Southern California Startup Scene – Perspectives from Silicon Valley (Part 1)

January 22, 2014 at 1:38 pm Leave a comment

I grew up in LA, but I never imagined Southern California having a tech startup scene. Well, perhaps an entertainment or film project, but not a tech startup. And yet, after all these years, I am drawn back to LA due to its upward trajectory of becoming one of the best places for tech startups. As a Silicon Valley veteran, I am intrigued and so should you if you have not noticed.

So what is so attractive about LA (or more broadly Southern California) for tech startups? For starters, the tech talent pool is plentiful – young and ambitious talent. With top universities (CalTech, USC and UCLA) in its backyard, Southern California rivals those from Silicon Valley. I was particularly surprised to discover that there are more IT graduates from Southern California than from Silicon Valley.

Southern California has created a fertile start-up environment

And the infrastructure and ecosystem are all built up now. With a array of specialized local incubators, and accelerators from idealab in Pasadena to CrossCampus in Santa Monica, startup founders have a growing number of co-existing places to find seed investment, mentorship and other resources to launch their ideas. In Silicon Beach (current epicenter of LA startup scene), there are 15 different such thriving places within a 12 block area. Even the local government is joining the party. Recently elected LA Mayor, Eric Garcetti, is a proclaimed tech geek and is known as being “the most tech-focused mayor in America”. Garcetti is focused on tacking one of the most pressing issues for LA – traffic. More on the details in Part 2.

Fewer VCs but plenty of capital

Sure, the number of prominent local VCs can’t match that of Silicon Valley, but there are over 20 active institutional and corporate VCs. And the top Silicon Valley VC firms such as KPCB and Lightspeed Venture Partners have strong connections into the entire LA tech scene. Physical proximity does make an impact in enabling active engagements from those Silicon Valley veterans. After all, it’s an easy one-hour flight. I have heard that some of the VCs use Surf Air, all you can fly between SF and LA.

LA is now #3 and surging

With talent, university, infrastructure, ecosystems and investors in place and growing, Southern California is starting to rack up some major wins such as SnapChat. In a nutshell, LA now has more similarities than differences when compared to its Silicon Valley big brother. Most of the critical elements are now real and LA is poised to become one of the elite tech startup locations in the world. As highly publicized, LA is now ranked #3 “Startup Ecosystem” in the world, behind Silicon Valley and Tel Aviv. And all indications point to LA deals surpassing East Coast in the US, right behind Silicon Valley in the next few years.

But this little brother has some unique characteristics that should not be overlooked. As such, LA is indeed different, trying to create its own identity rather than living up to the Silicon Valley big brother. Maybe that’s a good thing. Read more in Part 2.

Robert Lee is a Managing Director at The Brenner Group, one of Silicon Valley’s premier professional services firms. He has more than 25 years of leadership in venture capital, startups, strategy consulting, global operations and business development. Robert manages the firm’s overall corporate strategy and development.
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