Venture capitalists boosted their investments in Los Angeles County in the second quarter, with innovative social media and e-commerce firms dominating the list of top deals.
The Silicon Beach area, centered in Santa Monica, continued to shine, grabbing 44% of total venture dollars invested in L.A. County, up from 38% in Q1.
Still, the L.A. region overall remained well behind Silicon Valley, New York City and Boston, in what was a red-hot quarter for venture financing nationwide.
L.A. County companies attracted $333 million in venture capital in the quarter ended June 30, up 16% from the second quarter of 2013, according to data firm CB Insights. The number of deals, however, totaled 35, down modestly from a year earlier and from the first quarter.
By contrast, venture capital investments nationwide totaled $13.88 billion in the latest quarter, up a blistering 98% from the year-earlier total and the highest since the second quarter of 2001.
For L.A., the jump in dollars invested, with fewer deals, meant the average deal size of each rose to $9.5 million from $4.8 million in the first quarter. “Venture investors were willing to write bigger checks for companies they liked,” said Billy O’Grady, head of City National’s Southern California Technology Group.
One of the biggest L.A. venture deals last quarter was a $40 million, second-round infusion for TeleSign Corp., a Marina del Rey-based provider of identity authentication for websites. The company expects $100 million in sales this year.
Another big second-quarter deal pumped $25 million in Series C funding into Tastemade, a two-year-old Santa Monica firm with a YouTube network of food programming. Tastemade users create and share their own food videos online. Venture investors led by Scripps Networks Interactive – which owns Food Network – provided the latest round of capital.
A third round of funding also went to Santa Monica-based WhisperText, which picked up $36 million last quarter from a group of VC firms including Chinese Internet giant Tencent. The popular Whisper app, launched in 2011, allows users to anonymously share secrets and gossip.
Among newer firms, one-year-old Washio got $10.5 million in initial (Series A) venture funding. The Santa Monica startup wants to disrupt the traditional laundry and dry cleaning industry by offering next-day service with pickup and delivery. Now in L.A., San Francisco and Washington, D.C., Washio is planning moves into other major cities.
While Silicon Beach startups like Washio will continue to attract funding, O’Grady said the next surprise may be a flurry of funding for fashion-related firms in L.A.’s burgeoning downtown.
EQUITY FINANCINGS FOR LOS ANGELES COUNTY VENTURE-BACKED COMPANIES
|2 Q 2014||1 Q 2014||4 Q 2013||3 Q 2013||2 Q 2013|
|Number of Financing Deals||35||36||32||25||40|
|Amount Invested ($M)||$332.6||$174.5||$270.5||$214.6||$288.3|
TOP 10 DEALS IN LOS ANGELES COUNTY
|COMPANY NAME||DESCRIPTION||CITY||ROUND TYPE||RAISED ($MM)||INVESTORS|
|Swagbucks||Reward platform provider||El Segundo||Growth Equity||$60||Technology Crossover Ventures|
|TeleSign||Mobile identity verification||Marina del Rey||Series B||$40||Adams Street Partners, Summit Partners, March Capital Partners|
|WhisperText||Developer of Whisper, a social community to share secrets||Santa Monica||Series C||$36||Lightspeed Venture Partners, Sequoia Capital, Shasta Ventures, Tencent, Thrive Capital|
|Tastemade||Digital media company centered around food||Santa Monica||Series C||$25||Redpoint Ventures, Liberty Media, Comcast Ventures, Scripps Networks, Raine Ventures|
|ImaginAb||Therapeutic management technology||Inglewood||Series B||$21||Novartis Venture Funds, Cycad Group, Merieux Developpement, Nextech Invest|
|Metacloud||Fully managed OpenStack-based private cloud solution provider||Pasadena||Series B||$15||Storm Ventures, Silicon Valley Bank, Canaan Partners, UMC Capital, Pelion Venture Partners, AME Cloud Ventures|
|Tradesy||P2P fashion marketplaces||Santa Monica||Series B||$13||Kleiner Perkins Caufield & Byers, Northgate Capital, Rincon Venture Partners, Riverwood Capital, Richard Branson|
|Washio||Mobile app for laundry pickup, cleaning, and delivery service||Santa Monica||Series A||$10.5||Canaan Partners, A-Grade, Troy Carter, AME Cloud Ventures, Sherpa Ventures, Pejman Mar Ventures|
|MiTu||Multi-channel YouTube network for Latino content||Culver City||Series A||$10||Upfront Ventures|
|UberMedia||Cross-screen mobile advertising platform||Pasadena||Series D||$8||Blue Chip Venture Company, Gordon Crawford|
*Equity financings include cash investments by professional venture capital firms, corporations, other private equity firms, and individuals into companies that have received at least one round of venture funding.
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