It seems inevitable that when the powers that be are faced with a crisis, or want money directed in a certain way, they form a task force.

The realities of San Diego’s venture capital industry capture both of these scenarios at once: There is a crisis in the local innovation economy because money is not being invested venture capital funds. This is an issue we’ve covered extensively n reporting on both the dearth of traditional venture funding and new ideas for raising seed money for start-ups.

The task force is now at hand, Xconomy’s Bruce Bigelow is reporting today. Organized by Connect chief Duane Roth and industry titan David Hale, the group is being led by David Titus, the managing director of locally based Winward Ventures. It will also include folks from Biocom, CommNexus, Cleantech San Diego, the San Diego Venture Group, San Diego Software Industry Council, and the San Diego Regional Economic Development Corporation.

Here are some things Titus had to say to Bigelow:

Titus says Windward raised its last venture fund in 2000, and the firm made its last new investment from that fund in 2007. Since then, Titus says, “We’re managing our [existing] portfolio of companies — like many others.” And for at least the past two years, Windward has been unable to raise a new fund from pension funds, college endowments, and other institutional investors. As Titus put it, “The meltdown in the public equity markets and the global economy has really shut that door tight.”

The situation, which was only compounded by the credit crisis that began last year, has created a void in funding for San Diego’s early stage startups that was not immediately apparent — largely because out-of-town venture firms continued to invest heavily in many of San Diego’s mid- to later-stage startup companies.

With venture capital continuing to flow into the region, some San Diego business leaders questioned whether there was really a dearth of venture capital in San Diego, or even much need for San Diego-based VCs. Their argument, basically, is “if you build it, they will come.” That is, if San Diego’s early stage startups have truly innovative technology, then venture capital will come from far and wide to invest in it.

Titus doesn’t see it that way. “I can only speak personally,” he says, “but when you’re talking about early stage companies, they don’t get done by out-of-town venture capital firms. They just don’t.”

DAVID WASHBURN

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