 2012 after selling Quest Software in Aliso Viejo to computer maker Dell Inc. for $2.8 billion. Smith received about $800 million in the sale.
Toba makes seed- and late-round investments in software companies. Its OC investments include Irvine-based Alteryx Inc., a data analytics software company that went public in March and now has a market capitalization of $1.1 billion.
The Alteryx investment is one of 45 active software companies in Toba’s portfolio, which also includes Newport Beach-based virtual reality content maker NextVR; security software maker SecureAuth Corp. in Irvine; and Costa Mesa-based business website and social media services provider MoPro. In the past year, it invested in companies that include San Juan Capistrano-based Cirro, which provides internet-based security products.
Ranked VC firms reported managing $1.18 billion, up 19% from $995 million in 2015. The biggest reasons were Toba’s 30% jump to $615 million and Irvine-based Lotus Innovations LLC’s doubling of funds to $90 million (more on Toba in Technology column, page 49).
Industry Shifts
Notable changes on the list include:
• Lotus’ lack of OC deals after investing about $15 million in 2015. Managing Director Christian Mack founded the firm in 2013 when it launched its inaugural fund of $10 million.
Lotus prefers to invest in early-stage communications software companies and provides back-office services, such as marketing, legal, IT systems and office administrators, to portfolio companies.
• Miramar Venture Partners in Corona del Mar made $750,000 worth of investments, down 74% from $2.9 million. The firm manages $143 million and invests in digital media and cloud computing companies.
• MedFocus Family of Funds in Irvine dropped off the list, saying it wasn’t active in Orange County, with only two deals for under $1 million. The firm makes early-round investments in medical device makers and made $2.1 million in eight local investments in 2015.
• Sail Capital Partners LLC in Newport Beach jumped back into the local market, reporting a $20 million investment. A phone message left for company founder Walter Schindler wasn’t immediately returned.
The firm invests between $1 million and $50 million in companies in the clean-energy, water, energy efficiency, storage and agricultural technology sectors.
