SCIENCE/TECHNOLOGY

Luring Scarce Capital: When does a venture capitalist invest in a start-up company?

“Usually, we invest when greed overcomes fear,” says Roger Davison, a partner at Brentwood Associates, a Los Angeles venture capital firm.

Davison, speaking last week to the Orange County software company chapter of the American Electronics Assn., said good start-up companies can still attract investors despite a contraction in venture capital funds.

Davison said he looks for companies with products targeted to a specific market with a total value of several hundred million dollars. The company should also have strong management, a well-focused strategy that can be sustained even with competition and multiple product lines.

While most banks aren’t lending money for growth companies, Silicon Valley Bank’s Newport Beach office is making loans to local companies, said Barbara Kamm, vice president and senior loan officer at the branch. She also spoke at the AEA event last week.

Kamm said the bank, which specializes in loans to technology companies, still favors loans to growing companies that are backed by venture capital firms and have a strong base of accounts receivables, which are used as collateral for loans.