2017 startup funding success in Los Angeles
2017 is already a monumental year for Los Angeles startup funding. LA startups raised over $350 million in May, $355 million in June, and almost 1 billion from January through April. Los Angeles based venture funds have had a great year as well. Upfront Ventures recently closed their sixth funding round of $400 million in an unprecedented fast track of two and a half months from launch to close. This round represents about a 33% increase over their previous fund.
Crosscut Ventures is currently raising a $125 million fund, almost doubling the size of their previous fund. Greycroft Partners announced a $250 million fund this year, a 25% increase from their last fund. So we have seen both an increase in the amount of startup funding and an increase in capital flow to Los Angeles venture funds.
Historic Startup and VC funding growth
In 2016, Los Angeles startups raised $4.2 billion in funding according to Built in Los Angeles’ 2016 Startup Report. This was a 38% increase over 2015, and the largest funding year for Los Angeles based firms. Over 200 companies successfully closed funding rounds, and at least 200 raised more than $1 million. In 2017, we have already seen almost $100 million in funding for 7 startups announced in one week. That announcement congratulated numerous companies including On-demand storage service Clutter, cloud security company Obsidian Security, insurance tech startup Sure, IoT company SmartLabs, baby food subscription company Yumi, male fertility company Episona, and a rideshare service for women, by women See Jane Go.
Why is this good for Los Angeles?
For the past several years, Los Angeles has been quietly transitioning from a city known for entertainment and fueled by aerospace to one that also embraces its identity as a rising tech hub. We have always had a wealth of talent, and we now have a larger and more diverse set of career paths. LA is also an amalgamation of close knit communities. This is important because as we amass more capital, we have the grave responsibility to spend that money wisely. It is up to us as investors and advisors to back solid products and empower innovative entrepreneurs who are solving large scale environmental or economic problems.
Who benefits from startup funding growth?
Ideally, job creation will benefit a large swath of the community. Local universities will see more options for their graduates to pursue. More jobs also means more potential revenue to fund infrastructure projects around Los Angeles. Finally, as today’s company leaders find successful exits for their companies, they can invest some of that fortune in tomorrow’s entrepreneurs. There are numerous problems to solve, and Los Angeles entrepreneurs are proving that they are ready to face those challenges.