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The New Economy and the Future Economic Health of Southern ...


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