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Thursday, Mar 28, 2024

Struggling With an Identity Crisis

Six years after it was named to reflect a burgeoning cluster of high technology companies along a stretch of the Ventura (101) Freeway, the 101 Tech Corridor has become more a state of mind than of place. To be sure, the corridor is home to biopharmaceutical giants like Amgen and Baxter, but it also houses insurance companies, Verizon Communications Inc. and Dole Food Co., not exactly names that come to mind when you think about high-tech players. For that matter, the corridor really isn’t a corridor at all. It includes companies like Sabeus Photonics Inc., an optical communications company, miles away from the Ventura (101) Freeway in Chatsworth and Second Sight Medical Products in Sylmar, where it takes two freeways just to get to the 101. The area’s diversity helped it to weather the recession that gripped the tech industry during the early part of this decade. But it has also created an identity crisis that makes it difficult for the 101 Corridor to attract financing, workers and even new companies, while other communities Silicon Valley, San Diego and Orange County get all the attention. “When I left my employer in Ventura to form Venture Management, I did so with the belief that Ventura County, Western Los Angeles, and Southern Santa Barbara County would go the way of Orange County, and I was looking forward to the kind of development of the technology base in the 101 corridor that I thought would lead to a complete redefinition of the economic engine of this area,” said Mark B. Shappee, managing principal of Venture Management, consultants who specialize in mergers & acquisitions and other financial transactions for information technology, defense and energy technology companies. “And that has not occurred. Twenty years later, we’re a long way from where I thought we’d be.” Of late some signs have begun to appear indicating that the profile of the corridor may be rising Tech Coast Angels this month opened a chapter in Westlake Village, for example but the idea of scientists, engineers and brain trusts, all connected by a stretch of asphalt and a futuristic vision that would change the world has not, for the most part, materialized. Silicon Valley Bank, which first set up offices in Westlake Village, smack in the corridor, recently moved its regional offices to Woodland Hills, where the bank can better access tech companies in Pasadena and the west side of Los Angeles along with those housed between Woodland Hills and Santa Barbara, 101 corridor boundaries that now only the most parochial observe. Gold Coast Venture Forum, a networking group, just changed its name to Gold Coast Business Forum in part to better reflect the diversity of companies the group serves. Leaving town And several of the companies that settled in the 101 corridor have since left for greener pastures literally. AcuFocus Inc., which located in Thousand Oaks to work on an implant device for presbyopia, last year relocated to Irvine, where a cluster of other medical device companies are located. Dune Networks Inc., a fabless semiconductor maker for Internet and storage platforms, in 2003 high-tailed it from Agoura Hills to Sunnyvale, where the lion’s share of the venture capital community can be found. “VCs go to locations where there’s a lot of activity, and if there’s a fund that focuses on a particular industry, they want a critical mass in a particular industry, otherwise there’s no reason for them to go there,” said Brent Reinke, corporate partner at Musick, Peeler & Garrett LLP and founder of the Gold Coast Business Forum. Back in the late 1980s, as the digital age dawned, the area that stretches along the 101 Freeway from the West San Fernando Valley to Santa Barbara was seen as an ideal locale for a technology hub. The corridor had plenty of land and it promised an attractive lifestyle for residents. Amgen, Rockwell Scientific and the brain power from the many defense-related businesses winding down in the area, along with research coming out of the University of California, Santa Barbara promised to spawn a flock of spinoffs along with plenty of technological innovations and businesses to market them. By 2000, venture capitalists discovered the area and began investing heavily, and all indications were that the corridor would grow into a Southern California version of Silicon Valley, albeit somewhat smaller. But while the area’s business community grew, its prominence did not. By mid-2000, a report by the Los Angeles Regional Technology Alliance found that few outside the 101 Tech Corridor knew of its existence, and even those tracking the area had trouble keeping the boundaries straight. Then the Internet bubble burst and the telecom industry went bust and the growth along the corridor came to a screeching halt. “A lot of the tech companies that were established then were in the telecom sector. And so with the downsizing and the recession in that sector it affected a lot of the startup companies in the region,” said Mark Turk, senior vice president and senior relationship manager for the Southern California region of Silicon Valley Bank. Suffering sprawl The available space in the 101 corridor filled up with all kinds of different companies, many in traditional, brick and mortar industries, and those service businesses that rely on a critical mass of companies in a specific industry found their target market was scattered far and wide. Some say it was inevitable that the tech industry in L.A. would fall victim to the same sprawl that afflicts the rest of the region. “To me we live in a very spread out region,” said Carlo Brignardello, principal with CRESA Partners whose commercial brokerage practice traverses the 101 corridor. “And when you have successful centers, it’s difficult to concentrate on just one.” Others lay at least some of the blame on the lack of an infrastructure and public support for a tech industry. With neighborhoods along the corridor resistant to building everything from roads to commercial buildings and even housing, ambitious companies began to look elsewhere to locate their headquarters. “I have an opinion that it has to do with the slow growth attitude of the population and political leaders,” said Shappee. “Small and mid-size companies were not able to expand and grow, and they had to go elsewhere, so you did not have the spin-offs that result in new, entrepreneurial businesses. It’s true in Ventura, in Thousand Oaks, in Westlake Village, across the board.” Whatever the reason, the lack of a critical mass has fueled a vicious cycle that has kept new companies from opening in the region and hindered existing companies in their growth efforts. Just as investment banks have bypassed the area in favor of places like San Diego, with its large cluster of life sciences companies, or Orange County, with its plentiful medical device companies, so too have prospective workers, preferring to relocate where there are opportunities for continued employment and challenge. “How do I attract the key technical or financial people or those with other areas of expertise into my business if relocation to this area then limits their career opportunities,” said Shappee. “Because once they move and join there aren’t a lot of lateral move opportunities.” Many say all that will change as the tech industry revives and the financial community resumes its spending, and, to some extent that is beginning to happen. “Companies have continued to need funding for product development and growth and that trend continues,” said Turk. “If anything, I see stronger patterns across the board and more companies are generating revenues.” Tech Coast Angels, which had looked at the area before but never opened here, formed its new chapter because Gary Clark, the chapter president, noticed that there were actually a number of life sciences companies in the area that were leaving after germinating an idea here. “I had been thinking we needed to join some of these technologies with a funding base,” said Clark. “Many spin out of a university setting and find a home in San Diego or the Bay Area. The innovation created here, we would like to keep here.” TCA, which offers funding along with mentoring and consulting services to help fledgling businesses ready themselves to present to the finance markets, believes that, with some support, the community of startups already existing in the area can be transformed into a life sciences cluster. “We found, even though L.A., Ventura County is not considered the core hot bed, we have between 700 and 1,000 small to medium-sized companies in the 805, 818, 626 area code in life sciences,” Clark said. “They’re just not on the radar scope.”

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