Greg Bettinelli bet his future on the continuing growth of the L.A. tech scene nearly three years ago. That’s when he decided to stop working for tech firms and start investing in them full time.
“I took this job because I was bullish on what was happening in L.A. and thought it was a great opportunity to be an investor and active member developing the tech community,” said Bettinelli, 43, a partner in Santa Monica venture capital firm Upfront Ventures, No. 1 on the Business Journal’s list of venture capital firms ranked by capital under management.
Greg Bettinelli, 43
Firm: Upfront Ventures
Rank: Venture capital, No. 1
Years at firm: 2.5
He credits local businesses such as Tinder, Space Exploration Technologies Corp. (SpaceX), Honest Co., Hulu, and, especially, Snapchat with enticing talent from Seattle, New York, and the Bay Area while pushing the envelope with commerce, content, and communication technology. As the local landscape has evolved, the same forces shaping those tech firms are changing how their investors and other deal makers do their jobs.
Whether they are pouring cash into doorbells that talk to your smartphone, scouring records for the next investment opportunity, or vetting a platform for mobile gamers to talk to each other, everyone is doing business in a more connected world.
One recent example is the Santa Monica smart doorbell maker Bot Home Automation Inc., better known as Ring. Upfront participated in the startup’s recent $61 million Series C round, led by San Francisco-based Kleiner Perkins Caufield & Byers, as well as its $28 million Series B funding round last year and a 2014 Series A. Upfront also led a $4 million seed round for downtown L.A. family ridesharing app HopSkipDrive in 2015 and participated in a recent Series A.
Bettinelli said half of Upfront’s investments are in Southern California companies.
“Interesting companies are being built with billions of dollars being deployed in Southern California each year,” he said. “Five years or six years ago, to think about L.A. having this much impact on tech innovation, a lot of people wouldn’t have believed you.”
Mountains of data
That also means that all deal makers have mountains of data at their fingertips and must be more resourceful to set themselves apart from competitors.
“You need to capture the acquirer’s interest with fewer words and creative, impactful messages and data,” noted Ed Bagdasarian, chief executive of Brentwood-based Intrepid Investment Bankers, which ranked No. 7 on the Business Journal’s list of investment banks. “You cannot out-Google your competitor.”
Some investment bankers have seen the pace of deal-making accelerate as entrepreneurs opt to sell rather than go public. In other instances, strategic buyers have aggressively pursued growth through acquisitions in a slow economy.
While some private equity players have seen high valuations and intense competition for assets, many venture capitalists are weathering withering valuations. Even so, three more VC firms crossed the $100 million mark in terms of assets this year, putting the number in Los Angeles County managing that heft at 19. In addition, some in that industry are seeing a low-valuation environment as a perfect time to go shopping.
Jim Andelman, managing director of Santa Monica-based Rincon Venture Partners, said 2016 is expected to be one of his firm’s most active years.
“The smartest time to be writing checks is when nobody else is,” Andelman noted. “We’re open for business and excited by the opportunities we’re seeing.”
Path to investing
If you need further proof of Bettinelli’s optimism about doing deals in Los Angeles, look no further than the Upfront partner’s license plate: “LONG LA.”
“I do a lot of consumer, and I have a strong focus on retail innovation, next-generation commerce-type companies,” he said.
A good example of an investment in Bettinelli’s wheelhouse – albeit not in an L.A. firm – is Upfront’s funding last year of San Francisco fashion resale marketplace thredUP. Upfront, which previously invested in the startup, joined an $81 million round in September led by Goldman Sachs. Bettinelli called it one of his most significant deals of the year
How Bettinelli established his investing niche is best understood by scanning his resume.
Prior to joining Upfront in 2013, he served as chief marketing officer of downtown L.A. online flash-sale site HauteLook Inc., which was bought by Nordstrom in 2011. Before that, he worked as a business development executive at Live Nation Worldwide Inc. of Beverly Hills, StubHub and San Jose’s eBay Inc.
In an industry that runs on relationships and reputation, Bettinelli said the connections he formed at those companies have helped him find investments as a venture capitalist. The entrepreneurs in Upfront’s portfolio also introduce him to people in their own circles who think they have the next great unicorn on their hands. But even with his great connections, Bettinelli said accessing deal flow takes a lot of work.
“This isn’t a business where you sit on your hands and hope people knock on your door,” he said.
And with tech firms routinely making national headlines these days, everyone thinks they’re an expert, Bettinelli explained.
“When you’re at dinner, people want to talk about Uber and their experiences with innovation,” he said. “They’re probably not talking about a drill bit manufacturer based in Des Moines, (Iowa).”
But that’s OK with him. He still gets excited by the thrill of the chase.
“Being a partner in a venture capital firm is like being a head coach in the NFL,” he said. “Jobs don’t open up often and everyone thinks they can do a better job than you.”
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