Venture capital: Investments in California gain steam

Venture capitalists are quietly reasserting themselves in what is one of the few bright spots for the California economy.

By Jerry Hirsch, Los Angeles Times
July 19, 2010

Venture capitalists are quietly reasserting themselves in what is one of the few bright spots for the California economy.

Venture capital investment reached almost $4 billon in California during the second quarter of this year, a 51% gain from the same period last year and the most since the third quarter of 2008. The number of companies they are funding also rose — up more than 8% to 296 compared with a year earlier, according to Dow Jones VentureSource, which collected the data.

Eventually this will mean jobs for California.

"The venture industry creates a lot of jobs because they are funding companies that are starting up almost from scratch," said Jessica Canning, global research director for Dow Jones VentureSource in San Francisco.

Venture capital investment is approaching its pre-recession levels, she said.

"This is good news," said Stephen Levy, chief economist and director of the Center for the Continuing Study of the California Economy in Palo Alto. "The investment will turn into jobs as some of these companies become successful."

Levy cautioned that the venture capital investment numbers represent a leading indicator for job growth and that the effects of the funding would take many months if not years to play out, "but as a first step it is very positive and probably along with the revival of business at the ports is the best economic signal going on for California."

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