Venture Capital

Peter Thiel, a PayPal co-founder and early Facebook investor, is launching a $402-million venture capital fund focused on mid-stage companies dealing with major global problems. He's calling it Mithril Capital Management. If that sounds familiar, it's because mithril is also an unusual metal described in “The Lord of the Rings” and “The Hobbit,” the Middle-earth fantasy classics created by J.R.R. Tolkien. The material, according to Tolkien, is malleable, beautiful and rare, stronger than steel while also weighing much less.

Southern California is a hotbed of young and innovative companies, but you wouldn't know it by following the money. Venture capital funding, the lifeblood of start-ups, has fallen sharply in the region this year, according to a report released Thursday. Southern California companies raised $507.6 million from venture-capital investors in the first three months of the year, a 42% decline from the nearly $880 million in the first quarter of 2012. The data were compiled by Dow Jones VentureSource.

Venture-capital fundraising in the U.S. plummeted 35% in the first quarter of 2012 - but the industry is hoping investors are just taking a breather before they begin pledging more funds in earnest. The total pot at the end of the quarter was $4.9 billion raised by 42 separate funds, including ones from Canaan Partners and Bain Capital Ventures. That's 9% fewer participating funds than the same quarter a year earlier, which raised $7.6 billion. The new data from the National Venture Capital Assn.

First it was Texas Gov. Rick Perry who came to California with his cowboy swagger and boasts about lassoing away businesses. Then the South Dakota governor swept through to recruit dairy farmers. Soon after, the Iowa governor made an appearance. Now they're coming in pairs. Joining forces, Utah Gov. Gary Herbert and Virginia Gov. Bob McDonnell are heading to California on Thursday to try their luck at wooing California businesses. On a two-day tour with stops in Costa Mesa, Palo Alto and San Francisco, the old friends plan to tout the wonders of doing business in their states.

Venture capitalists invested 10% more funds in start-ups last year, shelling out $32.6 billion, according to Dow Jones VentureSource. The number of deals by U.S.-based venture companies increased 6% to 3,209, including several transactions involving consumer information service companies such as Twitter, Zynga and LivingSocial. The median amount invested was up 16% to $5 million. That's even as the fourth quarter, usually the most active of the year, saw a decline of nearly 4% year over year and nearly 2% from the month before to 803 deals.

Pasadena-based OpenX Technologies Inc., the online advertising firm whose products are built on largely open-source technology, has raised $20 million in additional venture capital, an infusion it believes will be the last one it needs on the way from being a tiny start-up to a full-fledged digital ad concern. Since its founding in 2007, OpenX has raised $50 million over four investment rounds. OpenX makes and distributes software that allows websites to sell the space on their pages to marketers, much like highway billboard owners look to profit by renting their blank signs to whatever advertiser will pay the highest price.

Venture capitalists are quietly reasserting themselves in what is one of the few bright spots for the California economy. Venture capital investment reached almost $4 billon in California during the second quarter of this year, a 51% gain from the same period last year and the most since the third quarter of 2008. The number of companies they are funding also rose — up more than 8% to 296 compared with a year earlier, according to Dow Jones VentureSource, which collected the data.

California last year attracted more venture capital than any other state, pulling in almost five times as much money as No. 2-ranked Massachusetts. A new report from PricewaterhouseCoopers and the National Venture Capital Assn. said that California received more than half of the country's $28 billion in 2011 venture capital investments. The report was cited Thursday in a blog posted by Dennis Meyers, the principal economist of the California Department of Finance. Nationally, venture capital investments increased 22% last year compared to 2010.

Venture capitalists spent the first quarter of the year dousing the clean-tech industry with more money, hiking investment in solar and other green companies. Though the number of deals fell to 69 from 79, companies raised $1.1 billion in the first three months of 2011 compared with $743.3 million in the same period last year, according to a report released Monday. The top 10 deals alone drew more than 60% of the total haul; the two largest accounted for 18% of nationwide investment, according to Ernst & Young and data from Dow Jones VentureSource.

Green-technology firms attracted the largest share of venture capital in the third quarter, with global investments rising to $1.59 billion, according to a survey released Wednesday by Cleantech Group and Deloitte & Touche. That's a 10% increase from the second quarter but still down 42% from the same period last year. Dallas Kachan, managing director of Cleantech, said that the third-quarter numbers were preliminary and that he expected total investment to have risen by 15% to 20% when the final figures are calculated.

