As many will tell you, the Los Angeles tech scene is on the rise. There are more companies coming out of the area, and more of them are getting funded.
You don't have to just take my word for that, though. The numbers back it up.
In the first half of this year alone, there have been 134 venture capital investments made in LA-based companies, according to data provided to Vator from PricewaterhouseCoopers, with over $1 billion put into those companies. The total puts it on track for 268 total, whereas 2013 saw 259 investments, with a total of $1.7 billion invested.
When looking back five to 10 years, the difference is, frankly, starting at how much more activity there is now.
In 2009, there were only 176 VC investments in Los Angeles tech companies, with a little over $1 billion invested total. In 2004, it was 149, with $900 million invested. Why are so many more companies getting funded? It's a topic that I previously covered when looking at some of the area's biggest exits.
Now, it certainly seems as though, while the number of deals has increased quite a bit, the amount being invested overall has not. That's because, when it comes to development stage, LA is still primarily focused on seed and early stage deals, which are typically smaller than later stages, David Siemer, David Siemer, co-founder and Managing Partner of Wavemaker Partners and founder of Siemer & Associates Investment Bank, told me.
"There are more early stage deals through angels, incubators and micro vcs, with tons of companies raising $50,000 to $300,000 easily," he said. "That is where the volume is in LA, but it doesn't add up to a lot, and there have been relatively few big raises in LA. Building companies is always getting more efficient, which is spurring a lot of growth."
The numbers bear this out: in total, 79 of the VC investments this year were seed and early stage; only 55 were expansion or later stages.
"The amount of capital in LA hasn't changed that much. We have a bunch of new smallish funds, but a lot of the larger funds from five years ago are now inactive," Siemer told me. He attributed that to the fact that LA is so close to Silicon Valley, where the large venture capital funds already exist.
Which funds is Siemer talking about? It could be Clearstone Venture Partners, which last raised money for a new fund back in 2005, and Rustic Canyon Partners, which has not raised a new fund since 2008. In data supplied to VatorNews by Thomson Reuters, Rustic only made four deals in the last 18 months. Clearstone, meanwhile, did not crack the top 50 most active VC firms.
"I've wrestled in my mind, whether it matters if LA doesn’t have big VC funds. It would be nice, but its not hard to get money from NorCal," he said. "It hasn’t impacted the ability of LA-based ccompanies to raise money by not having large stage VCs here, because good companies can raise from NorCal or New York."
Plus, he noted, the smaller VC funds are enough to make up for the loss of the larger funds.
Things will eventually turn around, though, and Siemer does believe that, in 10 or 15 years, LA will have some later stage funds, but they will be satellites, rather than home offices, telling me, "They will have offices around the world, and eventually the bigger firms will have an outpost here."
Or, perhaps, the overall numbers are not quite as bleak as they seem.
As Mark Terbeek, partner with Greycroft Partners, pointed out to me, if you discount 2009, which was a terrible year for everyone in the economy, the numbers are tracking higher.
Ten years ago, or 2014 to be exact, the investment climate was good. It was the first good year post the dot.com bubble busting. "This vintage year activity represents the thawing of the nuclear winter in venture capital. It is a decent baseline," said Terbeek. "2009 is a terrible year to benchmark against, as this was the worst part of the stock market collapse due to the debt markets and financial market melt-down. No one was investing."
In fact, since 2009 was so similar to 2004, he said, it showshow big the market had grown.
"2013 looks to me about double the number of deals and double the amount of cash that was invested in 2004. That feels right to me, I think the market is definitely two times or more larger than a decade ago," he said.
Note: You'll see Greycroft, Wavemaker Partners, Javelin, MuckerLab, Science, Amplify and many more at Splash LA, along with some of the hottest startups (The Honest Company, Whisper, TrueCar, DogVacay and more) and investors. Register before August 13 to get 50% off the ticket price. It's a bargain. Register here.
Here are some of the most active Los Angeles-based venture capital firms over the last year and a half, going by the most number of deals. We will also include the average investment per deal, the total amount invested, and some of the notable investments made since the beginning of 2013.
