The flow of venture capital dollars into L.A.-area companies fell to $3.49 billion last year, off more than 16 percent from the year-earlier high of $4.17 billion, according to a report by Dow Jones Venture Source.
That funding decline, however, was smaller than the nationwide drop in venture capital investment, which fell to $52.4 billion last year, 32 percent below 2015’s $77.3 billion.
“The numbers are pretty consistent with 2013 and 2014; 2015 was a spike year,” said Jamie Montgomery, managing director of Santa Monica venture firm March Capital Partners. “The spike was driven by a large number of unicorns nationally. There were 46 new unicorns in 2015 versus 16 new unicorns in 2016.”
Despite lower numbers, the L.A. venture market appears to be healthy, he noted.
In particular, Los Angeles appears poised to birth and nourish enterprise software firms in the coming years, said Montgomery, noting a large number of engineers graduate from local institutions, such as USC, UCLA, Caltech, and Harvey Mudd.
“I think we will see more Series A and Series B investments in the enterprise IT space,” he said, adding that notable local enterprise software companies include cybersecurity firm Signal Sciences of Venice, marketing software firm Retention Science of Santa Monica, and user authentication firm TeleSign of Marina del Rey.
Beyond increased enterprise software investments, the largest and most impactful financing event this year is likely to be the anticipated $25 billion initial public offering of Snap Inc., parent of Snapchat.
“That’s going to return a lot of capital locally and that will skew these numbers in Southern California,” he said.
User Insights
Some 36 million unique users visit Ranker.com every month to cast their vote on everything from best movies to best speeches in presidential history. While viewing the results of user votes is entertaining for website visitors, it’s also something that movie and TV studios, and music labels are willing to pay for.
By tracking the votes of users to its website, Ranker is able to cross-correlate what those users, and users with a similar demographic background, might be interested in. The Miracle Mile company launched a product in November called Ranker Insights, which allows third parties to purchase that information.
“We can correlate (that) people who like X also like Z,” said Glenn Walker, Ranker’s chief operating officer.
One client, Universal Music, used Ranker’s findings to more cheaply market Frank Sinatra’s music to fans of fellow Rat Pack member Sammy Davis Jr., said Walker.
“It is quite often more cost-effective to target a related audience,” he said, noting that buying advertising against “Frank Sinatra” online is more expensive.
As it turns, out Davis fans are more likely to be hard core and willing customers of the crooner genre, while everyone likes Sinatra.
Tech Jobs
When the L.A. Tech Job Fair kicks off on Jan. 26 in downtown, the Los Angeles Mayor’s Office and Jason Nazar, an entrepreneur in residence with the city, are hoping it will be the biggest tech job fair the city has ever seen.
“This is the first time ever that every major tech company will be together at one summit,” said Nazar, who is also chief executive of Santa Monica salary comparison website Comparably.
Hosted at co-working space the Reef on Broadway and Washington Boulevard, Nazar said more than 4,500 people have registered for the event and more than 140 tech companies have signed up to attend. Those scheduled to participate include dating app Tinder, human resource company Cornerstone OnDemand, and online legal document provider LegalZoom. The event is free for job seekers; a table for hiring companies costs $100.
The L.A. Tech Job Fair is the brainchild of Nazar, who has organized the event as part of his responsibilities as the city’s entrepreneur in residence, a one-year, unpaid business advisery position to Mayor Eric Garcetti. The city’s other entrepreneur in residence is Eva Ho, former general partner at Susa Ventures, a venture capital firm in the Fairfax District.
In addition to hosting meet-and-greet opportunities for hiring companies and job seekers, the event will have a number of career development seminars and a keynote address from Garcetti.
“What we are trying to do is to get people noticed by these companies without a resume,” he said. “The goal is really to help as many people to get access to the top tech companies and get hired.”
Staff reporter Garrett Reim can be reached at [email protected] or (323) 549-5225, ext. 232.
