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JAMES FLANIGAN ON SOUTHERN CALIFORNIA

An Attitude of Awareness in O.C.

May 14, 1997|JAMES FLANIGAN

Orange County's vision of itself, expanding with its booming economy, now declares that the county is the heart of "California's Technology Coast," a region that extends 50 miles in all directions to encompass much of Los Angeles, San Diego, San Bernardino and Riverside counties as well.

"The Tech Coast has 20% more technology-driven companies than Silicon Valley," says a statement from the Orange County Business Council, which thought up the Technology Coast idea to emphasize growing involvement in computer electronics, software and biomedical industries.

The rhetoric about being the heart of Southern California's technology seems presumptuous perhaps. But, hey, what's wrong with a little vision to help a young, ambitious area focus its energies?

What's happening is that Orange County, an area of 2.7 million people in 31 cities with an economy turning out $85 billion a year in goods and services, has reached a new phase in its development and a new maturity in its outlook. Once a surf-minded suburb of Los Angeles, and then a rich adjunct to the larger, $250-billion economy to its north, Orange County now is innovative, serious and instructive.

With unemployment at roughly 3%, the county is importing workers from neighboring counties. But its boom this time is different from past occasions. Its 1,300-member business council is more active in supporting local industry and more thoughtful about social problems amid prosperity.

And more confident. "Orange County today reflects the entrepreneurial spirit that Silicon Valley had in 1979-80--a place where they ask what you're doing, not what you've done," says Fred Rogers, chairman of Select University Technologies Inc. in Newport Beach.

Rogers, 47, originally from the Canadian province of Alberta, founded Select three years ago on the notion that he could sift through university research and come up with ideas for commercial products. So far he and a few associates have come up with four potential products: a charcoal from macadamia nuts that could be useful in steelmaking, a water-cooled air conditioner, aluminum cable three times stronger than steel, and identity cards that work on radio signals.

Now Rogers, whose firm subsists on roughly $80,000 in equity from Canadian and U.S. investors, wants to find industrial partners to fund development of those products. For the work, he can look forward to using laboratories at one of six Technology Innovation Centers or incubators that the business council is building or planning.

The council started promoting incubators when its members realized that Orange County's economy, once dominated by landowning and aerospace firms, has become home to hundreds of entrepreneurial companies.

CenTOR Corp. of Garden Grove is a good example. An 8-year-old company that has grown to roughly $1.5 million in sales by putting technical information for engineers on CD-ROMs, CenTOR has developed a software tool that provides efficient Internet access for technical data. Founder Chris Nunez, 37, dreams of CenTOR growing to $40 million in sales within four years on the strength of the new product, which has won acceptance from big companies, including General Electric Co.

The firm, which has 10 employees, has reached a crossroad. CenTOR needs venture capital if it is to hire a sales force and expand its customer base. And time is pressing. CenTOR must expand before some other company develops a similar Internet tool and reaps the growing market's rewards. So Nunez has been meeting with venture capital firms and contemplating surrendering some control of his company in return for financing.

But to get venture capital, CenTOR may have to go outside Orange County because local sources are few. Enterprise Partners, of Newport Beach, which has backed 63 companies with $215 million in venture capital, is the largest such firm in the county. Chuck Martin, who heads Enterprise, has just raised an additional $200 million and sees a bright future for his business.

Yet the fact that Enterprise leads the field in such a dynamic environment is a clue to how recently the economy has changed. Major venture capital firms, from Los Angeles and San Francisco, had branch offices in Orange County years ago but pulled back in the early-'90s recession, explains Bert Weinstein, co-founder of the business council.

Ironically, the adversity of recession and the November 1994 Orange County bankruptcy spurred its business community to action. Now its efforts are deepening. Today the council is holding a conference with a leader of Joint Venture Silicon Valley, the public-private partnership that arose in 1992 to help that Northern California region cope with recession.

Yet today's conference won't be on start-ups or financing but on "civic entrepreneurship," the phrase Northern California uses to describe the role company leaders can play in their communities.

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