Venture investments in Orange County companies fell 10% last year with a steep decline in funding for healthcare startups, according to a report by Ernst & Young LLP and VentureOne, a unit of Dow Jones.
Startups here raised $523 million last year, down from $583 million a year ago, according to the report.
The number of OC deals fell to 49 in 2006 from 52 in 2005.
In 2005, venture investing here reversed a three-year slide. Before 2005, investing in OC startups had fallen steadily since 2002’s $512.6 million.
Last year’s dropoff could be skewed by a few big deals in 2005, some upward of $40 million, said Michael Schoenfeld, a partner at Ernst & Young and leader of its venture capital advisory group.
“Orange County had a very healthy year for venture capital investing and that’s consistent with the nation,” Schoenfeld said.
OC almost had the nation’s biggest deal of 2006. Amp’d Mobile Inc., a provider of wireless service as well as video and other entertainment, scored a $150 million second round of financing last year.
The company started in Aliso Viejo and moved to Los Angeles last year.
Amp’d is run by Peter Adderton, one of the founders of Irvine-based Boost Mobile LLC, which markets mobile phones to the surf and skate crowd.
The county’s medical device and other healthcare technology startups saw a steep dropoff in investment after a record year in 2005.
Last year, there were 11 deals among OC’s healthcare companies, totaling $270 million. In 2006, there were seven deals that totaled about $105 million.
On the flipside, local tech companies got a big boost,especially those in the Web-heavy information services industry.
“In the IT space there is a lot of optimism,” Schoenfeld said.
Newport Media Inc., a Lake Forest-based chipmaker landed a $30 million deal in November in its third round of funding.
And Red 5 Studio, an Aliso Viejo-based online game developer, scored $18.5 million in its maiden round of funding.
U.S. venture capital investing in 2006 rose to its highest level in five years to $26 billion invested in 2,454 deals, up 8% from a year ago.
Southern California as a whole passed the Northeast for the first time since 2001. The area is now the nation’s No. 2 region for venture investment, after the Bay area.
Investment in Los Angeles startups totaled $1.3 billion, up from $884 million a year ago.
In San Diego, companies raised $1.3 billion, up from about $1 billion in 2005.
