The Los Angeles Technology Market
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LA ecosystem is heating up
LA is #3 largest tech ecosystem in the US…
Source: AngelList – startup companies by region as of July 31, 2014.
Note: SoCal includes LA (69%), San Diego (15%) , Orange County (9%), and other areas (6%), Northwest includes Oregon & Washington. Silicon Valley includes San Francisco & Bay Area. 3
24%
14% 12%
4% 4% 3% 2% 2% 2%
Silicon Valley
New York SoCal Northwest Boston Chicago Austin DC Colorado
Share of US Early-Stage Startups (%) AngelList startups by region
…and #1 fastest growing
Source: AngellList – startup companies by region by month.
Note: Compound monthly growth rate of new startups by region from Jan 2014 to June 2014 4
5.3% 4.7% 4.6% 4.5% 4.4% 4.1% 4.0% 3.9% 3.8%
SoCal Northwest Chicago New York DC Boston Silicon Valley
Colorado Austin
2014 1H Monthly Startup Growth AngelList startups by region
Capital flowing to LA: $1.5B+ invested in LA in 2013, a 30% CAGR since 2010
5 Source: CB Insights – LA Funding Report (July 2014) Notes: US VC grew at 7% CAGR from 2010 ($23.7B) to 2013 ($29.2B) via CB Insights.
$700 $920 $1,040
$1,550
$860
172
225
281 302
2010 2011 2012 2013 2014
# Deals
Invested Capital ($M)
1H
LA has grown 4X faster than US average
250 companies have raised $1M+ since 2012
2012 2013 2014 YTD
$1M+
$10M+
$50M+
Sources: CB Insights, Crunchbase
Prominent SoCal companies by last round of financing
7 Source: CB Insights, Yahoo Finance (9/3/14 EOD), TechCrunch
Large valuable companies are built in LA
8 Source: CB Insights, YCharts.
Increasing number of prominent successful exits
$8B+ in 2014 so far with more to come
Acquired (Facebook)
Acquired (Disney)
IPO IPO
Acquired (Apple)
Acquired (AOL)
Acquired (Apple)
Acquired (Opera)
Acquired (AOL)
Acquired (Red Hat)
Why tech thrives in LA
9
10 Source: Kauffman Index of Entrepreneurial Activity, April 2014
LA is built on entrepreneurship
530 490
440 400
360 360 360 350 310 290
240 240 200 200 190
LA
Mia
mi
SF
Hou
ston
NY
C
Atla
nta
Pho
enix
Riv
ersi
de
Dal
las
Sea
ttle
DC
Bos
ton
Chi
cago
Phe
lphi
a
Det
roit
2011-2013 Entrepreneurs per 100,000 people
Early successes have seeded the ecosystem’s new era growth
11
LA Tech 1.0 LA Tech 2.0
Seasoned entrepreneurs and recycled capital drive new ventures
LA graduates the most engineers in the US…
Sources: US News & World Report, Accreditation Board for Engineering and Technology (ABET); Includes graduate universities within 150 miles of metropolitan area 12
6,811
7,561
9,862
10,945
New York
Bay Area
Boston
LA
Engineering Graduate Enrollment
…from some of the most prominent schools
Sources: US News & World Report, Accreditation Board for Engineering and Technology (ABET); Includes graduate universities within 150 miles of metropolitan area 13
14 Source: CB Insights
LA has a strong base of local investors…
Rank Investor 1 Upfront Ventures 2 Mucker Capital 3 500 Startups 4 Greycro= Partners 5 SV Angel 6 Siemer Ventures 7 Rincon Venture Partners 7 Double M Partners 9 Baroda Ventures 10 First Round Capital 10 Google Ventures
…who are actively writing LA checks
15
LA-based Venture Firm
Most Active VC Investors in LA
Source: CB Insights – LA Funding Report (July 2014)
Supportive incubators, accelerators, and community spaces foster early stage growth
Source: RepresentLA 16
Living in LA is more affordable compared to other tech centers
Source: Cost of Living from Council for Community and Economic Research (via Areavibes) 17
LA SF NYC
Overall Index 127 152 148
Groceries 106 119 149 Housing 176 243 166 ULliLes 112 90 131 TransportaLon 106 109 128 Healthcare 110 111 127 Goods & Services 103 119 144
Equivalent Standard of Living $50,000 $59,807 $58,197 vs Los Angeles 20% 16%
And, of course, the weather doesn’t suck
Source: Kelly Norton, Kellegous.com “The Pleasant Places to Live” graphic & analysis using NOAA data 18
Pleasant days: Days with (1) mean temperature between 55° F and 75° F, (2) minimum temperature above 45° F, (3) maximum temperature below 85° F, and (4) no significant precipitation or snow depth
But it’s not about the “next” Silicon Valley
19 Source: Slate.com
20
Tech has moved beyond servers & switches – we are shifting to the application layer
Personal computing
Telecommunications
Open source software
Application Layer
Scalable computing & storage
21
We’ve seen this before – every technological revolution goes through the same cycle
The Industrial Revolution
Age of Steam & Railways
Age of Steel, Electricity, & Heavy Engineering
Age of Oil, Automobiles, & Mass Production
Age of Information and Telecommunications
1771
1829
1875
1908
1971
1829
1873
1920
1974
?
