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There is Something Going on in the LA Tech Market by Upfront Ventures

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An overview of the LA Tech Market and why it has been booming lately. Prepared by Upfront Ventures.

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  • Excellent overview, thank you so much Mark! - there are so many reasons to be in LA. Yet, the number question I get is still 'why are you guys in LA?'. Love the map with the startups' location.
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  • Thanks Mark. This is comprehensive & insightful.
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There is Something Going on in the LA Tech Market by Upfront Ventures

  1. The Los Angeles Technology Market
  2. LA ecosystem is heating up 2 ADD IMAGE
  3. LA is #3 largest tech ecosystem in the US… 24% 14% Share of US Early-Stage Startups (%) 12% AngelList startups by region 4% 4% 3% 2% 2% 2% Silicon Valley New York SoCal Northwest Boston Chicago Austin DC Colorado 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 3 San Francisco & Bay Area.
  4. …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
  5. Capital flowing to LA: $1.5B+ invested in LA in 2013, a 30% CAGR since 2010 $700 $920 $1,040 5 Source: CB Insights – LA Funding Report (July 2014) $1,550 Notes: US VC grew at 7% CAGR from 2010 ($23.7B) to 2013 ($29.2B) via CB Insights. $860 172 225 281 302 2010 2011 2012 2013 2014 # Deals Invested Capital ($M) 1H LA has grown 4X faster than US average
  6. 250 companies have raised $1M+ since 2012 Prominent SoCal companies by last round of financing 2012 2013 2014 YTD $50M+ $10M+ $1M+ Sources: CB Insights, Crunchbase
  7. Large valuable companies are built in LA 7 Source: CB Insights, Yahoo Finance (9/3/14 EOD), TechCrunch
  8. Increasing number of prominent successful exits Acquired (Facebook) IPO IPO $8B+ in 2014 so far with more to come 8 Source: CB Insights, YCharts. Acquired (Disney) Acquired (Apple) Acquired (AOL) Acquired (Apple) Acquired (Opera) Acquired (AOL) Acquired (Red Hat)
  9. Why tech thrives in LA 9
  10. LA is built on entrepreneurship 530 490 2011-2013 Entrepreneurs per 100,000 people 440 400 360 360 360 350 10 Source: Kauffman Index of Entrepreneurial Activity, April 2014 310 290 240 240 200 200 190 LA Miami SF Houston NYC Atlanta Phoenix Riverside Dallas Seattle DC Boston Chicago Phelphia Detroit
  11. 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
  12. LA graduates the most engineers in the US… 7,561 6,811 LA Boston Bay Area Sources: US News & World Report, Accreditation Board for Engineering and Technology (ABET); Includes graduate universities within 150 miles 12 of metropolitan area 10,945 9,862 New York Engineering Graduate Enrollment
  13. …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 13 of metropolitan area
  14. LA has a strong base of local investors… 14 Source: CB Insights
  15. …who are actively writing LA checks Most Active VC Investors in LA 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 15 LA-based Venture Firm Source: CB Insights – LA Funding Report (July 2014)
  16. Supportive incubators, accelerators, and community spaces foster early stage growth 16 Source: RepresentLA
  17. Living in LA is more affordable compared to other tech centers 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% Source: Cost of Living from Council for Community and Economic 17 Research (via Areavibes)
  18. 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
  19. 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 20 Application Layer Scalable computing & storage Open source software Telecommunications Personal computing
  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 21 1771 1829 1875 1908 1971 1829 1873 1920 1974 ? 1797 1847 1893 1929 2001 Application Layer • Manufacturing industry • Open trade • Standardizing time • Catalog sales • Economies of scale • Urban development • Interventionism • Interstate highways • IMF, World Bank, BIS Infrastructure Layer TODAY 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
  22. The focus is increasingly on what we actually DO online: the 3 C’s 22 Application Layer Content Commerce Communication Infrastructure Layer This is what LA does best
  23. Content is increasingly consumed online… Avg Time / Day with Major Media by US Adults (hh:mm) Total 10:46 11:18 11:49 12:03 12:14 Other Radio TV 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 2010 2011 2012 2013 2014 Digital 3:11 4:33 5:14 3:49 5:46 Print % of Time 30% 34% 39% 43% 47%
  24. US adults watch 5+ hours of video per day. In the future, video will be an online medium. Avg. Time / Day Consuming Video by US Adults (hh:mm) Total 4:30 4:49 5:07 5:15 5:23 0:06 0:03 0:08 0:22 0:33 0:12 0:21 0:22 0:22 4:24 4:34 4:38 4:31 4:28 2010 2011 2012 2013 2014 Mobile Online TV 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. Content
  25. LA is the creative capital of the US, specializing in video content 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 25 Sources: 2013 Otis College of Art and Design; Bureau of Labor Statistics 2012 Content
  26. 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
  27. Commerce also shifting online: 14% CAGR vs. 3.5% for offline US retail $225 $263 $304 $347 $393 $440 $492 5.3% 5.8% 6.4% 7.0% 7.6% 8.2% 8.9% 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% $600 $500 $400 eCommerce % of total retail sales $300 $200 US Retail eCommerce Sales ($B) $100 $- 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
  28. LA is the retail & trade capital of the US #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 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 28 and 2014 Outlook Commerce
  29. LA commerce startups have taken the lead Subscription-based fashion retail $400M sales projected for 2014 And many more… 29 Sources: WSJ 8/26/14 on Honest Co, Re/Code 8/28 on JustFab, TrueCar S-1 Car buying & selling platform 7,000+ dealers 1.1M+ car sales Eco-friendly baby & home products $150M+ revenue projected for 2014 Commerce
  30. Communication Three of the top social apps located in LA Photo messaging app 700M+ snaps / day 20%+ MoM growth 30 Sources: The Economic Times 8/1/14 (Snapchat), Sean Rad interview at 2014 Upfront Summit (Tinder), Mashable 3/11/14 (Whisper) Mobile dating app 10M+ DAU 750M swipes / day Anonymous social network 3.5B page views / mo
  31. Further, LA is tackling the hard technology problems to lead the next revolution 31 Space VR / AR Power
  32. Recap: the future is sunny in LA Fastest growing tech ecosystem Well-positioned for the three Cs: Content, Commerce, Communications 32 Come join us! Talent + Capital + Lifestyle Big fundings, big exits, & big ambitions for the future: space, energy, VR, & more
  33. The Los Angeles Technology Market

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