From a geographical perspective, the San Francisco Bay Area and Los Angeles startup ecosystems are no longer separated by a few hundred miles.
Top-tier VCs from SF visit LA regularly, and entrepreneurs raise from investors upstate and downstate in one process. Anecdotally, as an LA resident of 4 years, there’s been a palpable uptick of entrepreneurs from the Bay Area who move down here after exiting to found their next company.
The City of Angels is a hub for a wide range of startups, but it has two major groupings: consumer-facing startups that tap into Hollywood’s marketing culture, and the deep-tech ecosystem created by the city’s role as a hub for aerospace, defense and R&D.
To track how the ecosystem for software and digital media startups here is evolving, I asked eight of the top consumer VCs to share some of the trends they are most excited about investing in right now:
- Kevin Zhang, partner at Upfront Ventures
- Mike Palank, managing director at MaC Venture Capital
- Brett Brewer, partner at CrossCut Ventures
- Courtney Reum, partner at M13
- Ron Rofe, partner at Rainfall Ventures
- Ryan Hoover, partner at The Weekend Fund
- Dustin Rosen, partner at Wonder Ventures
- Zach White, principal at Sinai Ventures
The key takeaway is perhaps the diversity of their responses: investors here are going deep into trends across the spectrum of consumer spending. Consumer health and transportation are mentioned, as they were in my surveys of VCs in London and New York, but this group repeatedly predicts a new wave of interactive, social media startups (albeit with different perspectives on what it looks like).
Kevin Zhang, partner at Upfront Ventures
I’m a strong believer it’s the best time to be a game developer now. Every 10 years or so distribution shakes up, now giants like MSFT, Google, Sony, Epic, etc. are rushing in to shift gamers to subscriptions and cloud gaming, which means big exclusive content library building with lots of “non-dilutive” capital for developers. Games themselves are becoming bigger, cross-platform, cheaper to build and more accessible than ever thanks to advancement in game engine and networking tech. Related: there’s a new generation of mobile entertainment brewing at the intersection of short-form video, live, audience participation and social play; it’s marrying what’s worked with UGC and live video with in-app-purchases and retention tactics of casual games to create more accessible and bite-sized entertainment destinations.
Mike Palank, managing director at MaC Venture Capital
While it used to be that great content alone made for a compelling entertainment experience, as we move into the future it will be the blending of great content and amazing tech that will truly capture and retain people’s attention. We’ve seen those funny Youtube videos of babies swiping pictures in physical magazines showcasing their expectations that everything is interactive. I think in much the same way, expectations around filmed media (movies + TV) will trend towards the interactive. We are seeing some truly interesting experimentation around interactive right now from companies like Netflix, Unrd, Eko, CtrlMovie, Playdeo, Hovercast, Aether, Within, Twitch and others.
The winners of the streaming wars understand this and I believe will supplement their content slates with interesting technology to make the viewing experience unique and participatory (Quibi has already announced some examples of this). At MaC, we are looking for those innovative companies that are re-thinking how consumers experience filmed entertainment to make it more experiential, interactive and engaging.