Venture capital firms in Orange County invested about $48 million into local startups 2006, according to this week’s Business Journal list.
A year earlier, the 19 firms on our list invested $51 million in local companies. The 6% decline isn’t unusual given that venture capital funding can swing wildly from year to year, depending on deals.
The list ranks venture firms operating in OC by their funding of local companies. The list is a snapshot of local venture investing and doesn’t include investments in local companies by firms that don’t have offices here.
Total 2006 venture investing in OC, including from firms outside the county, came in at $558 million, according to Ernst & Young LLP and Venture One, a division of Dow Jones & Co. That was down from $595 million in 2005.
Overall last year, technology dominated, grabbing $375 million in total venture funding, up from $312 million in 2005.
Among local venture capital offices, healthcare funding led the way.
The Newport Beach office of Menlo Park-based healthcare investor Versant Ventures topped this year’s list with more than $14 million invested in local companies.
Versant also topped last year’s list with more than $15 million invested.
The firm focuses on biotechnology, drug, medical device and healthcare services companies.
Versant last year invested in GluMetrics Inc., an Irvine device company that develops glucose monitors, and Aliso Viejo-based Eyeonics Inc., which makes replacement eye lenses for cataract patients.
Investment in healthcare companies could increase this year, said Michael Schoenfeld, leader of Ernst & Young Venture Capital Advisory Group.
“We’re seeing a trend of dollars into healthcare globally,” he said. “Orange County should benefit from this.”
Versant invested more than twice as much as anyone else on the list.
The Irvine office of Santa Monica-based Palomar Ventures Management LLC came in at No. 2 with $6.2 million.
Palomar stuck to tech here last year, investing in Aliso Viejo-based Datallegro Inc., a maker of data storage gear, and Mission Viejo-based Incuity Software Inc., a developer of software for manufacturers.
At No. 3 was Corona del Mar-based Miramar Venture Partners at $6 million. Its investments included Irvine auto financier Graypoint Auto Finance Corp. and Irvine’s Get Lower Inc., operator of a site to shop for real estate and other services.
Rounding out the top 5: No. 4 Irvine-based healthcare investor Medfocus Family of Funds at $4.5 million; and No. 5 Tustin-based Angel Strategies LLC at an estimated $4 million.
“Orange County is an innovation hub with a dynamic economy,” said John Garcia, managing partner of Angel Strategies. “We’re learning to grow.”
Garcia offered a bold statement that could ruffle some feathers. He said he sees the county losing its lead in medical devices.
“People may say otherwise, but we’re not as strong here as we once were,” he said.
Garcia said he’s more bullish on health services. He said his firm is looking to cash out its investment in Solana Medical Spas, an Irvine-based company that has received bids from potential buyers.
Garcia said he’s also looking at potential investments in security services, cell phone technology and businesses targeting the Latino market.
New to this year’s list is No. 8 Laguna Beach-based Okapi Ventures LP.
Okapi, which focuses on computer and medical technology, closed its fund in 2006. The $30 million fund has invested $2 million so far.
The firm has bought into San Clemente-based RF Nano Corp., an electronics company, and an undisclosed digital media company.
Okapi has a “few deals in the pipeline,” according to managing directors Marc Averitt and Sharon Stevenson, the two-person team behind Okapi.
This year, No. 7 Costa Mesa-based Sail Venture Partners plans to invest up to $15 million in energy-related startups, according to partner David Jones.
“There’s no market bubble in energy,” he said. “Orange County has great companies in the sector, as good as anywhere else.”
Sail is looking to close an investment in a local company, he said.
The firm focuses on Southern California and also invests in other parts of the country.
Sail lists Irvine-based Oryxe Energy International Inc. as one of its successes. After investing $3.5 million in Oryxe, the developer of fuel additives has seen revenue go from $2 million in 2005 to $12 million in 2006. This year, Oryxe expects $20 million in sales, according to Jones.
