2016 LA Startup Report: $4.2B in funding and 64 exits

by John Siegel
January 31, 2017

For the fifth straight year, tech funding in LA continued to grow.

LA tech companies raised $4.2 billion in 2016, up 38 percent from 2015. The growth is largely due to Venice-based Snap Inc, which turned heads when news broke that the company had raised $175 million in March. That was only a fraction of what they went on to actually fundraise — a little over a month later, the company revealed it had raised a stunning $1.2 billion Series F.

In total, 231 tech startups would raise funds over the course of 2016.

Mergers and acquisitions jumped in 2016 as well. Exits accounted for nearly $3.5 billion, even though the vast majority of exits did not disclose financial terms. Though the actual number was down slightly compared to 2015, the aggregate money generated finished at nearly $1 billion higher than what the industry saw in 2015. 

Additionally, LA saw three companies go public in 2016, with two doing so over the course of just one week.

A huge year for exits

2016 saw 64 exit events. Though only 14 startups revealed the financial terms of their exits, LA still saw $3.46 billion from exits, led by QLogic ($1.3 billion) and Dollar Shave Club ($1 billion). Other major acquisitions include TouchCommerce (now a part of Nuance Communications) for $215 million, United Online for $170 million and ReachLocal for $156 million.

While everyone patiently waits for Snap Inc's IPO, LA had three other initial public offerings in 2016. NantHealth went public in June, boasting a valuation of $1.65 billion. The Trade Desk ($1.1 billion valuation) and Everbridge ($331 million valuation) went public within a week of each other in September, capping off a busy year.

Consumer web takes over

Consumer web and mobile companies soared in 2016, with $1.58 billion of the total funds raised this year.

B2B software had a strong year at $560 million total raised, led by a number of high-profile rounds including enterprise security software company Cylance. It was a big year for e-commerce startups as well, with 23 startups combining for $357 million. Thrive Market's monstrous $111 million round led the pack back in June.

Fintech startups combined for nearly $337 million over the course of 2016. Payoff, Patch of Land, Mavenlink, Acorns and InvestCloud all had rounds of more than $25 million.

2016 also proved to be the year that money really started flowing into AR/VR startups. With NextVR's $80 million round of funding leading the way, the industry saw 15 startups bring in $213 million in funding over the course of the year. Edtech startups, anchored by Age of Learning’s big $150 million funding also closed strong, accounting for $200 million total. The money continued to flow for adtech startups, with $223 million going to startups over the course of the year.

Built In LA’s Annual Report is a financial analysis of digital tech employers in LA and Orange County for 2016. To be eligible for inclusion, a company’s primary business and industry must be digital technology/innovation, including web and mobile applications, software, IoT, e-commerce, VR/AR and digital agency work. Data is compiled from SEC filings, press releases, confirmed news reports and other public databases. Funding data includes venture capital, private equity, debt financing and securitizations.   

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