Two events in the last year dramatized the impact the tech sector is starting to have on Los Angeles.

Over the summer, Steve Ballmer, former chief executive of Microsoft Corp. who’s worth $22.5 billion, plunked down $2 billion to buy the Los Angeles Clippers basketball team, easily vanquishing other bidders and boosting the valuations of sports franchises across the country.

In March, Venice disappearing-photo app maker Snapchat Inc. closed another round of funding that brought its valuation to an estimated $15 billion. In the process, its co-founders, Bobby Murphy and Evan Spiegel, 26 and 24 years old, respectively, joined the ranks of local billionaires.

Los Angeles has always been a haven for the super wealthy, whether they grew up here, moved here or just used the temperate climes and laid-back lifestyle as an excuse for another holiday getaway home. But over the last few years, the region has been awash in tech money – some locally grown, some transplanted – that has begun to reshape the region.

The tech sector this year dominates the Business Journal’s list of Wealthiest Angelenos for the first time. Of the 50 billionaires on our list – another first, never before have all 50 been valued above $1 billion – eight trace their wealth to the tech sector. And they are not just slipping on to the list. Although L.A.’s tech billionaires represent 16 percent of the top 50, they account for 20 percent of all wealth on the list.

It’s a signal of a paradigm shift in the nature of the L.A. economy. Its newest billionaires are those who successfully capitalized on, and in some cases ushered in, technological innovations that have revolutionized the way society communicates, interacts and gathers information. Their impact is being felt not just on smartphones and tablets around the world, but in the price of housing here and, increasingly, even in the creative office environments many Angelenos work in each day.

Six of the nine are part of a new generation of tech titans, those who made their fortunes in the wake of the dot-com bubble more than a decade ago. But there is still some significant old-school tech money kicking around, characterized by individuals whose companies are essentially manufacturing businesses that produce high-tech goods. Just look to Kingston Technology co-founder John Tu (No. 7), whose $6.5 billion fortune is built on selling memory cards and hard drives, or Aubrey Chernick (No. 41), who founded operational software company Candle Corp. back in 1976.

New Vanguard

The new vanguard of tech billionaires comes from a different mold. They are the forward-thinking entrepreneurs and investors who made their money through groundbreaking websites, software and mobile apps.

Former eBay President Jeffrey Skoll (No. 19) has flown his banner on the list since 2005, and he’s got more company this time around.

Snapchat’s Spiegel (No. 37) and Murphy (No. 37) are the youngest individuals to ever grace the list. Sean Parker (No. 9), 35, is the famed co-founder of file-sharing service Napster whose fortune came after he was named Facebook Inc.’s first president in 2004. Now worth an estimated $5.8 billion, he moved to Los Angeles after buying Ellen DeGeneres’ old Holmby Hills house in June for $55 million.

Then there’s legendary Silicon Valley venture capitalist Christopher Sacca, who lives in Manhattan Beach. Sacca and his firm, Lowercase Capital, made early stage bets on Instagram, Twitter Inc. and Uber Technologies Inc., all of which have paid off. Handsomely. He was among the Top 50 until the last minute, when a late swoon by Twitter dropped his fortune to $1.1 billion.

And, of course, there’s everyone’s favorite multitasking billionaire, Elon Musk (No. 2), chief of Tesla Motors Inc. and Space Exploration Technologies Corp., or SpaceX. When the South African-born PayPal co-founder is not busy reshaping the automotive industry, he’s trying to make space travel affordable and eventually bring the human race to Mars.

The dynamic of having a coterie of hugely successful, driven entrepreneurs come together in one area fuels an environment of innovation as well as the services catering to it.

In Los Angeles, a very similar dynamic was seen nearly a century ago with the establishment of Hollywood as the center of the motion picture world. It is a cycle of innovation and re-investment that allowed Silicon Valley to become the global epicenter of technology, a dynamic that can be traced back to Apple Inc.’s initial public offering in 1980, which created 300 millionaires.

That process has begun to pick up steam in Los Angeles over the past decade, following big exits for companies such as Myspace Inc., Edgecast Networks, Cornerstone OnDemand Inc., TrueCar Inc., Maker Studios and Beats Electronics.

Other local tech companies circling the billion-dollar mark include El Segundo’s JustFab Inc. and West Hollywood’s Tinder.

Much of the backing for such tech ventures comes from investors, such as Parker and Sacca, who have already made money in the sector.

“We’ve always found that clients are much more willing to invest in things they know,” said David Regan, head of investments for the west region at J.P. Morgan Private Bank in Century City.

Regan noted that wealth management clients in tech-related fields have become one of the fastest-growing parts of the bank’s business in Southern California.

