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Saturday, Sep 23, 2023

Companies See Full Speed Ahead in Tech Corridor

After three fiscally moribund years, the 101 Tech Corridor seems poised for economic growth. When the stock market tumbled in 2001, the corridor’s fortunes suffered as the flow of venture capital began to halt and the number of startups waned. However, many local businesspeople claim that this downturn has reversed itself and assert that the region is currently undergoing an economic resurgence. Reflecting that growth, sources indicate that several companies are ready to spin off from tech powerhouses Amgen and Baxter Healthcare. “I think things have picked up tremendously in the last six months to a year. A lot of startups are coming to the area,” said Richard Wolpert, chief strategy officer for Seattle-based Real Networks, Inc., who operates from Westlake Village. “I think that there are ambitious young people who are seeing the IPO market come back, seeing acquisitions come back and realizing that there is a lot of money to be made. It feels like springtime has arrived after three long years of winter.” Wolpert singled out Calabasas-based video game manufacturer THQ and Woodland Hills-based file-sharing company, Brilliant Digital (parent company of Morpheus), as some of the corridor’s best prospects for growth. Though the corridor has no official boundaries, it is often considered to be most concentrated in the area paralleling the Ventura (101) Freeway from Woodland Hills to Santa Barbara. The latest projections stand in contrast to the recent history of the 101 Tech Corridor and expectations many had when it first got its label about a decade ago. Back then many hoped that the area would evolve along the lines of Silicon Valley. “The expectation was that the area would turn into a miniature Silicon Valley. But I think the process or the amount of activity you’ve seen has been impacted by a lack of venture capital,” said attorney Brett Reinke, an early advocate for the area who will be starting up a Westlake Village office for law firm Musick, Peeler & Garrett LLP as corporate partner. Figuring that the emerging companies along the 101 Tech Corridor needed an avenue to meet and share experiences, Reinke in 2000 founded the Gold Coast Venture Forum, envisioned as a networking group for the emerging growth companies in the area. But in recent weeks, the group has changed its name to Gold Coast Business Forum, a move that reflects the gap between initial expectations and the current reality. Although emerging growth companies that served as the initial impetus for the name Gold Coast Venture Forum are still a part of the association’s membership roster, the group has come to include a spectrum of many different businesses. John Dilts, president of the Los Angeles and Westlake Village chapters of venture capital angel group, Keiretsu Forum, seconded Reinke’s assertion that the lack of available venture capital has hindered the area’s growth in comparison to other tech hot spots. “The corridor never took off like the Silicon Valley because the many sources of venture capital in the Silicon Valley are attractive for tech companies. It’s the epicenter of that venture capital money. It created a groundswell for that whole tech development phenomenon,” Dilts said. According to Dilts, Amgen’s sprawling campus in Thousand Oaks has the potential to have the same stimulating regional effect that Microsoft had in Redmond, Wash. “The proximity to Amgen is going to be very influential in attracting biotech companies to the area, similar to the phenomenon of people going up to Microsoft in Redmond. The word is going to continue to get out that north of Los Angeles is very livable and prosperous,” Dilts said. Amgen action? Yet many in the area have bemoaned the fact that Amgen’s presence has never produced high levels of “spinoff” companies. Ironically, when the Thousand Oaks based biotech firm launched a $100 million venture capital fund, Amgen Ventures, to help develop early stage biotech companies, it located the fund in San Diego. Nonetheless, Bill Buratto, president of the Ventura County Economic Development Association, expects Amgen to start spinning off companies in the coming months. “Cal State Channel Islands has plans to create a business park to bring in companies that can create synergies between the university and the local businesses. They will rely on startups from Amgen, Baxter Healthcare and Rockwell Scientific. I’ve been told that there are as many as four new companies inside Amgen that are waiting for venture capital, the same with Rockwell. This trend will happen and be bolstered by CSUCI,” Buratto said. Expansion has triggered optimism among local businesspeople, and helped commercial vacancy rates in the area to dwindle significantly. Yet, this influx of growth might cause a significant problem: lack of available space. “In the last year, we’ve filled up practically every available property that remained vacant. After the dot.com bubble burst, there was a great deal more available land, but now all of the good pieces of space are filled up,” Carlo Brignardello, a principal at Los Angeles-based, Cresa Partners said. According to Brignardello, the migration of companies seems mostly to be following an east to west pattern, as companies have fled the steep business taxes and high population density of Los Angeles. Among those companies that have been expanding, Brignardello cited Westlake Village-based Xirrus, THQ, ValueClick Inc. and United Online, one of the few companies that have moved from west to east along the corridor. Buratto believes that a lack of affordable and/or available real estate has the potential to stymie the corridor’s growth. “The median house in Ventura County costs $550,000. We’ve got new housing developments but no large Ahmanson type projects to add significant housing stock. Demand will eventually exceed the supply,” Buratto said. “This makes it difficult for companies to expand and for companies to be able to move in. It’s projected that between now and 2020, cities will be built out of their residential capacity. Obviously, that’ll have a negative impact on all business.” Built out Buratto also weighed in on the growing need for more commercial space in the corridor, claiming that older cities like Thousand Oaks are almost built out of possible commercial space. He fears that at some point there won’t be any more. Additionally, Buratto singled out Camarillo-based electronics manufacturer, Mica-Tech Inc. as one of the region’s fast growing new companies. He stated that though founded in 2002, the company has proceeded to carve out a sizable stake in the industry. Benjamin F. Kuo, publisher and editor of the website, www.socaltech.com, warned that the area could fall in danger of being the sole domain of small and mid-sized tech companies. “I think that this trend is generally true of all of Los Angeles. The very successful local companies get bought by other people. Look at all company’s bought by Yahoo, they sell out and move elsewhere. Earthlink sold out and moved out from Pasadena to Atlanta. Xylan remains in the area but they sold out to Alcatel. Most of the local companies aren’t very large and that needs to change to improve the business climate.”

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