VC Firms Poured $9 Billion Into LA Companies in 2020

VC Firms Poured $9 Billion Into LA Companies in 2020

Amid one of the most tumultuous years in recent economic history, Los Angeles companies managed to land $9 billion in venture capital funding in 2020.

According to a new report from CBRE Group Inc., that’s a record for the greater L.A. region, where funding jumped 15.4% in 2020 from $7.8 billion in 2019. The aerospace, media and technology industries led the way, raking in a total of $4.1 billion.

As the report notes, VC funding “has long been a lucrative source of seed capital for burgeoning companies,” but a sizable share of money recorded by CBRE last year went to Space Exploration Technologies Corp., the Hawthorne-based aerospace giant that’s been around since 2002.

No longer a startup, Elon Musk-led SpaceX still has a lot to prove in terms of making money, but that hasn’t stopped investors from seeking out a stake in its lofty ventures.

The rocket-maker has built a massive war chest for its ambitious goals of landing humans on Mars by 2026 and deploying a satellite constellation around Earth to create a global broadband network.

Last summer, SpaceX closed a $2 billion funding round that bumped its valuation to $46 billion. Since the new year, it has received $850 million in fresh funding — a sum that’s not included in the CBRE report — pushing the company’s valuation to $74 billion.

No matter how much money SpaceX raises, though, Silicon Beach can’t catch up to Silicon Valley, which remains the nation’s venture capital hub. According to Jones Lang LaSalle Inc., the San Francisco area accounted for 44% of all U.S. venture capital spending and 22% of global spending in 2019, due largely to its strength in areas such as technology, software and hardware systems.

These sectors are smaller in L.A. Still, CBRE Research Director Eric Willett said the Los Angeles market is on the rise.

“Every year, for the past decade, L.A. has been one of the top markets, and 2020 was no departure from that,” he said.

A separate report from PitchBook Data Inc. and the National Venture Capital Association valued venture capital activity in L.A. in 2020 at $19.3 billion, a 39% increase from 2019. That’s on par with New York but still far behind San Francisco, which had deals valued at $61.5 billion, up 18% year over year.

Although CBRE found that the pandemic led to a decrease in funding in the first half of 2020, Willett said that “the second half finished out strong.” He noted that the pandemic led investors to “heighten their focus on certain sectors” and evaluate their interest in emerging industries.  

The health care industry was one of those that benefited; it saw a surge in funding as Covid-19 drove innovations in telehealth, from vet care to dentistry, and companies raced to develop tests and vaccines.  

The pandemic, “which afforded people around the globe more time to invest in pastime activities,” the report said, also drove growth in the video game industry.

Across L.A. and Orange counties, the video game and esports industry hauled in $1.1 billion in VC funding, “outpacing other technology categories such as social media and software developers,” the report said.

Culver City-based Scopely Inc., a leading mobile gaming company, attracted $540 million in funding, while Hollywood-based esports and lifestyle company FaZe Clan Inc. took in $40 million.

As for aerospace, SpaceX isn’t the only local company drawing in dollars. Relativity Space Inc., which is using 3D printers to build rockets out of a 120,000-square-foot manufacturing facility in Long Beach, raised $500 million in a Series D round announced in November. Epirus Inc., a Hawthorne-based company that’s using artificial intelligence and high-power microwave technology to develop unmanned aerial systems to detect and destroy weaponized drones, closed $70 million in a Series B round announced in December.

Willett said he doesn’t expect the pace of VC funding to let up this year.

“We have had a robust start to the year in the last two months, and we anticipate that it will continue to be a really strong year for venture capital funding,” he said.  


BUSINESS: Rocket manufacturer
CEO: Elon Musk
2020 VC FUNDING: $2 billion

It’s no surprise that SpaceX, the biggest name in L.A.’s aerospace industry, hauled in a massive amount of venture capital funding last year. It’s not just a big player in Los Angeles, SpaceX is one of the most valuable privately held companies in the world.

CBRE notes that most investments into the company were fueled by SpaceX’s “recent string of successes,” including its Falcon 9 program and Crew Dragon — the first manned spacecraft to launch from U.S. soil since the retirement of the space shuttle program in 2011.

In May, the Crew Dragon made history when it lifted off from the Kennedy Space Center in Florida on a modified Falcon 9 rocket and carried two NASA astronauts to the International Space Station. The Crew Dragon capsule is designed specifically for human flight, and SpaceX is under contract with NASA for five more commercial crew missions. The next launch is set for April 22. 


BUSINESS: Mobile gaming
CEOs: Javier Ferreira, Walter Driver
2020 VC FUNDING: $540 million

Entertainment-driven game companies like Scopely are beating out other technology categories — including social media and software development — for venture capital funding.

And Scopely, which is valued at $3.3 billion, is at the front of the pack. Over the past decade, the company has launched some of the industry’s most addictive and popular mobile games. Its products include “WWE Champions” and “Wheel of Fortune Free Play.”

In 2020, Scopely partnered with ViacomCBS to license the entire “Star Trek” universe for its popular game, “Star Trek Fleet Command.” Also last year, Scopely acquired game studio PierPlay, which developed “Scrabble Go.” Looking toward the future, Scopely plans to expand its business to console and PC platforms. 


BUSINESS: 3D printed rockets
CEO: Tim Ellis
2020 VC FUNDING: $500 million

Relativity Space is cementing itself as a leader in the aerospace industry and creating healthy competition for SpaceX. Home to one of the largest 3D printers in the world, Relativity Space aims to print rockets in less than 60 days. Its main project is Terran 1, which, if successful, would become the world’s first 3D-built rocket.

On March 24th, the company completed its second printing phase of Terran 1, which is now 75% complete. Terran 1 is expected to launch in June 2022 from Florida’s Cape Canaveral.

In March, Relativity Space announced its first Defense Department contract to launch a Space Test Program mission in 2023 to put a U.S. military payload to orbit. In response to SpaceX’s Falcon 9, which is reusable, Relativity Space announced it will be rolling out Terran R, 90% of which will be manufactured by the company’s 3D printers.

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