Getting to Know Silicon Beach

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Silicon Beach is more than volleyball, surfing, and enjoying the world famous Southern California surf and sand. A growing number of tech investors believe that “there is really something going on in LA.” The LA-based tech scene is exploding with startups and investors that now call it home. All this activity has captured the attention of top VC funds that now invest in LA. One of the early investors in LA, Upfront Ventures, now invests over 40 percent of its dollars into companies based in the greater LA area. The LA region even has its own hashtag – #LongLA – to capture the investment potential of the maturing startup ecosystem.


And nowhere is the chorus for #LongLA louder than in “Silicon Beach.” The coastal LA tech community has given rise to a number of high-profile companies with billion dollar valuations or exits that include The Dollar Shave Club, The Honest Company, Kite, Ring, Snap, and ZipRecruiter. In less than a decade, the rise of these companies has propelled Silicon Beach into the spotlight as the most visible community in the growing Southern California tech ecosystem.

While Canadians may know Silicon Valley is the biggest global producer of high growth tech startups, fewer may have heard of “Silicon Beach,” and most don’t know how to navigate opportunities here. Silicon Beach loosely refers to the coastal tech community that has flourished over the past decade around the cities and LA neighborhoods of Santa Monica, Venice, Marina del Rey, and Playa del Rey. In this post, I provide some data on the region, the industry sectors and companies that thrive in the startup community here, and highlight resources that can help your company start living its California dream.

What can you find in Silicon Beach?

Silicon Beach has become well known for consumer facing technology startups ranging from transportation apps, like the e-scooter sharing company Bird, to beauty e-commerce products, like Jessica Alba’s The Honest Company. However, the data reflect a more nuanced and diverse startup landscape. The Boston Consulting Group (BCG) in partnership with the Alliance for Southern California Innovation sought to make the Southern California tech ecosystem more navigable by mapping the region’s density of startups, investors, and talent across the region. The information presented in this post is largely derived from that data.

Silicon Beach has had 92 companies founded over a three-year period, more than any other community in Southern California. The community has 380 individual investors that are concentrated in angel, early seed, and seed round levels. Notable early stage Silicon Beach VC investors include Upfront, Wavemaker, Anthem, CrossCut, Science, March, Embark, and more recently M13 to name just a few. The region is also home to 46,000 tech workers.

Top 6 Industry Sectors for Silicon Beach Startups

  1. Internet & Mobile

  2. Information Technology

  3. Media and Entertainment

  4. Marketing, Design, and Publishing

  5. Professional Services

  6. Fashion & Lifestyle


Internet & Mobile
Internet and mobile is the largest industry for startups in Silicon Beach, comprising 20 percent of all companies. These include companies that provide e-commerce, apps, augmented reality, messaging, and developer tools and platforms. Silicon Beach companies operating in this industry include Snap, the Dollar Shave Company, and ZipRecruiter. Securing a nascent customer base in Silicon Beach communities like Santa Monica and Venice, with their high tourist and pop culture appeal, can help companies build brand awareness and drive market adoption.

Information Technology
The second largest industry represented by Silicon Beach startups is in information technology (IT), accounting for 15 percent of startups in the area. This industry cluster includes startups doing analytics, artificial intelligence (AI), IT, big data, cloud computing, blockchain, software, information services, cyber security, customer relation management (CRM), 3D tech, fintech, cloud data services, and business intelligence. These include companies like Securonix, Tala, TaskUs, which provide cybersecurity detection, financial services, and backend customer service support respectively. Startups in IT leverage Southern California’s deep talent pool. SoCal produces more STEM graduates and more tech PhDs than anywhere else in the country.

Media and Entertainment
The media and entertainment industry, the third largest in the area, comprises nine percent of startup companies. This sector includes digital entertainment and media, content, broadcasting, audio, music, film, and e-sports. The startups in this space are aided by the rapid convergence of tech and entertainment and LA’s dominance in entertainment, with the five major movie studios located in nearby Hollywood and Burbank. Gaming has become one of the fastest growing sub-sectors in the entertainment sector and includes startups like Super League Gaming, which is a publicly traded company; Dream Team; and Edgecast, which was acquired by Verizon.

Marketing, Design, and Publishing
The fourth largest industry represented by Silicon Beach startups is marketing, design, and publishing, which also represent nine percent of startup companies. This sector includes startups in advertising, ad platforms, ad targeting, digital and brand marketing. Silicon Beach companies in the industry include Leaf Group, GumGum, and Rubicon Project.

Professional Services
Accounting for five percent of companies in Silicon Beach, the fifth largest industry is professional services. This sector encompasses financial, consulting, business development, banking, real estate, human resources, asset management, and credit companies. These include Silicon Beach companies such as banking startup Aspiration, human resource professional service company Bambee, Commercial Real Estate Exchange, Inc. (CREXi), and automotive pricing and information company TrueCar.

Fashion & Lifestyle
The sixth largest industry represented by Silicon Beach startups is fashion and lifestyle companies, which comprise four percent of startup companies. Although this industry falls outside the top five industry sectors, the fashion and lifestyle category is too quintessential to SoCal to ignore. Silicon Beach startups in this sector include companies such as BeautyCounter, actress Gwyneth Paltrow’s fashion company Goop, and online booking company ResortPass.

Notable Sectors Outside the Top 6 Industries
Equally illuminating is to note what sectors did not show up in the top 6 industry categories for startups. Healthcare and biotech, which are among the top 5 industry sectors for startups across all of Southern California, did not feature in the top six industries in Silicon Beach. Similarly, some Silicon Beach startups in transportation and hardware that have garnered widespread attention for large fund raises, exits, and general market disruption, are also outside the top industry sectors for Silicon Beach. Nonetheless, there are some notable companies in these smaller sectors that have had considerable success, such as Kite Pharma, Bird, and Ring.

Resources

There are a number of resources to help your company grow in Silicon Beach. This mature innovation ecosystem has a number of co-working spaces if you are looking for a place to land in Silicon Beach, such as Blankspaces, Cross Campus, and WeWork. The area is also home to a number of incubators and accelerators that can provide access to funding, mentorship, and more. These include Amplify, Expert DOJO, MuckerLab, the Preccellerator, and Science. There are also a number of service providers who specialize in supporting startups, including legal, finance, and talent recruiting companies.

Assistance Navigating Southern California Innovation Landscape

Silicon Beach is but one of 14 innovation nodes that stretch from Santa Barbara down to San Diego. Southern California’s sheer size, which spans over 50,000 square miles and includes over 20 million residents, can make it difficult to navigate and uncover the resources your company needs to grow. If you need help as you explore the possibility of bringing and growing your scaling startup to Southern California please reach out to MAPLE Business Council or to the Alliance for Southern California Innovation for guidance.

Your California startup dreams await you …

Eric Eide
Director Ecosystem Development, Alliance for Southern California Innovation and MAPLE Business Council Advisory Board Member