When it comes to the green technology sector, there's California and then there is everyone else. The state has managed to reduce per capita greenhouse gas emissions even as its economy and population have grown, according to Next 10, the San Francisco nonprofit group that has produced the California green innovation index for the last five years. In its just released 2013 report, Next 10 said the state continues to be the national leader in areas such as venture capital funding for green technology, green tech patents and the growth in clean power generation.

Venture capital funding shriveled for the first time in three years in 2012, with investors funneling $26.5 billion to companies over 3,698 deals, according to a new report. That's a 10% drop in dollars and a 6% slide in deal volume, according to the National Venture Capital Assn. and PricewaterhouseCoopers in their MoneyTree report. Why the hesitation? “General economic uncertainty,” said HJ Paik, director of the Southern California Emerging Company Services practice at PwC, in a statement.

My experience over the years is that Nolan Bushnell, the guy who founded Atari  and once hired Steve Jobs, doesn't talk to the press much. So when the opportunity to talk to him came up, I jumped at it. "I basically look at PR as something you do if there's an object in mind," Bushnell said during a phone interview this week. "But my ego doesn't need it. " Fair enough. But Bushnell does have an object in mind. In fact, two of them.  The first is a documentary that's going to be airing on various PBS stations over the next few weeks called, "Something Ventured: Risk, Reward And The Original Venture Capitalists.

Can government play a positive role in economic development? To understand who built what in the construction of the American economy from its pre-industrial origins, a look at one of the drivers of U.S. innovation - venture capital - is instructive. For more than three decades American venture capitalists have concentrated their activities and earned their returns in a very small number of industrial domains. In booms and in slumps, in bull markets and in bear markets, the information and communications technology and biomedical sectors together have consistently accounted for 80% of venture capital investment.

Venture capital funding for U.S. companies fell sharply in the third quarter compared with a year earlier, according to statistics compiled by Dow Jones VentureSource. California continued to be the nation's dominant player in financial support for promising new companies, although the state's numbers were also off by a considerable margin. In Southern California, funding for start-ups fell more than half. Across the U.S., 820 venture capital deals raised $6.9 billion during the third quarter.

Peter Thiel, a PayPal co-founder and early Facebook investor, is launching a $402-million venture capital fund focused on mid-stage companies dealing with major global problems. He's calling it Mithril Capital Management. If that sounds familiar, it's because mithril is also an unusual metal described in “The Lord of the Rings” and “The Hobbit,” the Middle-earth fantasy classics created by J.R.R. Tolkien. The material, according to Tolkien, is malleable, beautiful and rare, stronger than steel while also weighing much less.

U.S.-based companies raised $6.3 billion through 717 venture capital deals during the first quarter of 2012, an 18% decline in capital and 9% decline in deals from the same period last year, according to Dow Jones VentureSource. “The declines were pretty evenly spread across industries so there weren't any big winners or big losers in the quarter, but there were some surprises. Investment in consumer Internet companies fell after two exceptional investment years, while the IT industry fared well thanks to strong interest in software startups,” said Jessica Canning, global research director for Dow Jones VentureSource.

U.S. venture capitalists began to dip back into their pockets in 2010 after sitting tight the year before, but the number of deals made and the amount invested still trailed pre-recession levels, according to the Dow Jones VentureSource report. Companies around the country scored $26.2 billion in 2,799 venture capital deals ? an 11% increase in funds from the year before and a 6% increase in deals ? according to the report released Monday. Even with the lift, investment is still lagging behind the period from 2006 to 2008, when venture capitalists stuffed more money into more agreements.

U.S.-based companies raised $6.3 billion through 717 venture capital deals during the first quarter of 2012, an 18% decline in capital and 9% decline in deals compared with the same period last year, according to Dow Jones VentureSource. "The declines were pretty evenly spread across industries so there weren't any big winners or big losers in the quarter, but there were some surprises. Investment in consumer Internet companies fell after two exceptional investment years, while the IT industry fared well thanks to strong interest in software start-ups," said Jessica Canning, global research director for Dow Jones VentureSource.

U.S.-based companies raised $6.3 billion through 717 venture capital deals during the first quarter of 2012, an 18% decline in capital and 9% decline in deals from the same period last year, according to Dow Jones VentureSource. “The declines were pretty evenly spread across industries so there weren't any big winners or big losers in the quarter, but there were some surprises. Investment in consumer Internet companies fell after two exceptional investment years, while the IT industry fared well thanks to strong interest in software startups,” said Jessica Canning, global research director for Dow Jones VentureSource.