LA showed up in 2012, and there’s a lot of promise in the air for the whole community. In particular there are a couple of stand out narratives taking place that have the potential for this community to have international impact in 2013:
Snapchat will become LA’s high growth rocket ship
Snapchat came out of nowhere last year and has already successfully fended off big, bad, corporate giant Facebook trying to clone their app. They’ve found something that people really want in expiring photos and it’s taking off. I think they really have a fighting chance at becoming LA’s Instagram – hyper fast growth and a household name. Its a great opportunity and they are poised to leave an impact on the world and LA as a result.
Factual will be recognized as a massive win & generate a wave of startups
If 2012 was “Airbnb for X”, look for “Factual for X” in the 2013 pitch decks. Having used the Factual APIs in multiple technologies (including Gonnabe), I love the service as a developer. And Factual is leading the way with the API as a Service business model. Its got all the pieces to become a huge win:
- Developer brand recognition
- Continued innovation in the new API (and Algorithms) as a Service model
- Product with Lock In (you build on an API and you’re locked in, which isn’t a bad thing when the company is awesome as Factual)
- Widely applicable (a local component is almost as necessary as a social component these days in mobile tech)
Look for more API as a Service startups that solve tough developer data & algorithm problems. The Factual model is there, and it’s just waiting for replication in new verticals.
The Series A Crunch will hit hard in LA
The Series A Crunch is real. I was in a startup during RIP The Good Times in 2008, and the impact of a crunch is real. Your headcount plans change, revenue becomes priority over product, and “grow at all costs” becomes “grow and watch costs”. And all signs show this Series A crunch thing hitting LA hard.
When I first moved back to LA in mid 2011, I went to an event at CalTech about local accelerators. There was a panel of the usual suspects, and a good crowd. What told me to worry was that every single question for the panel was about “starting an accelerator,” not joining one. It was obviously a bubble for accelerators (I don’t think a mature ecosystem like Silicon Valley could support as many accelerators as there are in LA), however they don’t come & go as fast as companies. The result is lots and LOTS of company’s being accelerated into an ecosystem that is lacking Venture Capital.
High demand and low supply of capital is great news for VC’s (they get to invest in the cream of the crop!), not so much for fledgling companies.
America is undergoing an entrepreneurship revolution where more & more people need to become entrepreneurs, so there’s an explosion of new companies everywhere. As result, the Series A crunch is everywhere too. There’s just not enough Venture Capital yet.
LA’s entrepreneurial boom has been amplified by accelerators and the excitement about the work-in-progress transition of LA’s economy to having a major tech component & tech community. So we’re gonna feel the A crunch more than other places. A generation of startups will fail. Entrepreneurs will hang up their gloves (for now), and technical cofounders will have to go back to getting paid.
Good news is that all the skills & talents these entrepeneurs have learned will get merged into the Startups they join as engineers, directors of marketing, and UX designers. Making LA’s top tier startups that much stronger. 2013 will be a year of consolidation for some (don’t sweat it when you know it’s time – failing is a badge of experience in the land of startups), and for some, they’ll realize that in the blur of all the startups, amidst killer competition, they survived and are ready to thrive.
And those will be the companies to watch (and to join) in 2013.
LA Tech will continue on its path to rival NY Tech
Despite the Series A crunch, LA Tech will continue to boom. Although, we’re due for a curbing of new companies, 2013 will bring some big stories. Snapchat & Factual are 2 of them, however there’s companies the press isn’t talking about on the launchpad prep’d for takeoff inside of co-working spaces, accelerators, and parents’ houses.
I’m excited who ends up defining the LA Tech Landscape in 2013, because it’ll be a big year for LA Tech as we grow from a community into a major Tech City that rivals New York Tech.
(There’s a few other startups I’m working with that I think will have a good 2k13, but can’t talk about those. You know bias & all…)