A $15-million injection into a U.S. company's Victoria arm signals that the city's high-tech industry can still attract much-needed venture capital, says a leading expert in the local tech sector. It also emphasizes the fact that even amid a major credit crunch in the U.S., there is always money for new ideas and top talent.

The San Francisco-based social web browser Flock has secured $15 million in venture funding led by U.S. powerhouse Fidelity Ventures. Most of that money will go to Flock North, the company's research and development branch in Victoria, as it hires new engineers to continue innovative research and development, said Flock's vice-president of engineering Clayton Stark.

Flock's financial pick-me-up represents a major boon for the entire high-tech community, said Dale Gann, vice-president of the Vancouver Island Technology Park which houses many of the city's top companies.

"I think that for Victoria to raise $15 million in one deal, that's really significant in the space we're in." Strong venture capital funding like this can signal to other investors that Victoria can breed the cream-of-the-crop talent it takes to build a successful company, added Gann.

Half of Flock's 40 engineers and researchers work out of the Victoria office which opened last year. Flock ranked sixth on PC World's Top 100 Products of 2008, falling just behind major names like Facebook and Apple iPhone on the on global computer magazine's list.

Last year, venture capital from California firms alone hit $13.8 billion, compared with the $2.3 billion from Canadian firms and $230 million shelled out in B.C., emphasizing the fact that local companies are all vying for investments from rich investment banks south of the border.

Mark Heesen, president of the National Venture Capital Association — a Virginia-based trade association that represents the U.S. venture capital industry — said economic woes won't necessarily tighten the venture capital's purse strings because firms invest in a company with a vision five or ten years down the road. "The economy today is not as critical as what the economy is going to be several years down the pike."

Where the economic climate does play a role, said Heesen, is for a later-stage company that a firm continues to shepherd along. The market downturn might make it more difficult for that company to go public or be bought out by corporations that have had to adopt more conservative buying strategies.

GenoLogics CEO Michael Ball, whose company raised $5 million in funding in 2005 and another $5 million in 2006 financed by Seattle-based OVP Venture Partners, said the major challenges for Victoria companies in acquiring venture capital is that the investors are sometimes looking for a 10-fold return on their money.

In order for a company to deliver that, they have to grow to a large size and sell to a very large market, he said.

His company provides lab and scientific data management solutions in the pharmaceutical and biotechnology markets

In the case of Flock, the company says its user base has increased by more than 250 per cent and revenue has grown by more than 400 per cent since the beginning of the year.

Stark hopes the latest round of financing will be the company's last, that it will be enough to bring it to profitability.

But with $30 million in private equity to date, Stark said venture capital investment, especially from the U.S., has been essential to the company's growth.

"It's a lifeblood," he said. "We're fortunate that exactly what we're doing is significant right now."

Right now, venture capital firms are keeping a close eye on developments in green technology, an area that has become a market trend in Victoria, said Kelly Edmison, CEO of the Vancouver-based venture capital firm, Pender Growth Fund.

One example, he said, is Carmanah Technologies which went from $4 million a year in revenue to $60 million under their wing. Edmison said his firm is now considering investments in other Victoria companies that have been making advancements in green tech but he could not say which ones.

In April, the B.C. government launched a $90-million venture capital fund to give a boost to emerging companies in the tech and life sciences sector. Gann said the Renaissance Capital Fund is a boost for local firms trying to garner international attention and investment in their product.

"Victoria is realizing it can develop good ideas, wrap a good management team around it and attract really good talent to the area and secure venture capital for its idea," said Gann.