L.A.’s startup ecosystem: an underdog with momentum

A few weeks ago the Startup Genome released it’s 2012 Startup Ecosystem Report, ranking L.A. number 3, behind Silicon Valley and Tel Aviv, and ahead of Seattle, NYC, and Boston.

Startup Ecosystem Index 2012

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

Improving: Funding

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.

4 comments

  1. Pingback: LA Showed Up in 2012. Now What? | LA Tech Rise
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  3. Hey Zach, you wrote:

    “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’s threatening about NYC? And how do you keep arguably the most important Biz center in the US ‘at bay’?

  4. Zach Sekar · January 25, 2013

    NYC as a startup community is not the same as NYC “the most important Biz center”. The same is true for LA tech and “Hollywood”. Maintaining a reputation of relevance and progress is what will help the Los Angeles startup community avoid being overshadowed by nearby SV and highly visible NYC.

    Only recently have traction and results in LA been able to garner a similar level kind of attention as doing the same in the Bay area or Manhattan. If that doesn’t stick, LA will be a less attractive home base for money, talent, and press.

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