Venture Capital Investments Hit Record High in Southland

Venture capital investments in Southern California surged to a record $289.7 million in the third quarter, up 47% from the second-quarter total of $197.2 million and 15% higher than $251.2 million a year earlier, PricewaterhouseCoopers reported.

A total of 27 firms received financing in the latest quarter in the region, which encompasses Los Angeles, Orange, Ventura and Santa Barbara counties. The increase in the total dollars invested reflected larger amounts of capital for each company, rather than a higher number of businesses funded, the firm said.

“You do have some big deals in the third quarter,” said Luis Puncel, a partner in the accounting firm’s high-tech group. “The venture capital firms have so much money, they can’t do smaller deals and manage their portfolios effectively. They look for larger deals so they can concentrate their investments and be involved in actively managing the companies.”

That trend has created problems for very young firms that are looking for investments of less than a few million dollars, Puncel said. The gap has been filled in part by the recent formation of some groups of individual investors--called angels--that back start-ups.

Two firms accounted for more than one-third of the dollars invested locally in the quarter. Somera Communications, a Santa Barbara-based provider of telecommunications infrastructure equipment, raised $51.75 million. RealSelect Inc. in Westlake Village, which provides online listings of real estate, received $50 million.

As usual, Silicon Valley reaped the largest share--$1.25 billion.