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Q4 VC funding up nationally, down locally

The fourth quarter of 2013 saw a significant drop in venture capital investment in Southern California’s three major markets according to DJXVenture Source.

Funding into San Diego companies slipped from $247.79 million in the third quarter to $102.56 million in the fourth, while Orange County fell from $190.56 million to $161.16 million and Los Angeles’ unusual spike to $749 million in the third quarter was tempered down to $250.06 million in the fourth quarter.

Very strong mergers and acquisitions and IPO markets are possible explanations for the lagging local numbers, since VC funding on a national level increased, though the number of funds decreased. Nationally, U.S. companies raised $8.9 billion from 901 venture capital deals in the fourth quarter, up from the third quarter by two percent in capital and five percent in number of deals.

Nationally, M&As of venture-backed companies increased by 17 percent from the third quarter with 115 deals garnering almost $12 billion, while IPOs raised $3.6 billion, a 60 percent hike from the previous quarter. David Titus, president of the San Diego Venture Group, said this shift from VC to IPO funds was particularly noticeable in San Diego.

“You have to realize that our numbers are highly driven by the biotech industry, and they had a great year last year,” Titus said at an SDVG VC Outlook 2014on Thursday. “We had eight biotech IPOs here in San Diego, which meant that those companies were not out getting large, late-stage rounds. If you add the type of capital that they might have otherwise raised, like they did last year, you see that in fact the funding levels here are relatively steady.”

Comparatively, San Diego was the 11th-ranked metro area in terms of VC dollars invested in the fourth quarter, and ninth based on number of deals.

Year-over-year all three regions were down as well, from $189.72 million in San Diego in December 2012, $249.18 million in Orange County and $358.21 million in Los Angeles.

The 2013 total amount invested in San Diego was $742.33 million, with $679.41 in Orange County and $1.607 billion in Los Angeles.

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