LA Tech Series

110799

The 10 most active LA-based VCs since 2013

Tech Coast Angels, Upfront Ventures and Wavemaker Partners have been leading a revitalized LA

Innovation series by Steven Loeb
August 7, 2014 | Comments
Short URL: http://vator.tv/n/384f

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

  • Number of investments: 8 in 7 companies
  • Amount invested: $2.65 million
  • Average per deal: $330,000

 

9. DFJ Frontier, invests in early-stage tech companies

  • Number of investments: 8 in 7 companies 
  • Amount invested: $6.99 million
  • Average per deal: $870,000

 

8. Rincon Venture Partnersan early-stage venture capital firm

  • Number of investments: 9 in 7 companies
  • Amount invested: $18.65 million
  • Average per deal: $2.07 million

 

7. Steamboat Ventures, invests in early through growth stage companies in the technology, media, and consumer sectors.

  • Number of investments: 9
  • Amount invested: $36.69 million
  • Average per deal: $4.08 million

 

6. NGEN Partners, focuses on companies that improve the environment and human wellness

  • Number of investments: 10 in 7 companies
  • Amount invested: $17.88 million
  • Average per deal: $1.79 million

 

5. Pasadena Angels

  • Number of investments: 14 in 14 companies
  • Amount invested: $2.59 million
  • Average per deal: $180,000

 

4. Karlin Ventures

  • Number of investments: 14 in 12 companies
  • Amount invested: $6.17 million
  • Average per deal: $440,000

3. Wavemaker Partners (formerly Siemer Ventures), which focuses on focuses on late seed stage opportunities in B2B and B2C startups

  • Number of investments: 35 in 28 companies
  • Amount invested: $7.75 million
  • Average per deal: $220,000

 

2. Upfront Ventures, focuses on investments in early stage technology companies

  • Number of investments: 40 in 31 companies
  • Amount invested: $76.65 million
  • Average per deal: $1.92 million

 

1. Tech Coast Angels, an angel investor network

  • Number of deals: 63 in 47 companies
  • Amount invested: $17.76 million
  • Average per deal: $280,000
  • Notable investments: Ranker, HitFix, Portfolium, TrustEgg, Yapert

(Image source: deborahsexpressions.com)


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