When it comes in venture capital, Los Angeles is a booming city.
Over the past year, it has been one of the most profitable venture-capitalized outings of any tech ecosystem (with honey sold to PayPal for $ 4 billion) and investors are hitting companies a billion dollars in the region at a torrid rate. It is also the city where investors spend the most money outside the major major centers of venture capital: San Francisco, Boston and New York.
While Los Angeles has a lot to offer, it also means it has potentially a lot to lose in the current economic downturn. California continues to be hit hard by COVID-19, despite local and state officials trying to reopen businesses.
TipsClear interviewed some of the city’s main investors in sectors like real estate technology and cannabis to find out how the city can survive – and potentially thrive – in a new era ushered in by the response to the pandemic.
Larger fund investors like Mark Suster and Kara Nortman at Upfront Ventures in Dana Settle at Greycroft Partners; start-up investors like Will Hsu at Mucker Capital; TX Zhuo at Fika Ventures, the responses were generally optimistic about future opportunities for startups in Los Angeles.
Even investors in specialized funds like Karan Wadhera from the cannabis-focused investment firm Casa Verde Capital and Brendan Wallace of real estate company Fifth Wall thinks Los Angeles will thrive in the post-COVID world.
As Mucker Capital Co-founder Hsu writes, “There are many more big companies than there are dollars of risk here in LA. Investors in other cities should continue to see Los Angeles as an underserved ecosystem with huge opportunities. “
- Mark Suster, Managing Partner, Upfront Ventures
- Kara Nortman, Partner, Upfront Ventures
- Will Hsu, Mucker Capital
- Dana Settle, Greycroft Partners
- Karan Wadhera, Casa Verde Capital
- Brendan Wallace, fifth wall
- TX Zhuo, Fika Ventures
Mark Suster, Managing Partner, Upfront Ventures
How much Upfront is focusing on investing in the local ecosystem of Los Angeles compared to a less geographic approach?
Upfront invests around 40% of its investments in the large Los Angeles market and invests around 40% between the Bay Area and New York. Upfront has always invested nationally and internationally with the final 20% and we have produced major releases in Chicago, Baltimore, Paris, London and Las Vegas to name a few.
Where we invest outside of Los Angeles, of course, we bring all our contacts and relationships, which makes us a logical choice for any start-up raising capital or having access to the biggest influencers, media companies, establishments academics and health professionals can help propel the success of the business.
How do you think COVID-19 will change entrepreneurial activity in Los Angeles?
It is true that some start-up companies have been affected by this pandemic, but as we learn only a few months ago, there have been much more acceleration of the technological growth trends that were already in place.
Specifically targeting certain companies based in Los Angeles, we can share with you the trends that we observe directly with the demand data:
We already knew that telemedicine made sense for doctors and patients and now this trend has accelerated, regulations are reduced and cultural barriers are overcome. We’re seeing tremendous growth in food production and preservation (like Apeel Sciences, for example) and food distribution (like ChowNow). The need to reduce the number of people in warehouses has fueled the demand for robotics / automation for companies like inVia Robotics and the need for remote monitoring has helped Los Angeles-based DroneBase.