By Sean Spear
Kudos to the creators of La La Land, one of 2016’s best movies that won widespread acclaim and six Academy Awards. There’s a duality to the film title: It refers to the fact that this musical romantic comedy was set in Los Angeles; it also plays on the fact that “La La Land” is an idiom for being out of touch with reality. But while L.A. is unmistakably the entertainment capital of the world, there is also a new reality that has come to fruition—the city has become a high-tech mecca that’s in the middle of an exciting business boom.
Lights, camera—what happened? You can see the growth year after year all over town, especially in the Westside area. Silicon Beach, for example, is home to the headquarters of Snapchat, Activision and Hulu, and also has offices for Google, Yahoo!, YouTube, BuzzFeed, Facebook, AOL, Electronic Arts, EdgeCast Networks, Myspace and more. What spurred this tech boom in the City of Angels?
Follow the money, and you’ll find the reason. In 2016, L.A. tech companies raised $4.2 billion dollars, which is 38 percent higher than 2015, and the capital was dispersed between 231 different tech startups. Exits accounted for nearly $3.5 billion dollars and three companies going public – NantHealt ($1.65 billion valuation), The Trade Desk ($1.1 billion valuation), and Everbridge ($331 million valuation).
Where is the money going?
- $1.58 billion was invested into consumer web and mobile companies
- $560 million was invested into B2B software
- $357 million was invested in e-commerce
- $357 million was invested in fintech (financial technologies)
- $223 million was invested in adtech (advertising technologies)
- $200 million was invested in accounting startups
- $213 million was invested in AR/VR (augmented reality and virtual reality)
- $150 million was invested in edtech (education technology)
Also, it’s worth noting that L.A. graduates more engineers from institutions of higher education—including UCLA, USC and Caltech—than any other metropolitan area in the United States. Many of those graduates with engineering degrees are sticking around town and setting up their own tech shops, or are recruited into the promising local talent pool.
While money talks, there are a myriad of other reasons why La La Land has evolved into a tech giant:
It’s a Large Market
18 million residents in the tri-county area with access to early users/customers.
The Talent Pool
L.A.’s wide range of talent includes storytellers, animators, game developers who came to LA seeking a spot in entertainment but wound up supporting the industry through the tech sector.
A Diverse Economy
Yes, the entertainment industry and tourism are huge, but there are wide swatches of companies in aerospace, technology, engineering, design and other sectors.
It’s a Multicultural Hub
The population consists of many different ethnicities: 49 percent Hispanic, 29 percent White/Caucasian, 11 percent Asian, and 9 percent African American. With all these cultures come a wide variety of traditions and ideas that are shared throughout the city, thus, empowering folks to think different and experience new things.
Location, Location, Location
And don’t forget L.A.’s cachet as a desirable place to live—with an average of 329 days of sunshine each year.
La La Land deserved critical acclaim and so does the city. L.A. is thriving with technological innovation and business growth. Here’s to the hope that some of these new tech companies will aim their brains at the pervasive traffic issue.
Sean Spear is an associate with Hughes Marino, an award-winning California commercial real estate company specializing in tenant representation and building purchases with offices in San Diego, Orange County, Los Angeles, San Francisco and Silicon Valley. Contact Sean at 1-844-NO-CONFLICT or firstname.lastname@example.org to learn more.