Venture capital firms based in Orange County decreased their local investments last year by about 22%.
The nine ranked firms had 51 investments totaling $65.1 million, down from 57 deals worth $83.6 million in 2016, according to the Business Journal’s annual tally of venture capital firms.
• The biggest reason was No. 8, Sail Capital Partners LLC, which reported its investments in OC companies fell from $20 million to zero. The Newport Beach-based company changed its business model from investing to advising family offices on where to invest, founder and Managing Partner Walter Schindler said.
“It’s a better deal for us than having to do all the work of managing it.”
The firm is continuing to look worldwide for investments to advise on, including Southeast Asia, where it’s managing energy projects, Schindler said. Sail is seeking innovations that combine energy and technology, such as new pipelines that degrade more slowly; waste recycling; hydrogen production; and nanofiber technology for air filtration, Schindler said.
Orange County has more innovation in energy projects than might be expected, he said, pointing out the National Fuel Cell Research Center at the University of California-Irvine as a catalyst.
“A surprising amount of new energy technology is happening in Orange County.”
• Another big factor in the decline was No. 3, Okapi Venture Capital in Laguna Beach, which reported four local investments totaling $5.26 million last year compared to nine for $21.5 million in 2016.
Its reduced stake can be attributed to the purchase of one of its main investments, Connectifier, in 2016 by LinkedIn Corp., said Okapi Managing Director Marc Averitt, who’s co-founder along with Sharon Stevenson.
While the VC environment in OC is “extremely small” compared to the Bay Area, there are many promising startups here, Averitt said. The hottest areas are cryptocurrencies and artificial intelligence, while industries cooling off include ad and marketing tech investments, he said.
Okapi is spending much of its time looking at design innovation.
“As Apple and others have shown us, as more and more technology becomes commoditized, design ends up mattering much more,” Averitt wrote in an email. “We feel OC will benefit from this trend given the legacy of design talent in OC and the location’s attraction to the creative types.”
Okapi had $67 million under management last year, up from $47 million in 2016. It typically invests from $100,000 to $3 million. The firm recently added two partners, Jeff Bocan and John Waller, who both have extensive VC experience. Joining as a venture partner was Matt McRae, the former chief technology officer at Irvine-based flat-screen television maker Vizio Inc.
• List newcomer Cambridge Cos. SPG’s Newport Beach office debuts at No. 2 with five investments totaling $20 million. It focuses on revenue-generating companies “that have broken down the barriers of entry into the market” and can scale nationally with a potential buyer or initial public offering, according to its website. Its investments include Owl’s Brew beverages, Nona Lim soups and Piñata, a consumer media company.
Managing Partner Filipp Chebotarev was previously with DaVita Healthcare Partners Inc. and worked for Republican U.S. Rep. Ed Royce.
• Another newcomer on our list is Newport Beach-based True Family Enterprises, which was founded by entrepreneurial couple Alan and Twila True.
Since the company declined to disclose the amount it invested in OC companies, we put it at No. 9 on the list.
However, it does make investments between $5 million and $100 million in early-stage and growth companies in real estate, consumer goods, food and entertainment.
Alan True, in a Business Journal article last week, said he invested $30 million in True Fresh HPP, a Buena Park factory that’s processing fresh food.
