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Garrett Reim

Funding for LA tech hits all-time high in 1H 2014

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The second quarter of 2014 was a record-setting one for LA's digital companies. Within the quarter, 86 companies were funded for a total investment of $622 million, and 25 companies exited at a total of over $1.987 billion. The amount raised in Q2 2014 nearly doubles the amount raised in Q2 2013.
 
The bigger picture of 2014 so far is a good one, too: the amount of funding raised in the first half of 2014 nearly doubles the amount raised in the first half of 2013.
 
This is the best first half LA tech has ever had.
 
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LA ad tech companies in particular had a great Q2 this year. Though not talked about much, Internet Brand’s $1.1 billion sale to private equity firm KKR was the largest exit. Known mostly as a media brand, Internet Brands is really more of an advertising and marketing solution for select verticals. Several of the company’s niche websites include Lawyers.com, ApartmentRatings.com and CarsDirect.com. Internet Brands has also developed a SaaS solution called AutoData Solutions to help auto dealers market and manage sales of their car inventories. 
 
Video advertising network AdColony was purchased by Norwegian browser company Opera for $350 million in potential earnouts and cash. Opera has reportedly been building out its advertising operations to bring in more revenue. 
 
Convertro, an advertising attribution and optimization software service, was bought by AOL for $101 million. The Rubicon Project, a notable programmatic advertising exchange platform, also had a $101 million IPO.
 
Clearly the bets are paying off for the 46 LA tech companies that were acquired or IPO'd in the first half of 2014.
 
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And now this year, a fresh round of bets are being placed on several fairly new entrants to the LA ad tech market.
 
Nativo, a programmatic native advertising platform, received another $5 million in funding. true[x] Media, a network of interactive ad space, also scored $6 million in funding to expand it’s operations and The Mobile Majority, a mobile advertising platform, received $8 million.
 
Despite ad tech’s history as a New York and San Francisco affair, it is clearly asserting itself within Los Angeles as well. As such, the technical depth of the Los Angeles startup scene is increasingly apparent. Many of these advertising companies are driving change in an industry that is increasingly worried about its effectiveness.
 
In particular, The Rubicon Project’s programmatic abilities and Convertro’s attribution technology are parts in an effort to ensure advertisements are being deployed in-front of the right people. Additionally, true[x] Media’s interactive advertisements and Nativo’s native advertisements are efforts to ensure once an advertisement is delivered to the right set of eye-balls its influence goes beyond the shrinking productivity of banner ads. As the technology behind these companies are worked out over the next several years, expect a lot of churn and more funding and acquisitions within the Los Angeles ad tech community.
 
In addition to advertising, the Los Angeles digital gaming sector also did well last quarter, including a number of studios that received funding to pursue mobile games. Several gaming company funding rounds included JumpStart with $13 million, TapZen with $8 million, Nix Hydra Games with $5 million and Industrial Toys with $5 million.
 
Survious received $4 million to purse virtual reality games and Gamblit Gambling raised $12 million to add gambling to mobile games. 
 
Also, several notably large funding rounds included $135 million to Nanthealth, a healthcare startup, $60 million to Swagbucks, a rewards network, $40 million to Telesign, identity security software and $31 million to Freshdesk, customer service software.

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Matthew Goldman

I think that IPOs should be valued at the company's total market value, not at the proceeds raised.

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