LA: The Fastest Growing Tech Ecosytem in the United States

Los Angeles has long held national and global mindshare as the beating heart of American cinema, music and style. Hollywood alone is a powerhouse that has spread American culture globally. But LA is more than just a media hub and increasingly, it is fast becoming a hub for technology.

In fact, LA is the fastest growing tech ecosystem in the United States and the momentum looks only set to accelerate. A recent CBRE report listed LA as first for the fastest year-on-year tech employment growth in 2017 — a whopping increase of 12.3% in just under a year! The wider Orange County — which surrounds LA — reported an equally impressive 10.6% year-on-year growth.

But it is not just employment that is growing. The same report showed that the number of tech degrees earned in the Greater Los Angeles area soared by 40% between 2011 and 2016 while the overall tech talent labour pool grew by 11% between 2012 and 2017. On both measures of job growth and talent LA is putting in serious double-digit growth.

One good measure of the overall vitality of a tech ecosystem is the amount of venture capital funding received by the city startups. While this can be skewed by mega-rounds — which are increasingly common today — it still is a proxy for how active the city’s entrepreneurs are and how interested investors across the country are in these emerging companies. In 2011, LA startups raised an impressive but relatively small $1 billion from venture capitalists. By 2017, this had ballooned to $7 billion, an eye-popping 600% growth in 6 years!

Clearly LA tech is heating up. A couple of pillar institutions have set up shop here — from Amplify.LA to Techstars and the numerours venture firms (including Wavemaker) — and they are playing a crucial role in supporting LA’s tech scene. But given the city’s size the opportunity for entrepreneurs is tremendous. Los Angeles is much more than the world’s media hub however. In fact the deeply diversified economy boasts the largest manufacturing workforce in the United States, as well as two of the busiest ports in the world. These present significant opportunities to use technology to solve problems for the city’s largest industries.

The State of California boasts a GDP of $2.448 trillion — the fifth largest GDP in the world. LA’s economy which clocks in at $928 billion accounts for over a third of this. For entrepeneurs looking to build big companies there’s plenty of opportunity for LA to make that happen. The city’s huge GDP is complemented with a new generation of pillar companies that will help propel the LA tech ecosystem to greater heights. The likes of Snapchat, SpaceX, Bird, Dollar Shave Club, Arrivo, Tinder and Hulu.

Finally — and most importantly for investors — the exit profile is extremely attractive in LA. Three of LA’s biggest tech exits have all happened in the last 4 years. More interestingly though, LA has consistently outperformed Boston and NYC in IPO exit money since 2014. That is exciting not only for investors but especially so for entrepeneurs. IPOs can help seed the next generation of companies and venture firms, further accelerating the development of LA’s ecosytem.

LA Tech is here to stay, when are you coming down?

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