Venture capitalists went shopping in Los Angeles during the third quarter, as e-commerce firms brought in large deals and made the county a rare bright spot for startup investment.
In all, $324 million of venture capital was invested in the county, up 9 percent from an already-strong third quarter a year ago. The number of separate investments, 48, was up 4 percent, according to a report released last week by PricewaterhouseCoopers and the National Venture Capital Association.
Most remarkably, local startups have secured 155 investment deals year-to-date, the most-active such period since the dot-com bubble burst in 2000.
The uptick has been largely due to startups tapping into two of L.A.’s big industries: Hollywood and fashion. E-commerce sites were particularly trendy investments.
Look no further than JustFab, an El Segundo e-retailer that sells shoes and handbags. The company raised $76 million in July – the eighth-largest venture deal in the United States during the quarter. The business, which runs mostly on subscriptions, is using the money to make a European expansion.
Nasty Gal, another L.A. e-commerce site, raised $25 million in venture capital funding in August to expand its headquarters, hire staff and roll out new products. Another, Little Black Bag Inc., raised $8 million the same month.
Also popular were startups tapping into Hollywood content.
NuvoTV, a Burbank-based television network aimed at Hispanic audiences, raised $40 million to expand its original productions in August.
Nationally, the story was different. In the third quarter, venture capital investment fell 12 percent to $6.5 billion on 890 deals, down 10 percent compared with the year before.
California was far and away the largest destination for the dollars – accounting for more than half of the total investments.
While the preponderance of capital in the state went to Silicon Valley, Los Angeles County raised more money by itself than all but two states – Massachusetts and New York.
Mark Sogomian, strategic growth markets leader at Ernst & Young in Los Angeles, said small deals account for much of the activity today in L.A.’s bustling tech hub of Silicon Beach, leaving the door open for larger investments in the future.
“Silicon Beach is heavily weighted towards earlier-stage companies,” he said. “The dollars are primarily driven by later-stage rounds, which tend to be the largest.”