“The interconnectedness of that community is such that people really understand other businesses and business models and may want to invest in those as well,” he said.

“The more we have breakout companies here, the more it gets people excited about putting money in L.A.,” said Mike Jones, the former Myspace chief executive who heads Santa Monica tech incubator Science Inc. and has become a prominent angel investor in companies such as Culver City’s Maker Studios.

He’s joined in the re-investment drive by Brian Lee, a co-founder of Glendale’s LegalZoom, which sold a controlling stake to European private equity firm Permira for more than $200 million last year. Lee also helped start El Segundo’s ShoeDazzle, which merged with JustFab in August 2013 for an undisclosed amount, and is a co-founder and chief executive of organic home product e-tailer Honest Co. in Santa Monica. He has personally invested in a slew of companies, including Santa Monica’s RadPad Inc. and Whisper.

Parker and Sacca, who both made their fortunes in Silicon Valley, have focused the majority of their investment dollars on Bay Area companies. However, Parker did contribute to the $6.3 million Series A round for L.A.’s NationBuilder, an online community organizing platform, while Sacca is an investor in L.A.’s Veggie Grill Inc. and Venice’s Chewse, an online food ordering service for businesses.

Boosting business

The expansion of the tech sector fueled by these investments has sent ripples through the local economy.

While real estate prices have increased notably across Los Angeles in recent years, analysts say the sharp uptick in the coastal communities of Santa Monica and Venice is directly attributable to the area’s growing tech workforce as well as the financial types who work with those companies.

“That’s the industry that’s coming in,” said Tami Pardee, owner of Pardee Properties in Venice.

She said the median home price in Venice jumped to $1.6 million in the fourth quarter last year, a 20 percent increase over the year-earlier period. Perhaps the best illustration of the residential feeding frenzy that has come with the growth of the tech sector is the 932-square-foot, two-bedroom Washington Way home Pardee sold for north of $1.9 million – more than $2,000 a square foot – in March.

That deal almost seems modest when compared with Minecraft founder Markus Persson’s purchase of a 23,000-square-foot Beverly Hills mansion last year for $70 million, or $3,043 a foot. (Despite his expensive digs, Persson, who sold Minecraft to Microsoft for $2.5 billion and has a net worth estimated at $1.5 billion, still considers Sweden home, so he’s not on our list.)

Rents in Venice are on the rise as well. Pardee said that while rates have doubled to $4 a square foot over the last two years, there are still notable outliers. She recently leased a 650-square-foot, one-bedroom apartment in Venice for $3,650 a month. At $5.61 a square foot, it went for three times the average Los Angeles County rent.

“It’s crazy,” she said.

But it is in the realm of commercial real estate that the impact of this new breed of businesses might have its most lasting impact.

The explosion of tech and digital media companies has created a demand for more and different kinds of office space. The first-quarter office vacancy rate in the Santa Monica submarket was 10.7 percent, among the lowest in the region and a full one-third lower than the countywide average. Not only is the hunger for more space making large locations hard to find and driving rental rates up, the open-plan designs – “creative office space” – favored by tech companies have made their way into L.A.’s broader business culture.

“That sort of functionality is spilling over to your law firms, engineering firms and some of your more traditional companies,” said George Crawford, a broker with Charles Dunn Co. Inc. who specializes in the downtown L.A. market.

Earlier this year, for example, startup law firm Hueston Hennigan, a white-collar criminal defense practice, signed a lease for 21,000 square feet at the PacMutual building downtown, which developer Rising Realty Partners redeveloped as a creative office hub. Its space is being built out to have lawyers’ offices around a perimeter that surrounds group workstations.

“We want to emphasize people coming together to share ideas,” Moez Kaba, a founding partner, told the Business Journal last month. “It’s not a hierarchical space with the senior partners locked in their offices, so it is going to be more like what you’d imagine for a Silicon Beach startup space.”

The push for creative office space in Los Angeles could be traced to the decision by Google Inc. in 2011 to move about 500 employees to the Frank Gehry-designed Binoculars Building on Main Street in Venice, once home to an ad agency. The move at once established Venice as a serious tech hub and planted a flag in Los Angeles for the more whimsical approach to office culture that had already taken hold up north.

Late last year, Google was said to be interested in leasing the famed Spruce Goose hangar in Playa Vista and converting it to office space; it did spend $120 million for the 12-acre parcel zoned for up to 900,000 square feet of office space next to the hangar.

Tenants will come and go, but buildings constructed by Google and rehabs like that done by Rising will be with us for years to come.

Long-term impact

Past zillionaires often supported educational or arts institutions, hospitals and the like. But much of the civic contribution from this generation of tech billionaires is aimed at expanding the regional economy. Putting their names on cultural institutions is something that today’s wealthy tech execs might do later in their careers.

