Friday, November 6, 2015

Venture Capital Soars In LA

LOS ANGELES—Venture capital is flooding into Los Angeles. By mid-year, $1.2 billion in venture capital flooded to Los Angeles-based tech firms. In fact, L.A. is home to several “unicorn” tech companies—a name given to private companies that have a valuation of $1 billion or higher based on fundraising—including SnapchatSpaceXTinderand Just Fab. There are only 138 so-called unicorn companies in the world, and seven are based in Los Angeles. These companies are becoming an important part of the office landscape and are fueling the creative officemarket. To find out why unicorn companies are coming to Los Angeles, where the $1.2 billion in capital is flooding and the outlook ahead, we sat down with Devon Parry, a senior research analyst at JLL, for an exclusive interview.
GlobeSt.com: What is driving the growth of unicorn companies in Los Angeles?
Devon Parry: The combination of a strong venture capital community, talented workforce and deep roots in the entertainment community, are contributing to a strong infrastructure for innovation which when combined make Los Angeles an ideal place for thriving, young, innovative companies to call home.
GlobeSt.com: What is driving the growth of tech companies in Los Angeles, especially when Northern California has historically been their home base?
Parry: The local technology sector in Los Angeles is tied heavily to the entertainment and media industry. The two industries are continuing to converge, as the appetite for content and new media on mobile devices and other channels increases. We have also seen an emphasis on firms with a mindset geared toward content creation.  Los Angeles is uniquely positioned to draw from top creative and media talent. The temperate climate doesn’t hurt either.
GlobeSt.com: Where is this capital flowing?
Parry: Much of this year’s venture capital funding came from Venice based Snapchat, accounting for $1.02B of the total $1.2B in investment. There is speculation that Snapchat will IPO in 2015 or 2016, and if so, venture capitalists will have to direct their dollars elsewhere.
GlobeSt.com: With $1.2B in venture capital at mid-year, where do you anticipate venture capital funding at yearend? What about next year?
Parry: Venture capital funding is expected to rise as Silicon Beach continues to be a place of home grown, innovative businesses. Additionally, Google made a large land purchase in Playa Vista earlier this year, with entitlements to build up to 900,000 square feet of office product. With Google establishing a larger footprint in the area, this will likely encourage the clustering of more start-up firms.

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