The wheels of 2016 are beginning to gain momentum and it's time to take a look at what the year may hold for the Los Angeles tech ecosystem. Many experts believe LA tech has finally matured and is ready to take the next leap in becoming a global tech hub.
But which companies will lead that charge? Will Virtual Reality and gaming be the content-driven saviors many LA techies believe they will be?
We sat down with a startup co-founder, an investor, and a USC professor, all of whom have had their fingers on the pulse of LA tech, to hear their predictions for the year to come:
, Co-founder of
, Managing Director at
, Professor & Author Chronicle of a Startup Town: Los Angeles and
Communications Director at Red Cup Agency
, Vice President, Finance & Strategy,
How do you think the startup community will be different in 2016?
Desai: I think LA is maturing as a tech scene. More fundings, more serious startups, more exits and more talent. For Heal, out of 12 total full time people, we have had people move here from Boston, Chicago, NYC and Silicon Valley. Getting people to leave places like Boston or the Valley for LA was virtually impossible 3 to 5 years ago. Now people want to be in LA.
Foy: Some unicorns will have added pressure to becoming profitable and create positive revenue as funding sources slow or dry up at the later stages.
Schneider: The startup community will be different in 2016 because it will come back to earth. Stratospheric valuations have been fun, but thankfully it’s time to take the helium out of the balance sheet and talk about the real value a startup offers. As part of this, locavesting will become more powerful, driven by equity crowdfunding. Communities will step up to support their local startups.
How will LA continue to strengthen its tech community in 2016?
LA will continue to grow its tech ecosystem with anchor tech companies like
Snap LA is located in the Santa Monica Business Park. We're across the street from a ton of great restaurants, coffee shops, Clover Park, and more!
, continuing to grow into multi-billion dollar companies. These companies will also spin off strong startups with experienced entrepreneurs who will create next generation tech companies.
Desai: LA needs more, better VC firms.There are a couple of good ones, but many LA companies still trek to the valley for their funding. We need another 6 to 10 large VC funds to do A- and B-rounds. We also need better cooperation between the leading universities – of which LA has many – and the tech scene. Programs like the City Fellows and others are starting to do that now.
Shah: In recent years, the LA tech community has gained more and more exposure nationally from high profile local exits such as Oculus and Lynda.com, as well as leading consumer disruptors such as Snapchat, The Honest Company, and Dollar Shave Club. This has led to top VCs from Silicon Valley and elsewhere becoming increasingly present in LA. Since he assumed office in 2013, Mayor Eric Garcetti has been an incredible advocate for our ecosystem, which has helped keep local talent here while also attracting new talent to the region. And we've seen big local names such as Cedars Sinai, Disney, and the LA Dodgers make significant efforts to support innovation in their respective areas. We have done the same at Cornerstone through the Cornerstone Innovation Fund, our corporate venture arm.
Is there one particular sector you think is set to boom?
Schneider: Several sectors will expand in 2016, but not in the explosive way that makes for good taglines. Customization, driven by accessibility to 3D printing, will make steady progress into every corner of the things we use, and not always in a high-tech way. Sure, you can order your Adidas in retro 1970 style, with the colors you remember from the early 90s, but look for car parts, bike parts, wearables and beauty items to become personalized as they never have been before.
Desai: Overall, I think LA is great for fin-tech, VR and a number of areas, but I think the biggest boom will come in the on-demand products/services segment. LA is ideal for on-demand because of traffic. Who wants to get in a car to go anywhere when it can come to you?
Foy: e-Sports will continue to grow. With Riot Games, Activision Blizzard, professional sports teams and major networks and studios now getting into e-Sports, we'll see more mainstream interest and engagement. Also big brands will start paying attention to eSports. I'm also very interested in VR and AR and believe that LA is uniquely positioned to become a content creation capital for VR developers and content creators.
Shah: As a finance guy, I see a lot of inefficiencies within our financial markets and processes and consequently have always been intrigued by fintech. The innovation that’s taking place in areas such as crowdfunding, lending, payments, credit, and financial wellness is very interesting. VR is another area where new applications seem to be coming out every day, and with Oculus recently launching pre-orders for Rift, I think we’ll see a lot more buzz there in the months to come.
Are there any tech startups in LA our readers should keep an eye out for?
We're located in the heart of buzzing downtown Santa Monica. The farmer's market is directly below our office and the beach a stone's throw away.
has a top team going after a huge untapped mobile market with a beautiful platform, product, and super engaged community. Also
is going after the emerging wearables market with innovative apps and cool tech. Both are CrossCut portfolio companies.
Schneider: Everyone wants VR to work, but it is at least another year away.
Shah: There are way too many to name here, but companies like HopSkipDrive, ServiceTitan, Workpop, Tastemade and Thrive Market are all doing amazing things in different areas of tech, which really speaks to the diversity of our ecosystem.
Are there any big problems that LA tech, or certain verticals within LA tech, needs to tackle?
Foy: We need to funnel more talent to our tech startups from our top educational institutions. Stanford does a good job of this. We need to do better with USC, UCLA, and California Institute of Technology. They produce more engineers than anywhere else in the country.
Schneider: Anyone who believes Paul Krugman of the New York Times (I do) believes that climate change is the biggest problem facing us. The Paris climate accord points the way to the future. There are not enough LA startups working in green tech and clean tech.
Desai: Yes — monetization. LA has historically been a media-centric town and as we see SF-based unicorns have their bubbles burst left and right, LA can stand out by having companies that deliver real revenue models. And, I think more core tech. More hard core engineers creating more fundamental innovations.
Some answers have been edited for length and/or clarity.