Senior Vice President
Southwest Market Manager
City National Technology Group
Los Angeles County last quarter had its second-largest venture capital inflow of the past few years, a funding wave that will leave more startups in strong shape to expand and hire.
And in a shift, just three deals in the usually hot Silicon Beach area of Santa Monica and vicinity made the L.A. region's top-10 venture investment list. The rest were from elsewhere in the county, including Pasadena, Glendale and downtown Los Angeles.
L.A. County firms overall received $386 million in venture capital funding last quarter, up from $381 million a year earlier, according to data firm CB Insights. The number of deals slipped 5 percent from a year earlier, to 41, but was up from 28 in the slow first quarter.
The Silicon Beach area had the single largest deal of the quarter: a $75 million Series D funding for Venice-based Dollar Shave Club, a 4-year-old membership club for grooming supplies.
But seven of the nine other top-10 deals were outside Silicon Beach. The second-biggest deal was a $52 million Series E investment in Pasadena-based Calhoun Vision. The company, founded in 1997, has developed an implantable eye lens for cataract patients that can be easily adjusted to correct for typical post-surgery vision problems. The lens is in its final U.S. test phases.
Also on the top-10 list was an $18 million Series A infusion for ServiceTitan of Glendale. The 2-year-old company provides home-based service firms, such as those run by plumbers and electricians, with cloud software to manage their businesses.
In downtown L.A., clothing maker Reformation raised $12 million in Series A funding. The company locally manufactures eco-friendly, high-fashion apparel using recycled fabric. And in West L.A., AssetAvenue got an $11 million Series A infusion. The firm is a new online lender focused on commercial real estate.
Billy O'Grady, Southwest market manager for City National’s Technology Group, said the variety of companies and their locations demonstrates how L.A. County "isn't dependent on any one single industry or region" for VC-worthy ideas. "It's really impressive when you see the diversity."
And though the cost of office space in Santa Monica and vicinity may hinder some startups there, O'Grady said there is "plenty of capacity as you move down the coast, such as to El Segundo, Marina Del Rey or Manhattan Beach."
In any case, he noted that Silicon Beach bounced back from $88 million in funding over nine deals in the first quarter to $141 million over 13 deals in the second quarter.
One recent Santa Monica startup is Enervee, an online service that provides energy-efficiency scores for thousands of appliances and other power-using devices. The company raised $3.7 million in Series A funding last quarter. Also in Santa Monica, 1-year-old Little Labs raised $3 million in seed capital. The company creates applications for smartwatches, including the Apple Watch.
EQUITY FINANCINGS FOR LOS ANGELES COUNTY VENTURE-BACKED COMPANIES
|2 Q 2015||1 Q 2014||4 Q 2014||3 Q 2014||2 Q 2014||2014 Total|
|Number of Financing Deals||41||28||32||32||43||145|
|Amount Invested ($MM)||$386.4||$220.3||$755.7||$312.7||$381.3||$1,606.9|
TOP 10 DEALS IN LOS ANGELES COUNTY
|COMPANY NAME||DESCRIPTION||CITY||ROUND TYPE||RAISED ($MM)||INVESTORS|
|Dollar Shave Club||Online membership club for men’s grooming products||Venice||Series D||$75||Venrock, Technology Crossover Ventures, Forerunner Ventures, Dragoneer Investment Group|
|Calhoun Vision||Provider of adjustable intraocular lens technology||Pasadena||Series E||$52||Longitude Capital, RA Capital Management, H.I.G. BioVentures, Balance Point Capital Partners|
|FreedomPop||Wireless Internet provider committed to delivering free 4G Internet||Los Angeles||Series C||$30||Partech Ventures, Mangrove Capital Partners, DCM Ventures|
|GumGum||Advertising platform that utilizes in-image advertising||Santa Monica||Series C||$26||New Enterprise Associates, First Round Capital, Upfront Ventures, Morgan Stanley Expansion Capital|
|Cynvenio Biosystems||Developing the LiquidBiopsy platform, which focuses on cell isolation technology for cancer diagnostics||Westlake Village||Series B-V||$25.5||Livzon Mabpharm, Greenwoods Asset Management, Syno Capital|
|Nativo||Advertising technology platform for publishers and brand advertisers to scale, automate and measure native ads||El Segundo||Series B||$20||Bertelsmann Digital Media Investments, Greycroft Partners, e.ventures, Signia Venture Partners, RezVen Partners, Advance Vixeid Partners|
|ServiceTitan||Mobile platform that helps home service companies streamline operations||Glendale||Series A||$18||Bessemer Venture Partners, I2BF Global Ventures, Mucker Capital, AMENALAV Group|
|Mojix||Provider of wide-area sensor networks for retail, oil and gas, and other sectors||Los Angeles||Series D||$14||Oak Investment Partners, OMERS Ventures, Mercury Partners|
|Reformation||Direct-to-consumer limited-edition clothing manufacturing||Los Angeles||Series A||$12||Stripes Group, Andrew Rosen, 14W, Karlie Kloss, Miroslava Duma|
|AssetAvenue||Online peer-to-peer lending platform||Los Angeles||Series A||$11||DCM Ventures, Matrix Partners, NetEase, Ron Suber|
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|The content of Venture Capital Report is compiled from data and sources believed to be reliable, but is not guaranteed as to accuracy or completeness. Opinions expressed are those of the authors or the interviewees and are not necessarily the opinions of City National Bank, member FDIC. This publication is intended to be a source of general information regarding subject matters of interest to our clients. The effectiveness of the advice or suggestions presented, if any, will depend on the reader’s situation and are for the reader to determine. If investments are discussed, the discussion should not be considered or relied upon as specific investment advice directed to the reader’s specific investment objectives, nor should any discussion of specific securities be taken as a solicitation or recommendation for any reader to buy or sell such securities. City National Bank (and its clients or associated persons) may at times have positions in securities and investments discussed from time to time in this publication and may make additional purchases or sales inconsistent with the discussion. City National Bank, as a matter of policy, does not give tax, accounting, regulatory or legal advice. Rules and regulations in the areas of law, tax and accounting are subject to change and open to varying interpretations. The reader is encouraged to consult his or her own tax, accounting or legal adviser.