(*The data below comes from The MoneyTree Report from PwC and National Venture Capital Association, based on data from Thomson Reuters):
10. Double M Partners, provider of seed and early stage funding
9. DFJ Frontier, invests in early-stage tech companies
8. Rincon Venture Partners, an early-stage venture capital firm
7. Steamboat Ventures, invests in early through growth stage companies in the technology, media, and consumer sectors.
6. NGEN Partners, focuses on companies that improve the environment and human wellness
5. Pasadena Angels
4. Karlin Ventures
3. Wavemaker Partners (formerly Siemer Ventures), which focuses on focuses on late seed stage opportunities in B2B and B2C startups
2. Upfront Ventures, focuses on investments in early stage technology companies
1. Tech Coast Angels, an angel investor network
(Image source: deborahsexpressions.com)
Upfront Ventures leads with 18 investments, followed by Wavemaker Partners and Tech Coast Angels
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Startup/Business
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Dealflicks is Priceline for movie tickets. $40 billion dollars are spent every year on movie tickets, popcorn, and soda, but 88% of movie theater seats are empty. Dealflicks partners with theaters to fill these empty seats by selling movie tickets and concessions for up to 60% off.
Since launching in July 2012, Dealflicks has been featured in CNBC, The New York Times, TechCrunch, NBC, CBS, PandoDaily, Film Journal, and more. Our iPhone app has been featured 4x by Apple, and our Android app at Google I/O 2013. Our annual revenue run rate has now surpassed $1M on 40x+ YoY growth.
Here's our video from Demo Day in February and here's one from July. Here's a current pitch deck and our AngelList profile. Dealflicks is part of Warner Brothers' Mediacamp program and is a 500 Startups accelerator company.
Angel group/VC
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What do we provide to entrepreneurs?
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Doximity is the largest and fastest growing verified network for physicians. It’s a secure place for doctors to collaborate with each other and grow their own professional profile. The network currently boasts more than 220,000 members and aspires to fill distinct needs for physicians, providing:
Angel group/VC
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Upfront Ventures, previously GRP Partners, is an LA based Venture Capital firm that focuses on early stage investments (mostly Seed & Series A).
GRP, rebranded as Upfront Ventures in June 2013, has been operating since 1996, making investments in tech companies like Overture, CitySearch, BillMeLater, Envestnet, DealerTrack, CyberSource, Qualys, and HDI in that time. For the firm, the rebrand represents its movement toward a new, 21st-century style of investing, emphasizing openness and transparency.
Startup/Business
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AdStage is an all-in-one self-serve online advertising platform to manage Google, Bing, Facebook & LinkedIn ad campaigns in one place.
AdStage provides full management and analytics to create, edit and optimize campaigns across search, display, social and mobile ad networks. The platform also includes cross-network reporting, pre- & post-flight insights, conversion tracking, and an integrated app system to extend the platform's features with powerful apps for every aspect of paid marketing.
We’re making ad tech accessible for advertisers of all sizes and are providing all you need to build and optimize effective ad campaigns across multiple ad networks.
Winner of LAUNCH Festival’s Best Business award and Pitch San Francisco’s VC’s Choice Award.
AdStage has been featured on Fast Company, TechCrunch, The Huffington Post, VentureBeat, ClickZ and MANY more (www.adstage.io/press).
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Company description: Deliv is a crowdsourced same-day delivery service for large national multichannel retailers. Deliv partners directly with retailers and prices same-day delivery the same, or lower, than standard delivery. In partnering directly with retailers, the Deliv “same-day delivery” button becomes a native part of the checkout experience.
Deliv drivers are made up of highly educated, experienced customer service and sales personnel. They are rated by customers and by Deliv’s operations team so the platform is able to prioritize the allocation of jobs to those with the highest ratings.
Business model: By partnering directly with retailers, Deliv allows the retailer to retain their direct relationship with the customer. Deliv believes in giving the customer, and retailer, the ultimate experience with easier purchase, superior delivery personnel and low prices. The Deliv “same-day delivery” button is integrated into the retailer’s checkout screen. The Deliv platform incorporates smart routing and full transparency including the ability for shoppers to watch their delivery on a map real time from pick up to their doorstep.
Competitive advantage: Deliv differs from other same-day delivery services by partnering directly with retailers and pricing same-day delivery the same, or lower, than standard delivery. This makes the traditionally premium service significantly more attractive to both consumers and retailers, driving significant volume and scale.
