Venture capital investments in the nation kept up a record pace in the third quarter while remaining flat in Southern California, further proof for entrepreneurs who complain that the region is a virtual Mojave Desert when it comes to this key source of investment capital. If we're really looking to be a high-growth region, new companies have to be getting funding. Successful companies breed more successful companies. Although Los Angeles County is in the midst of a small-business boom, this won't necessarily draw venture capital. According to Jack Kyser, chief economist for the Economic Development Corp. of Los Angeles County, many of the new companies are small or home-based businesses and aren't candidates for venture capital.
Capital is what brings companies up to the next level.
The amount of venture capital going into a region signals whether that area will be a leader in the years ahead. Nation-wide, venture funds are flush with cash from investors who have made money in the stock market. In the third quarter, the amount of venture funds in Southern California was about the same as in the third quarter of last year, Coopers found. But we're not necessarily gaining much, either. This is a slow beginning.