Senior Vice President
Southwest Market Manager
City National Technology Group
(650) 812-8311
Billy.OGrady@cnb.com

 

vc report

 

Los Angeles County saw a new high in venture capital funding in the fourth quarter of 2014, inflated by a huge cash infusion for ephemeral-messaging application Snapchat.

Venture investors put a record $765 million to work in 28 L.A.-area companies in the quarter ended Dec. 31, according to data firm CB Insights.

Venice, Calif.-based Snapchat, however, accounted for $485.6 million of the latest total, or 64%. It was the three-year-old firm’s fourth financing round and one of the largest in venture capital history.

Snapchat, whose technology allows users to share photos and other content that disappears after a set period of time, has exploded in popularity. Venture investors led by Kleiner, Perkins are betting that Snapchat’s app will eventually produce a bonanza via advertising or pay services.

But while Snapchat reaped a funding windfall last quarter, money was relatively scarce for other startups in “Silicon Beach,” which encompasses Santa Monica, Venice and Marina del Rey. Apart from Snapchat, just seven Silicon Beach companies shared $67.4 million in financing, compared with 13 deals worth $184.2 million in the summer quarter and 13 deals worth $92.3 million in the fourth quarter of 2013.

For all of L.A. County, funding totaled $280 million last quarter (excluding Snapchat), down from $342 million in the third quarter though up slightly from $270.5 million in the final quarter of 2013.

Billy O’Grady, head of City National’s Southern California Technology Group, said the fourth-quarter slowdown for L.A. was likely a fluke of timing. Based on deals already announced in the new year, “The first quarter will be quite strong,” he said.

He noted that L.A. continues to attract capital for companies generating new online entertainment. “Content is going to be king here in L.A.,” O’Grady said. In fact, four of the top 10 L.A. deals last quarter were first-round (Series A) fundings for content-related firms.

The third-largest L.A. deal was a $35 million Series A financing for Scopely, a Culver City developer of touchscreen mobile games that aims to become a gaming network, similar to the role major studios play in TV and film. Also in Culver City, Woven Digital drew $18 million in Series A venture money from investors including former NBA players Baron Davis and Jermaine O’Neal. Woven’s online entertainment sites include BroBible and UPROXX.

The second-biggest L.A. funding also went to a Culver City firm: NantMobile, a project of billionaire Patrick Soon-Shiong. The company got $50 million in Series C funding to continue developing its sensory browser, which recognizes physical objects (say, a store name) and instantly links to information about the subject.

EQUITY FINANCINGS FOR LOS ANGELES COUNTY VENTURE-BACKED COMPANIES*

  4 Q 2014 3 Q 2014 2 Q 2014 1 Q 2014 4 Q 2013
Number of Financing Deals 28 28 35  36  32 
Amount Invested ($MM) $764.6 $341.6 $332.6 $174.5 $270.5

TOP 10 DEALS IN LOS ANGELES COUNTY

COMPANY NAME DESCRIPTION CITY ROUND TYPE RAISED ($MM) INVESTORS
Snapchat Ephemeral messaging application Venice Series D $485.6 Kleiner Perkins Caufield & Byers, Benchmark Capital, Yahoo
NantMobile Develops a “sensory browser” to identify real-world objects  Culver City Series C $50.0 Verizon Ventures
Scopely Mobile gaming developer  Culver City Series A $35.0 Highland Capital Partners, Greycroft Partners, The Chernin Group, Sands Capital, Evolution Media Growth Partners, Knoll Ventures
EcoSense Lighting Solid-state lighting solution provider Los Angeles Series D $25.2 Bain Capital Ventures, Flagship Ventures
DogVacay Online marketplace connecting dog owners in need of pet-care services Santa Monica Series B - II $25.0 Benchmark Capital, Foundation Capital, First Round Capital, DAG Ventures, GSV Capital, OMERS Ventures, Science Media
Whipclip Develops an app that allows users to create clips of TV moments to share with friends Santa Monica Series A $20.0 Greycroft Partners, Metamorphic Ventures, Institutional Venture Partners, Scooter Braun, Gordon Crawford, William Morris Endeavor, Raine Ventures, Ron Zuckerman, Peter Guber, Ziffren Brittenham, Steve Bornstein, Thom Weisel
ScoreBig Online sports, concert, and theater events ticket platform Los Angeles Series D $18.0 US Venture Partners, Hearst Ventures
Woven Digital Male-focused online and mobile news, entertainment, and lifestyle publisher Culver City Series A $18.0 Institutional Venture Partners, Baron Davis, Mike Lazerow, Advancit Capital, Chris DeWolfe, Jermaine O’Neal, United Talent Agency
FastPay Provider of liquidity and financial workflow solutions to the digital media industry Beverly Hills Series C $15.0 Oak HC/FT Partners
Pluto TV Online TV platform that aggregates videos across the Web for themed channels Los Angeles Series A $13.0 US Venture Partners, Chicago Ventures, Great Oaks Venture Capital, Luminari Capital, UTA Ventures

 

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.