An interesting article this week from Reuters, talking about how Venture capitalists set sights on Hollywood, implying that venture capitalists are flocking to fund entertainment-related startups in Los Angeles.

Although the venture numbers are correct (yes, venture funding is up nicely in Los Angeles), the conclusion–that those investments are in entertainment-related companies, is, I believe, off the mark. In looking at the latest investments in just the Los Angeles area from the NVCA’s quarterly report, the biggest deals are for Cytomx (biotech) $30M, RightScale (cloud computing) $25M, Ceres $20M (plant genomics and biofuels crops), Futuredontics $16M (internet matching of patients to dentists), and Revolution Prep $15M (test preparation for SAT/ACT tests). I don’t know about you, but I don’t see any sign of entertainment or Hollywood in that list. In fact, in Q3, the only deal that seemed related were small (MovieClips, with $3.4M for an online video site, and $700K for Snowball Factory, a developer of tools to manage online content).

Now, why should I complain about an article on how investment is increasing in Los Angeles? (i.e. any press is good press?) Because it fails to get to the truth of why venture funding has continued, and increases in the area–because of a diversity of industry, great entrepreneurs, and startups across a full scope of industries. It would be great if venture capitalists were interested in funding Hollywood-spawned startups, but that actually (in my own humble observation) happens all too infrequently. Yes, there might be a few which leverage the connections and location near Hollywood, but Los Angeles is much more than just Hollywood, particularly in the technology startup world.

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Venture Capital by Benjamin Kuo