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  1. 1. Venture Capital Investment in the SCAG Region 1995 - 2002 Bruce DeVine Chief Economist
  2. 2. What is Venture Capital? <ul><li>Money provided by professional money managers who invest alongside management in young companies with the potential to become significant economic contributors. </li></ul><ul><li>A key source of equity for start-up companies. </li></ul>
  3. 3. Venture Capitalists Generally: <ul><li>Finance new and rapidly growing companies; </li></ul><ul><li>Purchase equity securities; </li></ul><ul><li>Assist in the development of new products or services; </li></ul><ul><li>Add value to the company through active participation; </li></ul><ul><li>Take higher risks with the expectation of higher rewards; </li></ul><ul><li>Have a long-term orientation </li></ul>
  4. 4. Importance of Venture Capital Investment to the Economy <ul><li>Venture Capital: </li></ul><ul><li>Boosts GDP and Creates Jobs </li></ul><ul><li>Supports Innovation Across The Board </li></ul><ul><li>Fosters Local and Regional Economic Growth </li></ul>
  5. 5. Importance of Venture Capital Investment to the Economy <ul><li>VC-Backed Companies: </li></ul><ul><li>Outperform Non-Venture-backed Companies </li></ul><ul><li>Create Leading Edge “Industry Clusters” with High Skilled, High Wage Jobs </li></ul>
  6. 6. Venture Capital Investment in the SCAG Region - Year 2002 Total Investment Mapped: $1.07 Billion
  7. 7. VC Investment Concentrations in the SCAG Region <ul><li>West Los Angeles </li></ul><ul><ul><li>Entertainment/Multimedia </li></ul></ul><ul><ul><li>Software </li></ul></ul><ul><ul><li>Dot-com Firms </li></ul></ul>
  8. 8. VC Investment Concentrations in the SCAG Region <ul><li>Irvine/South Orange County </li></ul><ul><ul><li>Medical Devices </li></ul></ul><ul><ul><li>Biotechnology </li></ul></ul><ul><ul><li>Computer Hardware </li></ul></ul>
  9. 9. VC Investment Concentrations in the SCAG Region <ul><li>Pasadena Area </li></ul><ul><ul><li>Caltech (electronics & engineering) </li></ul></ul><ul><ul><li>Jet Propulsion Laboratory (electronics) </li></ul></ul><ul><ul><li>Idealab </li></ul></ul>
  10. 10. VC Investment Concentrations in the SCAG Region <ul><li>Conejo Corridor </li></ul><ul><ul><li>Biotechnology </li></ul></ul><ul><ul><li>(Low-rise Campuses) </li></ul></ul>
  11. 11. VC Investment Concentrations in the SCAG Region <ul><li>South Bay </li></ul><ul><ul><li>Aerospace </li></ul></ul><ul><ul><li>Defense </li></ul></ul><ul><ul><li>Dot-com firms </li></ul></ul>
  12. 12. Importance of Venture Capital Investment to the Economy <ul><li>Venture capital-funded companies contributed nearly $1.1 trillion to GDP and directly accounted for 12.5 million jobs in 2000 </li></ul><ul><li>Equivalent to 11% of US GDP and one out of every nine jobs. </li></ul>
  13. 13. Importance of Venture Capital Investment to the Economy <ul><li>Impact of venture capital is extraordinary in terms of the contributions of VC-backed companies to: </li></ul><ul><ul><li>R&D spending </li></ul></ul><ul><ul><li>New industry creation </li></ul></ul><ul><ul><li>Tax revenues, and </li></ul></ul><ul><ul><li>Exports </li></ul></ul>
  14. 14. Contribution to the Economy: VC-Backed Companies Outperform All Public Companies Contribution per $1000 in assets between 1980 and 2000 Ratios: VC-Backed Companies / All Public Companies 1.0 1.3 1.5 1.8 2.0 2.3 2.5 2.8 3.0 3.3 Sales Federal Taxes Exports R&D Source: Global Insight (Previously DRI-WEFA) 1.7 to 1 2.8 to 1 1.9 to 1 2.9 to 1
  15. 15. SCAG Region Venture Capital Investment ( in $Millions) $532 $585 $794 $1,401 $3,696 $6,343 $1,899 $1,217 $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 ($Millions) 1995 1996 1997 1998 1999 2000 2001 2002
  16. 16. SCAG Region Venture Capital Investment: (Q1-1995 through Q4-2002, in $Millions) $0 $250 $500 $750 $1,000 $1,250 $1,500 $1,750 $2,000 1995 1996 1997 1998 1999 2000 2001 2002
  17. 17. Venture Capital Investment: SCAG Region, California, and U.S . (Q1-1995 through Q4-2002, in $Millions) $0 $5,000 $10,000 $15,000 $20,000 $25,000 0 800 1600 2400 3200 4000 1995 1996 1997 1998 1999 2000 2001 2002 SCAG Region California U.S. NASDAQ Composite NASDAQ
  18. 18. SCAG Region Share of California and U.S. Venture Capital Investment (Q1-1995 through Q4-2002 ) 0% 5% 10% 15% 20% 25% Share of California Share of U.S. 1995 1996 1997 1998 1999 2000 2001 2002
  19. 19. California’s Share of U.S. Venture Capital Investment (Q1-1995 through Q4-2002 ) 10% 15% 20% 25% 30% 35% 40% 45% 1995 1996 1997 1998 1999 2000 2001 2002 California receives more than 40%of the U.S. total 45% 50%
  20. 20. SCAG Region Venture Capital Compared with Major Transportation Funding $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 ($Millions) Venture Capital Investment Gasoline Tax (State & Federal) Retail Sales-Local Transportation Fund 1995 1996 1997 1998 1999 2000 2001 2002
  21. 21. Venture Capital Investment in the SCAG Region Cumulative: Q2-97 Through Q4-02 Total Investment Mapped: $9.6 Billion
  22. 22. Venture Capital Investment in Inland Empire: Q2-97-Q4-02 <ul><li>Q4/97- Corona Case Swayne $38 Million </li></ul><ul><li>Q4/99 - Temecula ZoneWorx * $9 Million </li></ul><ul><li>Q1/00 - Ontario Pacific Precision Metals $7 Million </li></ul><ul><li>Q4/01-Q4/02 - Chino Morgan Confections $4 Mill. </li></ul>* Formerly Zone Automation
  23. 23. VC Investment Summary by Area Cumulative: Q2-97 Through Q4-02 West Los Angeles Irvine/So. Orange Co. Conejo Corridor South Bay Pasadena Area (Inland Empire & Imperial) $2.5 Billion $2.3 Billion $1.1 Billion $680 Million $508 Million $58 Million
  24. 24. Thank You Venture Capital Investment in the SCAG Region

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