I love what I do. As a venture capitalist I support brilliant founders as they build companies that have the potential to reshape the world. It rarely comes as a surprise to anyone when I say I plan to be a VC for the rest of my career. However, it almost always surprises when I say that in holding that role I would never leave Los Angeles.
There seems to be an expectation that if I am serious about a successful career in venture capital, then I will move to the Bay Area. After all, it is the largest market by nearly every metric you could measure activity in a tech ecosystem. Tech is part of the fabric of their culture and there are so many people to learn from.
But I’m an investor. Investing is about getting behind an asset before its value is realized. Though LA’s emerging tech ecosystem isn’t much of a secret anymore, I still feel most people outside of LA don’t fully grasp what is taking place here.
LA is already one of the largest markets for venture investment and its growth still outpaces every other large US market. And while the city is most known for its media and entertainment brands, there is an emerging trend of entrepreneurs here setting out to solve difficult technical challenges as well. For example, the number of machine learning related investments here topped $300 million in 2017, which is almost double the prior year.
Los Angeles has more top engineering schools than any other city in the country and produces more engineering graduates. Historically, many of the most talented graduates took roles at large companies, while the most entrepreneurial move up north to the Bay Area.
I see a shift in the perspective first hand when I visit UCLA, USC, and CalTech and have conversations with upcoming graduates. They are excited about joining and creating startups in their own backyard. The impact of retaining such a large number of technical graduates can’t be overstated — they are going to build great companies here that employ people who will build more great companies here. We’ve really only just begun this virtuous cycle.
This momentum is enhanced by the experienced technical talent LA has in well established companies and research institutions in so many sectors — Aerospace, manufacturing, entertainment, biomedical sciences, advertising, etc. There will be so much value unlocked as the startup community better engages these industries experienced employees as advisors and founders.
What I love most about the talent here is its composition. Los Angeles has a very diverse entrepreneurial population, where the number of minority owned businesses actually outnumber those that aren’t. There is a lot value in being in a market with ethnic and socioeconomic diversity. In addition to creating opportunities to find founders with widely varying backgrounds and experiences, I find LA to be an amazing market to launch consumer products. I saw it with the early Snapchat expansion years ago and you can see it today with companies like Joymode. It gives founders the opportunity to see who their product resonates with most before deciding to scale the business.
Like most other tech hubs, we still have work to do in make our tech community more inclusive. Fortunately, LA has efforts from local investors, non profits, and government organizations all the way up to Mayor’s office who have created programs to ensure the next generation of entrepreneurs reflect the diverse demographics of the city. I’ve collaborated or volunteered with many of these organizations and can see that the seeds they planted are starting to bear fruit.
Investors from around the world have poured $21B of venture investment into LA tech since 2006. Over that same time period only $3B has been raised by LA based venture firms. This means the vast majority of investment here has been from outside capital, which creates an opportunity to step in and show the benefits of working with a strong local investor.
It is worth noting I’m an LA native. So while I’m proudly biased, I think a real objective look will convince most that betting my career on LA Tech is actually a pretty solid bet. The emerging talent, expertise, and diversity all combine to create a city that will produce innovative businesses for decades to come. The fact that it’s in the mid 70s in the middle of winter doesn’t hurt either.
So to all those outside of LA tech — Investors looking to put more dollars to work in Los Angeles, entrepreneurs thinking about starting businesses here, non profits looking to expand — feel free to reach out to me. I’d be happy to collaborate or connect you with others that could be helpful.
To those already here, please reach out as well. Let’s continue to build this city to reach its fullest potential. The more we can coordinate our efforts, the better we’ll be able to support the next generation of entrepreneurs.