While the Startup Genome is a young project, and this report is only one data point, L.A.’s upward trend from #6 on the previous ranking gels with what many of us here in the Southland can attest to anecdotally: the L.A. startup ecosystem has momentum, but it’s certainly still an underdog.
Strengths: Company Performance & Talent
Simply put, L.A. is home to highly talented entrepreneurs who are focused and dedicated on building real businesses tackling large markets.
LA has a great potential for growth by differentiating itself from SV. Objectives for investors might include helping startups get more help from mentors and increasing their risk tolerance by funding more younger entrepreneurs.
– Amir Banifatemi, Investor & Founder K5launch
Los Angeles investors are not as active as those in Silicon Valley, but the overall ecosystem is comprehensive, with a “healthy mix of capital sources.”
LA startups are more 16% less likely to raise VC than startups in Silicon Valley and more likely to be self- funded or raise money from friends and family.
Biggest weakness relative to SV: Support
The geographic sprawl, distractions, and overshadowing entertainment industry have not left L.A. as connected and supportive as Silicon Valley.
Out of the all of LA’s rankings its support ranking (e.g. funding sources, mentors & service providers) is the worst at place 13. For example the amount of mentors available to startups in LA is 27% less than in SV.
We’ll see whether the proliferation of accelerators and incubators in L.A. will have a positive effect. An active and connected community of successful, local entrepreneurs is likely the best bet to give Los Angeles startups a leg up.
LA Tech Rise itself was founded to connect and reconnect the minds and efforts of the LA startup community, and to encourage everyone to stay involved.
LA is an entertainment mecca that also has a lot of tech start ups because it’s a big city on the west coast of the US. It’s a nice environment to live, but it has a lot of distractions and is very dispersed. I think it’s much harder to do any large scale start up in LA. I also think that LA people do not feel part of a community as much as therefore don’t help each other as much.
– Chris Grey, Founder and CFO of Caplinked
Of course, the performance of any ecosystem is really up the individual companies located there. Still, we can either work together to keep the momentum strong and try to close the gap between L.A. and S.V., or we risk being overtaken by the many other strengthening communities across the countries and the globe.
Consistently keeping NYC at bay may be as important as competing with Silicon Valley to improving the reputation and investment opportunity for our startup ecosystem.
What are your thoughts? Let’s keep the discussion going here or on Facebook.