Angel group/VC
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Double M Partners, LP is a $7.2MM early stage venture fund based in Los Angeles and formed in August 2012. The Fund invests in Internet, Media and Communications (“IMC”) companies who primarily are either business to business infrastructure, software, management platform and/or technology focused companies. The Fund is managed by Mark Mullen who has more than 20 years of investing and investment banking experience across the IMC sector. The Fund’s current portfolio is comprised of 19 companies primarily in Southern California, but also including companies in San Francisco, Oregon and Canada. It is estimated the Fund will have a total of approximately 25 investments in the range of ~$200,000-$500,000. The Fund is supported by a premier group of investors, as well as fund advisors who are all successful entrepreneurs, investors and business leaders.
Service provider
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EdgeCast Networks, Inc. offers a superior, cost-effective, global content delivery service that gives our customers competitive advantage in the delivery of digital media. Our world-class content delivery platform provides customers the cost benefits and flexibility of controlling their own content delivery network while liberating them from bandwidth contracts, capital investments and operational hassles.Startup/Business
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JIBE is a referral-based hiring platform that enables jobseekers to tap into their existing social networks to gain access to the jobs they want through the people they already know. JIBE provides jobseekers with a wide range of career opportunities, insight into how many connections they have at a given company and the ability to contact their connections, ask for referrals, and then attach those referrals to their job application. JIBE works directly with enterprises, many of which are Fortune 1,000 companies.
Founded in 2008 by Joe Essenfeld, JIBE is based in New York City and backed by Polaris Venture Partners, Lerer Ventures, Zelkova Ventures and Thrive Capital.
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Ranker is a consumer web platform and interest graph play based on the easily understood and highly engaging concept of rankings and voting. Ranker harnesses the “wisdom of crowds” to provide credible answers to questions like “what are the best <blank>?”. Visitors can vote on or rank topics with various levels of engagement, and Ranker’s technology aggregates this interest graph data into CrowdRankings such as The Best TV Shows. Ranker utilizes semantic, linked datasets to power this “connected listmaking” for users across all topics, and has partnered with Freebase, Factual, and other sources of “big data” for this. The ranker.com site launched to the public August 2009 and has seen solid traffic and user growth every month. In the future Ranker will be porting its ranking technology to other sites and platforms. As of August 2011, Ranker is accumulating 3 million unique visitors and 10 million pageviews a month.
Ranker’s platform is not confined to a specific vertical and is flexible enough to be used for blogging, shopping, polls, publishing, social networking, even organization.
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Gyft is a digital gift card platform that enables you to manage your gift cards. Users can upload, send and redeem gift cards from their phones. Gyft is seamlessly integrated with Facebook to make sending gift cards convenient and fun!
For retailers, Gyft creates a meaningful new revenue channel and can help drive redemption. By using Gyft’s solution, merchants can drive customer acquisition, increase shopper interaction and drive social engagement.
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CapLinked is a cloud-based enterprise platform that accelerates the execution of sophisticated business transactions. CapLinked is used by companies for managing mergers, financings, asset sales, investor reporting, and due diligence. The company was founded in 2010 by Eric M. Jackson (PayPal's first head of U.S. marketing and author of the award-winning book The PayPal Wars) and Christopher Grey (former senior private equity executive and managing director at a subsidiary of Emigrant Bank). Its investors include FF Angel, Subtraction Capital, 500 Startups, Hercules Growth Fund, and Peter Thiel (the cofounder of PayPal). The Wall Street Journal called CapLinked “the go-to place for setting up and closing deals,” and Inc. named CapLinked to its list of “5 Back-Office Tech Innovations.” The company is based in Los Angeles.
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Janrain helps organizations succeed on the social web with its user management platform. Comprised of multiple products that can be used together or in concert, Janrain solutions build user engagement and brand awareness.
Janrain Engage provides social login and social sharing to enable a user to login with an existing account on Facebook, Twitter, LinkedIn or 15 other networks, as well as share content and activities from the site to their social networks.
Janrain Capture is a turnkey social profile data storage and registration solution.
Janrain Federate provides single sign-on functionality to extend a brand's online ecosystem.
Janrain customers include industry leaders such as Universal Music Group, MTV Networks, Kodak, NPR, Tribune Interactive, Sears and Citysearch. Founded in 2005, Janrain is based in Portland, Oregon.
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FreeWheel
offers the most formidable system for digital video ad management and
monetization. Built from the ground up by a handful of former DoubleClick
executives, FreeWheel's solution-set has already armed companies like Turner
Broadcasting System, Warner Brothers, CBS, VEVO, Discovery Communications, and
others with the tools and services necessary to make more money from their
video content. For more information, please visit: www.freewheel.tv. Follow us on Twitter @FreeWheeldotTV.
