Venture Capital investment moving away from Boston

Seed Money, It Seems, Doesn't Need Much Rain - New York Times

In 2005, venture capitalists invested $2.54 billion in 301 deals in the San Diego area and in Los Angeles, Ventura, Riverside and Orange Counties, a 17 percent increase in dollars over 2004. By contrast, the industry invested $2.67 billion in New England, a 13 percent decline in funds.

The change marks an ascendancy for the Southern California region, now challenging the Boston corridor as No. 2 behind Silicon Valley in allure to venture capitalists.

"There is a distinct possibility that Southern California will eclipse New England in the very near future," said Mark G. Heesen, the president of the National Venture Capital Association. "It is a significant shift."

The growth in investment dollars in Southern California comes as the New England region has become less alluring to some venture capitalists. Charles R. Lax, managing general partner of GrandBanks Capital, a venture firm in Newton Center, Mass., a Boston suburb, said he was looking increasingly outside the New England area to invest capital.

The reason, he said, was a rise in the cost of living and doing business. "It's hard to move people here and it's hard to keep people here," he said.