That does not signal a lack of interest on making an impact on society and culture, just a different approach. Many tech types view backing socially conscious businesses as a more appropriate venue for affecting change, while also reaping hefty financial rewards.

“It is true that there is less interest in the art museum or the hospital” among this cohort, said James Ferris, director of USC’s Center on Philanthropy and Public Policy.

“The horizons for where you can make an impact have changed, opened up and broadened,” he said, noting that social entrepreneurship is especially popular in the technology sector.

Perhaps these entrepreneurs have taken a cue from Patrick Soon-Shiong.

The richest man in Los Angeles for an unprecedented seven straight years, Soon-Shiong has publicly embraced an expanded definition of philanthropy that includes the work of corporations.

The biotech billionaire is now focusing most of his efforts on Culver City’s NantWorks, a company that’s expanded its reach into technology over the last several years as part of its goal to improve the quality and efficiency of health care delivery, a pursuit that is both profitable and socially beneficial. Among its major offerings is a cloud-based clinical health information system linking patients, health care providers and medical researchers.

Or maybe they’ve seen one of the movies produced by Skoll’s Participant Media in Beverly Hills, such as “An Inconvenient Truth,” “The Cove,” “Waiting for Superman” or last year’s Oscar winner “Citizenfour,” which are meant to inspire social change.

Google Chief Executive Larry Page said last year that he would prefer giving his money to Musk than a charity, arguing that private companies are better equipped to enact “revolutionary change,” such as Musk’s goal of colonizing Mars.

“That’s a company, and that’s philanthropical,” he said of Hawthorne’s SpaceX during a TEDx talk in Vancouver, Canada.

Musk is also a trustee of Culver City’s XPrize Foundation, which organizes a series of incentivized competitions to encourage entrepreneurs to come up with business-based solutions for challenging world problems such as climate change, clean energy and poverty.

“A lot of these tech types, when they turn to philanthropy, they want to do things differently,” said David Callahan, founder and editor of Inside Philanthropy.

“These people believe in market-based approaches to making society a better place.”

Mark Suster, an influential L.A. venture capitalist and partner at Santa Monica’s Upfront Ventures, said he agrees with the philosophy espoused by Google’s Page, adding that it’s indicative of how today’s tech entrepreneurs think about using their money.

“The new generation is all about recycled capital,” said Suster. “It’s like the guys at Google said, would I rather give my money to a bureaucracy or give it to Elon Musk to help us figure out the next big problem in the world?”

Through a spokesman, Musk declined to be interviewed.

Not everyone agreed, however, that companies are necessarily the best way to solve pressing concerns.

“Sometimes we overestimate our own talent,” said Jamie Montgomery, managing director at Santa Monica’s March Capital Partners, one of the largest tech venture capital funds in Los Angeles.

“There are probably 1,500 homeless people in Santa Monica and half are in shelters. If Elon Musk wants to go to the moon, or someone else wants to change the face of communication, surely we can figure out how to house 750 people,” he said, pointing to local institutions such as the Ocean Park Community Center and Boys & Girls Club of Santa Monica, both in the heart of Silicon Beach, as worthy organizations in need of support.

David Bohnett, who was among the first wave of L.A. tech entrepreneurs to become fabulously wealthy when his GeoCities site was sold to Yahoo Inc. in 1999 for $3.7 billion, urged the county’s emerging tech elite to define the issues important to them and take action.

“The most effective giving is both community specific and organization specific,” Bohnett said in an email. “Los Angeles has a cadre of strong local leaders who welcome our newest tech entrepreneurs to help build and support the myriad social service and cultural arts institutions that help our city thrive.”

Because many of these wealthy individuals are quite young and still have their noses to the grindstone scaling their companies, their direct impact on the region might yet be years away.

That reality has not been lost on city officials.

“The public sector can reach massive amounts of people in a vastly different way than the private sector can – either nonprofit or for profit,” said Deidre Lind, acting president of Mayor’s Fund for Los Angeles, an independent nonprofit organization established by Mayor Eric Garcetti that solicits donations from corporate and individual donors to support civic improvement efforts. “It is the responsibility of folks like myself to build a culture of philanthropy for all of these new tech companies and the employees working with them.”

And while local business issues such as L.A.’s gross receipts tax have a direct impact on their companies, young tech entrepreneurs have not donated a lot of money to local political candidates in recent elections.

However, said veteran campaign strategist John Shallman, who’s worked for candidates such as former Los Angeles City Controller Wendy Gruel and ex-Mayor Richard Riordan, that could change soon as the industry keeps growing.

“It’s a sleeping giant,” said Shallman of tech money and influence in the L.A. political scene.

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