The New Economy and the Future Economic Health of Southern ...
The New Economy and the Future Economic Health of Southern California Venture Capital Investments in the Nation and the SCAG Region Updated October 2001
Venture Capital Defined <ul><li>Equity investments made in emerging private companies </li></ul><ul><li>Barometer of regional and national economic health </li></ul><ul><li>Identifies promising industry segments </li></ul><ul><li>Predictor of future output, employment, and wealth growth </li></ul>
Factors Influencing Where Capital is Invested <ul><li>Proximity to major research institutions and universities </li></ul><ul><li>Proximity to major international airports </li></ul><ul><li>Educated workforce </li></ul><ul><li>Proactive government </li></ul><ul><li>Venture capital firms located in the area </li></ul><ul><li>Cultural amenities </li></ul>
Venture Capital Investments in the United States <ul><li>Venture capital investments grew rapidly in 1999 and 2000, with the peak quarter in the 1st quarter 2000 </li></ul><ul><li>Investments have dropped drastically in 2001 compared to the previous two years </li></ul><ul><li>California has received 46% of the investment dollars during the 1997-2nd Quarter 2001 time period </li></ul>
Nationally, Investments Peaked in the 1st Quarter of 2001
California is the National Heavy Weight in Venture Capital Investments
The SCAG Region Receives a greater percentage of Investments than San Diego...
… But SCAG Trails San Diego and the U.S. in Average Per Person Investments
Regionally, 2000 was the Best Year for Venture Capital Investments.
This 2-Year View Shows Investment Hot Spots in Santa Monica, Irvine, the South Bay, Pasadena, and the Conejo Corridor .
Currently, Venture Capital Investments remain Steady with 1st Quarter 2001 and Well Below the Previous Year’s Level.
Discussion - The Double Edged Sword of Venture Capital <ul><li>Venture capital investment is the fuel of the new economy and is necessary for future economic prosperity </li></ul><ul><li>Areas without venture capital investment in new economy jobs will lack the highest paying, most wealth generating jobs </li></ul><ul><li>However, venture capital investment inflates real estate prices, limiting the availability of affordable housing </li></ul>
Link to Jobs/Housing Balance <ul><li>Venture capital investments tend to flow to areas that are Jobs-Rich... </li></ul><ul><li>...Despite the fact that housing costs in these Jobs-Rich areas are higher than elsewhere </li></ul>
Future Ramifications <ul><li>The SCAG economy is diversified and has not been as adversely affected by the decrease in venture capital investments as Silicon Valley </li></ul><ul><li>In the aftermath of the terrorist attacks on the U.S., high paying New Economy jobs may be replaced with high paying engineering jobs </li></ul>
Future Ramifications <ul><li>The defense industry may resurface as a driving high-paying, wealth-generating industry in Southern California </li></ul>
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