Venture Capital Investment in the SCAG Region

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					Venture Capital
Investment in
the SCAG Region
1995 - 2002


Bruce DeVine
Chief Economist
         What is Venture Capital?

• Money provided by professional money
  managers who invest alongside management
  in young companies with the potential to
  become significant economic contributors.
• A key source of equity for start-up companies.
          Venture Capitalists Generally:

• Finance new and rapidly growing companies;
 Purchase equity securities;
 Assist in the development of new products or services;
 Add value to the company through active participation;
 Take higher risks with the expectation of higher
  rewards;
 Have a long-term orientation
         Importance of Venture Capital
         Investment to the Economy

Venture Capital:
• Boosts GDP and Creates Jobs
• Supports Innovation Across The Board
• Fosters Local and Regional Economic Growth
         Importance of Venture Capital
         Investment to the Economy

VC-Backed Companies:
• Outperform Non-Venture-backed Companies
• Create Leading Edge “Industry Clusters” with
  High Skilled, High Wage Jobs
Venture Capital Investment in
the SCAG Region - Year 2002

           Total Investment
           Mapped: $1.07 Billion
     VC Investment Concentrations
          in the SCAG Region

West Los Angeles

 – Entertainment/Multimedia

 – Software

 – Dot-com Firms
     VC Investment Concentrations
          in the SCAG Region

Irvine/South Orange County

 – Medical Devices

 – Biotechnology

 – Computer Hardware
     VC Investment Concentrations
          in the SCAG Region

Pasadena Area

 – Caltech (electronics & engineering)

 – Jet Propulsion Laboratory (electronics)

 – Idealab
     VC Investment Concentrations
          in the SCAG Region

Conejo Corridor

 – Biotechnology

 – (Low-rise Campuses)
     VC Investment Concentrations
          in the SCAG Region

South Bay

 – Aerospace

 – Defense

 – Dot-com firms
        Importance of Venture Capital
        Investment to the Economy

• Venture capital-funded companies
  contributed nearly $1.1 trillion to GDP
  and directly accounted for 12.5 million
  jobs in 2000
• Equivalent to 11% of US GDP and one
  out of every nine jobs.
         Importance of Venture Capital
         Investment to the Economy

• Impact of venture capital is extraordinary
  in terms of the contributions of VC-backed
  companies to:
  – R&D spending
  – New industry creation
  – Tax revenues, and
  – Exports
                     Contribution to the Economy:
                     VC-Backed Companies Outperform All Public Companies



3.3
              Ratios: VC-Backed Companies / All Public Companies
3.0

2.8       Contribution per $1000 in assetsR&D
                     Federal
2.5           between 1980 and 2000 2.9 to 1
                      Taxes
                              2.8 to 1
2.3

2.0

1.8                                              Exports

1.5          Sales                              1.9 to 1

1.3        1.7 to 1
1.0
      Source: Global Insight (Previously DRI-WEFA)
                         SCAG Region
                         Venture Capital Investment
                         (in $Millions)
              $6,000                                          $6,343


              $5,000
($Millions)




              $4,000                                 $3,696


              $3,000

                                                                       $1,899
              $2,000
                                            $1,401
                                                                                $1,217
              $1,000                 $794
                       $532   $585


                 $0
                       1995   1996   1997   1998     1999     2000     2001     2002
                SCAG Region
                Venture Capital Investment:
                (Q1-1995 through Q4-2002, in $Millions)

$2,000

$1,750

$1,500

$1,250

$1,000

 $750

 $500

 $250

   $0
         1995    1996   1997   1998   1999   2000   2001   2002
                  Venture Capital Investment:
                  SCAG Region, California, and U.S
                                                 .
                  (Q1-1995 through Q4-2002, in $Millions)
                                                                                NASDAQ
$25,000                                                                           4000
                                          NASDAQ
                                         Composite
$20,000                                                                           3200



$15,000                                                                           2400
                                             U.S.


$10,000                                                                           1600
                                California


 $5,000          SCAG Region                                                      800



    $0                                                                            0
          1995      1996       1997     1998        1999   2000   2001   2002
                 SCAG Region Share of California
                 and U.S. Venture Capital Investment
                 (Q1-1995 through Q4-2002)


25%
        Share of California

20%



15%



10%   Share of U.S.


5%



0%
      1995        1996        1997   1998   1999   2000   2001   2002
             California’s Share of U.S.
             Venture Capital Investment
             (Q1-1995 through Q4-2002)
50%

45%

45%

40%
                                         California receives more
35%
                                         than 40%of the U.S. total
30%

25%

20%

15%

10%
      1995   1996   1997   1998   1999   2000       2001       2002
                              SCAG Region Venture Capital
                              Compared with
                              Major Transportation Funding

              $6,000
                         Venture Capital Investment
                         Gasoline Tax (State & Federal)
              $5,000     Retail Sales-Local Transportation Fund
($Millions)




              $4,000


              $3,000


              $2,000


              $1,000


                 $0
                       1995     1996    1997      1998     1999   2000   2001   2002
Venture Capital Investment
in the SCAG Region
Cumulative: Q2-97 Through Q4-02
              Total Investment
              Mapped: $9.6 Billion
           Venture Capital Investment in
           Inland Empire: Q2-97-Q4-02


• Q4/97- Corona Case Swayne                $38 Million

• Q4/99 -Temecula              ZoneWorx*    $9 Million

• Q1/00 -Ontario Pacific Precision Metals $7 Million

• Q4/01-Q4/02 -Chino Morgan Confections $4 Mill.
  * Formerly Zone Automation
            VC Investment Summary
                    by Area
             Cumulative: Q2-97 Through Q4-02

West Los Angeles              $2.5 Billion
Irvine/So. Orange Co.         $2.3 Billion
Conejo Corridor               $1.1 Billion
South Bay                     $680 Million
Pasadena Area                 $508 Million


(Inland Empire & Imperial) $58 Million
Venture Capital
Investment in
the SCAG Region




Thank
You

				
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posted:8/14/2012
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