Source: Chart adapted from Carlota Perez’s “Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages” who describes the two phases as “Installation” & “Deployment” periods
1797
1847
1893
1929
2001
• Manufacturing industry • Open trade
• Standardizing time • Catalog sales • Economies of scale
• Urban development • Interventionism
• Interstate highways • IMF, World Bank, BIS
Infrastructure Layer
Application Layer
TODAY
22
The focus is increasingly on what we actually DO online: the 3 C’s
Infrastructure Layer
Application Layer
Content Commerce Communication
This is what LA does best
23 Source: eMarketer, April 2014. Note: Adults 18+, time spent with each medium (regardless of multitasking). Excludes time spent watching digital video via console, connected TV or OTT device.
Content is increasingly consumed online… Content
2010 2011 2012 2013 2014
Avg Time / Day with Major Media by US Adults (hh:mm)
Digital
Radio
TV
3:11 4:33 5:14
3:49 5:46
Total 10:46 11:49 12:03 11:18 12:14
Print Other
% of Time 30% 39% 43% 34% 47%
24 Source: eMarketer, April 2014. Note: Adults 18+, time spent with each medium (regardless of multitasking). Excludes time spent watching digital video via console, connected TV or OTT device.
US adults watch 5+ hours of video per day. In the future, video will be an online medium.
2010 2011 2012 2013 2014
Avg. Time / Day Consuming Video by US Adults (hh:mm)
TV
Mobile Online
4:24 4:38 4:31 4:34 4:28
0:06 0:21 0:22 0:12 0:22 0:08 0:22 0:03 0:33
Total 4:30 5:07 5:15 4:49 5:23
Content
LA is the creative capital of the US, specializing in video content
25
1 in 7 people in LA are employed in a creative field
#1 metro area for Art, Design, & Media employment
$140B+ annual economic impact from creative industry
Sources: 2013 Otis College of Art and Design; Bureau of Labor Statistics 2012
Content
Video & content startups are succeeding in LA
26
And many more…
#1 producer & distributor of online video
6.5B+ monthly views 450M+ subscribers
Leading artist social network
300M pieces of art 30M+ members
Largest Latino online video network
400M+ monthly views 40M+ subscribers
Sources: Maker, DeviantArt, Mitu
Content
$225 $263
$304 $347
$393
$440
$492
5.3% 5.8%
6.4% 7.0%
7.6% 8.2%
8.9%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
$-
$100
$200
$300
$400
$500
$600
2012 2013 2014 2015 2016 2017 2018
27 Source: eMarketer April 2014. Note: includes products or services ordered using the internet, regardless of the method of payment or fulfillment, excludes travel & event tickets.
Commerce also shifting online: 14% CAGR vs. 3.5% for offline US retail
US Retail eCommerce Sales ($B)
eCommerce % of total retail sales
Commerce
LA is the retail & trade capital of the US
Sources: Kyser Center for Economic Research International Trade Outlook – The Southern California Region 2013-2014. Bureau of Labor Statistics 2012. CIT & CFA Fashion Industry Profile and 2014 Outlook 28
#1 metro area for Retail & Trade sector employment
$400B+: imports / exports through LA ports in 2012, a new record for the US
36% of US apparel manufacturing jobs are in LA
Commerce
LA commerce startups have taken the lead
29 Sources: WSJ 8/26/14 on Honest Co, Re/Code 8/28 on JustFab, TrueCar S-1
And many more…
Subscription-based fashion retail $400M sales
projected for 2014
Car buying & selling platform 7,000+ dealers 1.1M+ car sales
Eco-friendly baby & home products $150M+ revenue projected for 2014
Commerce
30 Sources: The Economic Times 8/1/14 (Snapchat), Sean Rad interview at 2014 Upfront Summit (Tinder), Mashable 3/11/14 (Whisper)
Three of the top social apps located in LA
Photo messaging app 700M+ snaps / day 20%+ MoM growth
Mobile dating app 10M+ DAU
750M swipes / day
Anonymous social network
3.5B page views / mo
Communication
31
Further, LA is tackling the hard technology problems to lead the next revolution
Space VR / AR Power
32
Fastest growing tech ecosystem
Come join us!
Talent + Capital + Lifestyle
Big fundings, big exits, & big ambitions for the future: space, energy, VR, & more
Well-positioned for the three Cs: Content, Commerce, Communications
Recap: the future is sunny in LA
The Los Angeles Technology Market