A Historical Perspective of Venture Capital Investments in

the SCAG Region

Quarterly Maps of Venture Capital Investment, 2nd Quarter 1997

through 2nd Quarter 2001

October 2001

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

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

Investment Scattered across the Region.

Investment more than Doubles from Previous Quarter.

$38 Million Invested in Corona in the Inland Empire.

1998 Starts Stronger than 1997 Ended.

Santa Monica and West Side as well as Irvine Area Show their Dominance in Receiving Investments.

Investments Stable at Year Long Trend of Approximately $200 Million.

Year Ends with $250 Million in Investments in the 4th Quarter.

Santa Monica, Irvine, and Westlake Village Main Investment Centers.

A Firm Located in the City of Brea Received the Largest Investment of the Quarter, $131 Million.

Santa Monica, El Segundo, Santa Ana, and Costa Mesa-based companies received large amounts of funding.

The Santa Monica area and Irvine Area Remain Investment Hot Spots.

Investments in the SCAG Region Reach Their Peak Quarterly Amount, $960 Million.

1999 Totals Show the Hot Spots: Coastal LA County, Orange County, Conejo Corridor, and Pasadena.

Investment in the Inland Empire Appears in Ontario.

Almost $1 Billion in Investment, with Key Areas being the South Bay and Orange County. Note Investment in Riverside.

South El Monte Receives $75 Million, Conejo Corridor and Orange County remain Strong.

Regional Investments Remain Strong while Bay Area Suffers Technology Slump.

A Banner Year for Investments in the Region.

Technology Slump Arrives in SCAG Region, Investments at the Lowest Level in Two Years.

Currently, Venture Capital Investments remain Steady with 1st Quarter 2001 and Well Below the Previous Year’s Level.

Future Outlook for Venture Capital Investment

• The SCAG economy is diversified and has not been as adversely affected by the decrease in venture capital investments as the Bay Area

• In the aftermath of the terrorist attacks on the U.S., high paying New Economy jobs may be replaced with high paying engineering jobs

Future Outlook for Venture Capital Investment

• The defense industry may resurface as a driving high-paying, wealth-generating industry in Southern California and could replace New Economy jobs in the region.