• Los Angeles Times, Monday, January 26, 2009 12:15 PM

In a down economy, venture funding usually dries up pretty fast, but the Los Angeles Times talks with two local companies who just managed to raise the cash. Gamervision, a social networking site for video gamers, announced a $5 million funding round on Friday. President Andrew Reisini said the trick was to avoid venture capital firms, hitting up angel investors and others who had already invested in the company's first round instead.

"In this atmosphere, it is very, very difficult to deal with any sort of institutions whatsoever," Reisini said. "We would advise people to look within the group of people already involved with the company." That includes Mom, Dad and other friends and family members. As Reisini says, it's hard for investors to find safe havens for their cash these days. As such, they're staying away from startups, which are considered risky investments.

One way to lure investors, say Julia Johnston and Ariel McNichol, co-founders of startup mEgo, is to pinch pennies. The pair was able to raise $2.5 million last Wednesday for their service, which aggregates social networking profiles using avatars, after cutting employees in October. "You have to prove that your burn rate is low, that you're really pinching your pennies," Johnston said. mEgo is planning to break into the booming virtual goods space.

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