New Money, Nice Town by Nevarez Leonard;

Author:Nevarez, Leonard; [Nevarez, Leonard]
Language: eng
Format: epub
Publisher: Taylor & Francis Group
Published: 2022-06-10T00:00:00+00:00

These external capital flows have important ramifications for local banks. As local software firms tap “insular” flows of venture capital and bring others like them to venture capitalists’ attention, local banks face the prospect of being squeezed out of the software industry. Of late, some banks and others in the traditional urban business community have been “getting the message” and “educating” themselves on how to better serve these firms’ financial needs. In Santa Barbara, a few banks have backed a new business incubator formed by entrepreneurs who made quality-of-life migrations to the area. In Los Angeles, the corporate parent of the Los Angeles Times has formed the largest investment fund for the region. However, it remains an open question whether this strategic shift comes in time, since most local firms systematically look outside the locality for financing.

In entertainment, intercorporate financing is the primary source of funding; production companies and other contractor firms usually grow based on investment in the projects they work on, not the companies themselves.20 Companies that are more technology-intensive (e.g., postproduction facilities) and blur into more conventional high-tech fields (e.g., new media companies) often depend more on venture capital or, when their risk and track records can be conventionally “proven,” sometimes local banks. At least in Santa Monica, local banks appear to have a slightly bigger foothold into entertainment than software. However, with the industry's rapid growth, even this foothold may be fleeting. As a Santa Monica banker said of the city's entertainment firms, “So many of them expand so rapidly, they quickly outgrow this bank.”

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