FOREIGNERS — Foreigners Making More Investments in Start-Up Firms

Local startups are finding that overseas investors can be a much more agreeable source of funding than U.S.-based venture capital firms or angel investors.

With most other countries still trailing the U.S. in terms of economic growth and technological development, foreign venture funds are eager to diversify their portfolios by investing in U.S. high-tech startups. Asian-American-owned companies in Los Angeles are particularly well positioned to benefit from these offshore capital sources because their founders often have strong ties with their countries of origin.

“It is quite common for Asian-American companies to have better synergies with Asian investors than with mainstream U.S. investors,” said Pierre Wuu, chief operating officer with Click2Asia Inc., an L.A.-based Internet company. “Obviously, we speak the same language, and many Asians in America have lots of ties with Asia, which makes it easier for them to access capital there than in the U.S.”

Click2Asia received funding from AsiaTech Ventures, a venture capital firm with a $120 million portfolio and offices in Hong Kong, Taiwan, Singapore and the Silicon Valley.

Big jump in foreign capital

There are no statistics on the number or value of L.A. County investments made by overseas entities. However, the U.S. Department of Commerce announced last month that foreign investors poured $283 billion into the U.S. last year, a 31 percent increase from the year before.

This number includes large acquisitions, which have been on the rise in recent years, but anecdotal evidence suggests that the number of smaller foreign venture investments in L.A. is also increasing at a rapid pace.

“In the past we would see these investments from time to time, but now we’re seeing them much more frequently,” said Tim Bruinsma, a partner at the law firm of Fulbright