Investments by professional venture capital funds in early-stage companies are often credited with giving the United States a significant advantage in innovation and economic growth.

The group that tracks the performance of this sector and lobbies for laws to promote venture investing is the National Venture Capital Association. Its president, Mark Heesen, will be the keynote speaker at VC in the OC Sept. 12 at the Balboa Bay Club in Newport Beach.

Heesen is a tax lawyer, former aide to a Pennsylvania governor and deputy director for Federal Funds, which reported to the Texas legislature.

Q. What is the purpose of the National Venture Capital Association?

A. We represent 480 venture capital firms in the United States, working on Capitol Hill to shape public policies that protect entrepreneurs.

One of our issues is immigration. We need to keep (foreign entrepreneurs) we educate in the U.S. They will start companies regardless and it is better that they start them here than back home where they will compete with U.S. companies.

Another (issue) is making sure that federal agencies get enough funding to pay for basic (research and development). VCs don’t finance basic R&D; someone has to do that.

Q. What venture capital trends do you see in California and Orange County?

A. We are seeing more and more money invested in California. In 1998, 38 percent of all VC investment went to California companies. In the first half of 2007 it was 49 percent.

Northern California has been the traditional place for VC…but Southern California is growing. Nine percent of VC investment went to Southern California companies in 1998; and in the first half of 2007 it was 15 percent.

I have stated for two-and-a-half years that Southern California will become the second strongest market, behind Northern California and eclipsing the Northeast. People said I was crazy but that has happened.

(The venture community) doesn’t separate Los Angeles, Orange and San Diego counties, just as we don’t separate San Jose from San Francisco. The reality is that (the three Southern California counties) are very, very strong for a couple of reasons.

First, Southern California universities are becoming stronger and can actually transfer technology out of the laboratories and into the marketplace.

Second, people complain that Southern California is expensive and crowded, but entrepreneurs love to live there and VCs follow the entrepreneurs, not the other way around.

Q. What trends are you seeing in U.S. venture capital?

A. We’re in a very good position right now in VC. We’re seeing prudent, long-term investing going on. No one technology is hot, so no bubble is developing (as it did in the late ‘90s with Internet companies).

Nationally, we are seeing $25 billion to $30 billion invested in emerging growth companies pretty consistently year after year.

We see a lot of interest in life sciences — both bio-med and medical devices — (and) in clean technology. But (there’s) not a lot of money, which is actually healthy because a lot of investors are trying to understand the technology first.

Information Technology is still king with VCs. We have moved the Internet to the next generation.

Q. What are Orange County’s strengths and weaknesses?

A. Orange County is strong in life sciences: pharmaceuticals and medical devices. The county has done quite a good job recruiting and retaining medical device companies, especially in the eye area.

If you can make a name for yourself in a specialty, you are going to attract more entrepreneurs with like-minded companies and good attorneys and accountants who understand venture capital.

(Orange County) is also seeing interest in clean technology and in information technology. It’s a healthy mix. You don’t want to put all your (investing) eggs in one basket. If that one sector goes south, the region suffers.

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