Ring, Bird & Wag! — A look at LA’s killer Q1
Last quarter we published our 2018 LA Tech Scene Presentation. In it, we included a look back at 2017, and shared the top-ten VC funded companies of the year. With the first quarter of 2018 now officially behind us, we decided to share an update on what appears to have been a landmark quarter for LA tech.
When Amazon announced that it was buying LA-based Ring for over a billion dollars, it was heralded as a “stand out” moment for the LA tech scene. So too was dog-walking app Wag raising $300M from SoftBank’s Vision Fund, and Bird, the electric scooter startup, raising $100M. Yet, in Q1, LA startups had so many “stand out” moments, it was hard to keep track.
After a quick look at the stats, it’s clear that the first quarter of 2018 was not a normal quarter for LA. In fact, the top-ten VC deals in LA last quarter took in a combined $1.02 billion in funding — just a few percentage points shy of the $1.14 billion raised in the top-ten LA rounds in all of 2017.
Of the biggest stories in Q1, Ring, Bird & Wag were just the highlights. Other LA companies making big waves last quarter were: GOAT, the mobile sneaker marketplace, which merged with its competitor, Flight Club, and raised $60M; Fair, the month-to-month car leasing startup founded by former TrueCar CEO Scott Painter, which raised a $50M round alongside a billion dollar debt line; Relativity Space, a 3D-printed aerospace rocket startup, which raised a $35M Series B (it missed the top ten, but would be #11 on this list); and Radiology Partners, which raised a massive $234M round led by NEA.
Not shown on this list are: Belkin, the decades-old hardware manufacturer based in Playa Vista, which sold to Taiwanese iPhone manufacturer Foxconn last month for close to $900M, and City Storage Systems (formerly CloudKitchens), which sold a controlling stake to former Uber CEO Travis Kalanick’s new 10100 venture fund for $150M, and will see Kalanick become its new CEO.
What’s interesting to note is how categories that are often not associated with Los Angeles, such as enterprise SaaS (ServiceTitan, a Saas construction company), healthcare (Radiology Partners) and hardware (Ring & Belkin), joined more traditional LA categories like film & entertainment (Atom Tickets), aerospace (Relativity Space), e-commerce & digital media (Goop) and beauty (BeautyCounter) to round out the biggest tech and VC headlines in Q1.
What hasn’t changed, however, is how dependent LA startups continue to be on capital coming in from outside LA — especially at the later stages. We’ve previously noted how LA startups attract more net-outside capital than any other U.S. metro. This trend continued in Q1. Of the top-ten rounds last quarter, 3 were led by Bay Area funds (Radiology Partners, ZipRecruiter & Goop), 2 were led by Boston funds (Atom Tickets & ServiceTitan), 1 by a New York City fund (BeautyCounter), and 4 by international funds (GOAT, Bird, Fair & Wag). As is often the case, while several top-ten rounds included participation from LA based investors, none were led by a local fund.
Even so, of the funds leading these late-stage rounds in LA, a couple firms stood out as repeat investors. NEA led or co-led two of the top-ten rounds (Radiology Partners’ $234M round, and Goop’s $50M Series C). And so did Index Ventures, which led the latest investment in GOAT and co-led Bird’s round alongside Valor Equity. In addition, LA-based fund, Upfront Ventures, participated in three of the top-ten rounds: Bird, GOAT, and Fair.
While this was clearly a landmark quarter for the Los Angeles region, it all happened in a quarter that saw other economic records nationwide. Connie Loizos of StrictlyVC recently noted that Q1 2018 marked the U.S.’s best IPO market in three years. The Nasdaq, Dow Jones and S&P 500 all hit record highs between January and March this year. And U.S. unemployment hit 4.1% in February, the lowest since before the 2008 recession.
Later this month, we’ll publish the Q1 2018 edition of our quarterly LA Seed Deal Report. The seed report looks exclusively at seed funded deals in LA each quarter. It will be interesting to compare how deals at the growth stage compare to what’s happening at the earliest stages.
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