The Tech Coast Angels investor group is on track to post its biggest year since 2000.
The venture network’s investment in Southern California companies rose 65% to $10.7 million through October, compared to a year earlier. Tech Coast did first-round funding for 20 companies in the period, versus 17 in all of 2004.
Tech Coast could match the $11.6 million handed out by its members in 2000, when early-stage investing was going gangbusters. The top year for the group was 1999, when the network handed out $15.2 million in startup funding.
A healthier venture capital industry and an improving technology sector are fueling this year’s activity, investors said.
“It’s been a pretty stunning year,” said John Morris, chairman of Tech Coast, which had its roots in Irvine but doesn’t maintain an official headquarters. “The fact is we saw a willingness of venture capitalists to invest, and you kind of build on that confidence.”
Tech Coast members don’t invest in any one startup as a complete group. Instead, they choose among potential investments on their own, with a handful of members typically getting together to put their own money in individual deals.
Angel investors target young companies. Venture capital firms tend to invest in later-stage startups than angels, but also join early funding rounds when they feel a company’s prospects for growth are good.
About half of Tech Coast’s funding rounds include partnerships with venture companies.
Tech Coast has funded three Orange County startups for the first time this year. Two OC companies got funded in 2004. Los Angeles, meanwhile, saw 11 startups funded by Tech Coast members this year, versus nine in 2004. Six San Diego startups attracted funding through October, compared to five in 2004.
The number of OC startups getting funding from Tech Coast has lagged those in San Diego and L.A. for a few years, Morris said. One reason is investors’ appetite for Internet content and wireless startups,traditional strengths in L.A.’s entertainment-focused economy and the influence of San Diego’s Qualcomm Inc.
For more on this story, see the Nov. 28 edition of the Business Journal.
