The economy is down, unemployment is up, but Oregon stands to emerge strong from the current recession if it can start growing new companies and attracting Oregon investors.

But that's not the trend in the state, said Wayne Embree, managing partner for the Portland investment firm Reference Capital Management. Rather, investment in new technology companies here peaked in 1985, admittedly near the end of the last big economic slump.

"We're in the middle of a horrible recession. Why would you want to talk about startups now?" he said. "Many of our portfolio companies were started in times like these. From our perspective, down economies are the perfect time to start companies."

Embree and Terri Fiez, the head of Oregon State University's Electrical and Computer Science Department, talked about startups and venture capitalism in Oregon at Monday's meeting of the Corvallis City Club.

Fiez was just back from a two-year leave of absence to start a company based on innovations derived from research at OSU. She said that perceptions about Oregon are a prime stumbling block for growing companies here.

"Investors say you can build a great engineering team in Oregon, but finding the top executives is difficult," she said. "The first thing they want you to do is move to California."

But while both agreed that the list of both new companies and investors seeking them is longer in Silicon Valley, Oregon's potential for encouraging angel investors - individuals who seek companies to support rather than pooling their money as venture capitalists do - might be a better way to go.

"Angel investors tend to be much more involved than with venture capitalists," Fiez said. "And in terms of the success rates of companies, going with an angel investor model may be very successful for us."

Embree said OSU's land-grant tradition also bodes well for developing ideas that translate into the marketplace as well.

"The very best winners in the venture capital community were spinoffs from research institutions, bar none," he said.