LA is gaining momentum as a second Silicon Valley

With Vator Splash LA just around the corner, here is a look at how LA is blossoming as a tech hub

Technology trends and news by Krystal Peak
May 30, 2012
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When people think about tech startups, they immediately conjure up the image of Silicon Valley 20-somethings or the hustle of San Francisco penthouse suites filled with VCs. What they don't usually think of is the sprawling spread of Los Angeles with its freeways shuffling some 10 million odd people around, but the case is that Los Angeles is becoming its own tech community, just an hour flight away from the campus centers of Facebook and Google.

With Vator Splash LA just a week away, I wanted to get a read on just what LA is doing in the tech sector, and how the city is bringing more talent and startups into its ecosphere. (Editor's note: Get tickets now before they jump up next week. Register here.) 

In the Vator Splash LA startup companies competiting to present at the event, that is voted and judged by tech peers, 11 of the top 20 are headquartered between Santa Barbara and San Diego -- and most of them are consumer-facing services or social networks.

But with LA outside the usual CalTrain or BART trip from most of the VCs offices in Northern California, I wanted to better understand how the SoCal startups standout and get the attention of businesses, customers and investors. I caught up with a couple of VCs that stay in-tune with the LA tech atmosphere to see just how they think the startups to the south are fairing now.

How the tech sector is changing in LA

Just five years ago tech companies wouldn't even dream of looking to LA as a viable headquarters. All of the rival companies, talent and VCs were all in Silicon Valley, but over the last few years with the success of BeachMint, ShoeDazzle, Zaarly and TrueCar, Los Angeles has become a place where tech companies with a strong business plan have come out of the gate swinging. 

Some entrepreneurs like Co-Chair of the accelerator Start Engine, Howard Marks, believes that Los Angeles provides the kind of environment that forces a company to be more scrappy and thoughtful in their execution. 

"People have always come to LA with a lot of ambition and a desire to prove themselves," Marks said. "But the tech world is often filled with companies that are floating by on all this capital that they don't get a chance to really see what works."

Since many of the LA startups are forced to really flesh out a business model beforehand, Marks thinks this leads to a smaller, stronger tech community. 

Areas of tech that are strong in LA

While Silicon Valley is filled with every type of tech company one can imagine, LA startups seem to be focused more in the areas of e-commerce, advertising and media, and consumer facing social interaction. 

A lot of this could be due to the previous point, that they need a viable business model to get out there and stay alive, but some of it also could be thanks to the Los Angeles environment and talent. LA is filled with fashion, design, advertising and networking already. You need look no further than Hollywood and what keeps that industry alive to see that those areas have a lot of power and some deep pockets.

Advantages of being in LA

While NorCal residents get in their shots about the problems with LA, we often do so because we are really jealous that they get all the great weather and can actually dip their toes in the ocean without physical pain. LA obviously can be a great place to work. 

When I caught up with Alex Gurevich, Principal at Javelin Venture Partners, he said that you need to look no further than the diverse population and affordable living to see what makes starting a company in LA desirable.

"The weather and environment is great and unlike a few years ago, there is a lot of great talent to pick up," Gurevich explained. "As opposed to San Francisco, all the recent graduates from LA colleges are easier to pickup here and they tend to have greater loyalty, less turnover for the talent because there is less competition."

But, even though things are shifting, you just can't beat Silicon Valley when it comes to density of VCs, talent, and community. LA is working on building more of a community of entrepreneurs and investors but it just is not there yet. 

What is around the corner for LA startups?

As the LA tech sector matures, more opportunities will open up for entrepreneurs south of San Jose. 

David Cremin, founder and managing director at DFJ Frontier believes that the change has already started.

"Great places have opened doors for entrepreneurs," Cremin said. " LaunchPad has been here for several years and has been a leader.  Now we have Science, Mucker Labs, Amplify, and idealab has been here since the late 90’s.  There is a lot going on, more than people outside the region realize.  It’s a matter of time before some more big companies are hatched here."

With just a few more days left to vote for the 10 startups that will present at Vator Splash LA, VCs and entrepreneurs everywhere should keep an eye on these young companies from the SoCal world: Credential Protection, LeadFerret, Xfluential, Calenjoy, AllowanceTree, Loyalty Dice, Flipgigs, Mergelocal, POP-AUT, MoPix, and DogVacay.

Personally I can't wait to get back down to LA to see just what has blossomed in the start-up world down there -- if you are interested in learning more about LA's tech scene, check out the Vator Splash LA event being held at the Santa Monica Fairmont on June 7 -- tickets are still on sale.


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