Silicon Beach Vs Silicon Valley: Why Tech Startups are Choosing LA over San Francisco
Los Angeles, the home of Hollywood movie stars, the film industry, glorious California sunshine and most recently, a new thriving startup scene. LA has always been the world’s entertainment capital, a place of big career dreams and heartbreaks, where almost every waitress is a failed actress and every waiter has a screenplay. It can be an unforgiving place where the big Hollywood machine will chew you up and spit you out without so much as a call back from a casting director or a “better luck next time”.
However, despite its reputation as a mecha for the fame-crazed celebrity lifestyle, it might surprise you to learn that LA is beginning to gain some attention in the tech startup world. More and more new businesses are beginning to choose the City Of Angles as the place to base their operations rather than the traditional home of San Francisco.
For one thing, LA has all the raw ingredients that allow a startup to get off the ground and thrive. In addition to affordable real estate when compared to San Francisco, Silicon Beach also offers a high quality of life, great universities and impressive broadband infrastructure. Additionally, those small lean startups who love to operate out of coffee houses need not worry, there are plenty of award winning baristas dotted throughout the SoCal region. LA is the home of the pitch. Movies and television shows begin with a creative proposal to a studio executive, so pitches to Venture Capitalists don’t seem that much of a stretch.
Los Angeles boasts what Mashable call “the most tech-focused mayor in America“. Mayor Eric Garcetti was elected in May of this year and is a self-taught coder and self-proclaimed techy. He has recently attempted to tackle one of the LA’s biggest obstacles for startups and most notorious problems – traffic.
LA’s tech startup scene is known as Silicon Beach because Santa Monica is home to 35.9 percent of all Los Angeles startups. Entrepreneurs benefit from Santa Monica’s enviable outdoor lifestyle, great night life, plentiful restaurants and abundance of bars. There are also number of tech incubators and startup accelerators scattered throughout the region. Where Silicon Beach falls short of Silicon Valley however, is in the area of investment from local VCs (Venture Capitalists).
In 2012, a total of $2.08 billion in venture capital investment was made in Los Angeles, which falls some way short of the $10.86 billion of similar investments made in Silicon Valley for the same period. However, things are improving. According to a recent LA Startup Report the average LA-based VC investment in a startup is about $4 million, and those cash injections range anywhere from $25,000 to $30 million. The number of investments is gradually increasing and expected to reach a new record by the end of 2014.
Among the most noteworthy trends emerging from Silicon Beach right now are the number of digital content companies. This comes as no surprise at all considering this is the home of entertainment. Woven Digital is one of them and it represents such brands as Barstool and THEChive.
Mayor Garcetti is pushing hard for entrepreneurs to consider Silicon Beach, Los Angeles as the home for their next startup business. The lower costs in doing business in LA when compared to New York or San Francisco, coupled with the top local talent an great lifestyle are certainly incentives. But LA must reconcile its achilles heel of insufficient sources of finance for new startups. Los Angeles may be the City of Angels, but it certainly isn’t the City of Angel investors. At least not right now.