West Coast rides the risk curve: venture capital firms in the West remain more willing to take a gamble on unproven companies or technologies, experts say. In Silicon Valley, "it's boring not to take a big swing," says one.

• Author: Marshall, Jeffrey
• Position: VENTURE CAPITAL

Go west, young (or middle-aged) entrepreneur. That's where venture capital (VC) firms are least troubled by risk and more willing to bankroll early-stage firms with promising but unproven technologies, according to a number of venture executives. In contrast, VC firms in the East are more likely to pony up only for more established operations, including executive teams they have funded before.

While these may be generalizations, they are backed by plenty of evidence. Financial executives seeking funding should consider them as broad guidelines, based on interviews with a number of people in the VC industry and others working with them.

In the late 1990s, of course, the Silicon Valley area outside San Francisco loomed like a modern-day El Dorado for anyone with an idea for the Internet; fortunes were forged virtually in a days' trading, building an unsustainable bubble. Yet there's still a widespread belief that untested ideas can find more fertile soil there than they would find in New York or Boston.

"There is definitely a character to the West Coast that is based on dreamers. Entrepreneurs here can be more risk-seeking, and the venture capital community is more tolerant of taking different risks," says Nate Redmond, a partner with Rustic Canyon Partners in Santa Monica, Calif.

Rustic Canyon, with $900 million in portfolio investments, is currently disbursing investments through its third fund since its founding in 1999 and generally has 40 to 50 portfolio companies, says Redmond. Its key investment themes include Internet/media convergence, clean technology, technology-enabled services, information services and wireless and wireline broadband.

"One key difference between the East and the West is driven by the character of the entrepreneurs," Redmond says. "A lot of the old guard firms in Boston still reflect the culture of the original founders." Unlike Silicon Valley, which mushroomed in the 1990s, some firms in the Northeast are more than 25 years old.

"A Boston firm will look at 'early stage' differently," he adds. "Often, those companies are further along than others. Today, the market is back to where strong entrepreneurs in the Bay Area can raise $5 million to $7 million on an idea; that rarely happens in Boston."

"My take is that East Coasters are more risk-averse," says Eric Shealy, a partner with Innovation Advisors, a boutique investment banking firm in Waltham, Mass., that regularly works with venture capitalists in investments...