Los Angeles is known for its sunny beaches, Hollywood glamor, and entertainment industry, but the city is also making a name for itself as a hub for open innovation. With a thriving technology ecosystem, access to talent, investment capital, and a supportive culture for entrepreneurship, Los Angeles is positioning itself as a leading destination for companies looking to drive innovation.
In the early nineties Silicon Valley was the only place to make big money. The big ideas, the big volumes were found in a few dozens of miles between San Francisco and San Jose. LA people and business were much more advertising driven (caring more about direct response and less about UX).
Even so, LA was the place where in 1996 Bill Gross founded the IdeaLab and created the “incubator model” – the longest running technology incubator. And while Silicon Valley dominated the infrastructure phase of the internet: building the road, bridges and airport required for trade (that is servers, switches, routers, databases, browsers, search), once the technological infrastructure (personal computing, telecommunications, open source software, scalable computing & storage) became more mature, the people needed were people at “application level”.
A City of talents
This when LA started to be the perfect place to serve the innovation arena with talents from different and diverse backgrounds. The city’s diverse population and thriving immigrant community make it an attractive destination for international talent, who bring with them new ideas and perspectives that can drive innovation. This is the home of what Brendan Wallace, CEO and co-founder of Fifth Wall (Venice Beach-based firm that primarily participates in Series A and B rounds for startups) calls “inclusive innovation” .
Hollywood and beyond
Los Angeles is home to a growing and diverse technology ecosystem. Being the home of Hollywood and the entertainment industry, it’s no surprise that there are many startups focused on media and entertainment. These include companies involved in content creation, distribution, and marketing, as well as those developing new technologies for the entertainment industry. Los Angeles is also home to several e-commerce and retail startups, ranging from fashion and beauty to food and beverage. Many of these companies are leveraging new technologies to create innovative products and shopping experiences. Another strong vertical in Los Angeles is Healthcare and Biotech with a particular focus on digital health and wellness.
The city features several leading universities, including the University of California, Los Angeles (UCLA), and the University of Southern California (USC), which produce a steady stream of highly skilled professionals who are eager to work with companies in the tech industry. Greater LA graduates more top engineers than anywhere else in the country (top engineering schools: UCSB, LMU-LA, USC Viterbi, UCLA Engineering, CalTech, UCIrvine – University of California, CalPoly Pomona, HarveyMudd College, UC Riverside, UC San Diego Jacobs School of Engineering).
A perfect ecosystem for investors
Los Angeles is also a hub for venture capital, with many investment firms and angel investors based in the city. For many years seed funds have defined Los Angeles’ venture ecosystem: LA has done great at founding early stage innovation (seed + series A). In the past, when companies were looking for larger fundraises they needed to turn to Silicon Valley to find the capital. However, the number of Los Angeles based seed funds—those with less than $50 million in commitments—have dropped as a share of total fundraising in recent years, while new funds capable of making larger investments are gaining ground. LA is developing late-stage local funding (series b, late stage) and the region is starting to reach the point where a local company can complete its entire fundraising journey from seed through late stage pre-IPO rounds entirely with local capital.
Some of the most well-known venture capital firms in Los Angeles include Greycroft, Upfront Ventures, Amplify Partners, and Mucker Capital. In addition to venture capital, there are also several angel investor groups, such as the Pasadena Angels and Tech Coast Angels, that invest in early-stage startups. There are also a number of startup accelerators and incubators in Los Angeles that provide funding and mentorship to startups, such as Launchpad LA, Amplify LA, and the USC Viterbi Startup Garage.
A strategic location and a supportive culture for entrepreneurship
LA’s secret sauce is a combination of the above plus a pleasant and balanced lifestyle (LA is much more affordable than SF and NYC) in a very populous city (greater LA is number 3 in the US with 19M inhabitants) blessed with clear weather and mild temperatures.
This supportive environment helps to foster innovation and provides a fertile ground for open innovation initiatives to take root and grow. The city also has a thriving startup community, with a large number of networking events, meetups, and other opportunities for entrepreneurs to connect and collaborate.
In conclusion, the open innovation ecosystem in Los Angeles is thriving, driven by a diverse and growing technology ecosystem, access to talent, investment capital, a strategic location, and a supportive culture for entrepreneurship. With its many resources and opportunities, Los Angeles is positioning itself as a leading destination for companies looking to drive innovation and stay ahead of the curve.