Venture capital firms based in Orange County or with offices here invested $41 million into startups in 2007, according to this week’s Business Journal list.
Last year’s total was down 13% from 2006, but investments can swing wildly from year to year.
The list ranks firms operating in OC by their funding of companies here and elsewhere. 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 2007 venture funding in OC,including money from outside the county,came in at $433 million, according to Dow Jones & Co.’s Venturesource unit.
The largest firm on the list was Newton, Mass.-based technology investor Softbank Capital, which has a Newport Beach office run from the home of associate Tarang Shah.
Softbank’s local office invested $10 million in 2007, up from no local investments in 2006.
Its latest investment: Santa Ana-based Communicado Inc., which helps small businesses update their phones and communications. Communicado is on its third round of funding.
Softbank is looking at three other local companies it might invest in by the end of this year, said Shah, who declined to offer details.
Local prospects have been few lately, according to Shah, who cited a lack of strong management.
“What we invest in has a lot to do with the talent available,” Shah said.
Softbank also seeks companies that solve problems, or “pain points” as they’re called among venture capitalists.
The second largest local investor was Menlo Park-based Versant Ventures, which put $5.2 million into healthcare companies from its Newport Beach office.
“We like healthcare because it’s not tied too closely to the economy,” said William Link, a managing director with the company.
OC has been an attractive market for his firm with its track record of startups that get bought by big medical device makers or that go public.
“A successful startup with a successful exit typically spawns more,” Link said.
Link said he likes local eye care companies such as Lensx Lasers Inc. in Aliso Viejo.
Santa Monica-based Palomar Ventures made the third largest investment at $4.5 million.
The firm, which invests primarily in tech, last year bought into Aliso Viejo-based DatAllegro Inc., a data storage company.
“The deal flow in Orange County remains strong,” said Scott Walters, a chief financial officer in the firm’s Irvine office.
Like most venture capital firms, Palomar doesn’t expect to make money on all of it investments. But it hopes the ones that do hit big.
One of its better investments has been in Mission Viejo-based Incuity Software Inc., which makes software that helps manage manufacturing.
Incuity was bought by Milwaukee-based Rockwell Automation Inc. in April for an undisclosed amount.
It now takes longer to raise a company to the next level, according to Walters.
“What used to be three to five years is now five to seven years,” he said.
Other notable local investors with local offices include Tustin-based Angel Strategies LLC, the fourth largest at an estimated $4 million and the largest based in the county, and Corona del Mar-based Miramar Venture Partners, the fifth largest at $3.7 million.
Costa Mesa-based Sail Venture Partners LLC made the eighth largest investment last year with $2.4 million.
Sail Venture started in 2003 with a $35 million fund to invest in energy companies.
“The rising price of oil drives us more than anything,” said partner David Jones. “I see this as more of a paradigm shift than a bubble.”
The firm likely will cash out of its first two investments some time this year and plans to have a $200 million fund ready by the end of September.
“Our deal flow is getting bigger every day,” Jones said. “Half of our investments are in Southern California and most of those are in Orange County.”
Sail invests in startup companies such as Cypress-based SN Tech Co., a maker of electric motors that it’s put $1.5 million into, and Irvine-based Flexenergy Inc., a Mission Viejo company that converts natural gas to electricity.
