The New York Times reports on a recent conference in Southern California for small businesses seeking capital.

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Surprisingly, the mood was upbeat.

The market for venture capital is nowhere as overheated as a few years ago.

The internet is a mature industry now.

Small companies are having a hard time borrowing money. They're having more success selling equity in their businesses.

The NYT writes:

But that was not the case at a recent conference in Southern California, where 1,000 investment professionals came from all parts of the United States to hear and talk to 330 aspiring companies — 50 of them from China. Many of the companies sought by investors were developing environmental, clean energy, cellphone, water treatment and biomedical technologies.

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The economic gloom actually encouraged the crowd, said Byron Roth, chairman of Roth Capital Partners, the Newport Beach, Calif., investment bank that was the host of the conference. These days, Mr. Roth said, “established large companies may not offer earnings growth but we can show investment managers fast-growing small companies that few people in broader markets know about.”

In addition, he said, investors with capital have less competition for choice properties “because large investment banks and hedge funds are affected by the financial crisis and forced to hold back.” Most companies at the Roth conference, in February, are publicly traded on Nasdaq and related over-the-counter markets.

“What I like about these conferences is that I find small, growing companies before everybody else does,” said Joseph C. McNay, who attended the Roth conference. Mr. McNay is chief investment officer and managing principal of Essex Investment Management, a firm based in Boston that handles $2.4 billion in investments for institutional and private family funds.

The crowds and enthusiasm were similar at the Montgomery & Company Technology Conference in March in Santa Monica, Calif., which attracted more than 500 investors and 160 companies. Most companies at the Montgomery conference were privately held and worked mainly in the fields of social networking games and communications services for mobile communications devices.

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“The sentiment was very optimistic,” said James W. Montgomery, the chairman of the firm, which has been raising money for small companies in media, communications and health care for 20 years. “There is plenty of capital around because venture capital hasn’t been in a bubble mode in recent years like real estate and debt markets.”

It is also a good time for mobile phone companies “because the infrastructure of the Internet has been built out,” Mr. Montgomery added. “So companies selling entertainment and services for phones can innovate on the Internet.”

http://www.youtube.com/watch?v=_y01g-SJ62w