Re/code’s been taking a look at Silicon Valley’s prettier sister, surveying 30 of its most promising companies. Standouts include Oculus VR, just purchased by Facebook for $2 billion; Maker Studios, for which Disney shelled out $500 million; Beats, Apple’s latest acquisition at $3.2 billion; and Gravity, purchased for $83 million by AOL. Nasty Gal, an early e-commerce innovator, is now worth $100 million.
LA’s startup community seems particularly strong when it comes to developing popular mobile apps such as Snapchat, Whisper and Tinder. Mass-market apps with consumer-friendly content have tremendous potential in the marketplace and these three in particular are likely to see their worth soar over the next few months.
Culture is the driver in LA. Peter Pham and Mike Jones of the incubator Science told Re/code that they’re more interested in the creative founders that come out of Fox Interactive and Demand Media than they are the tech wunderkinds from Facebook or Google. Traditional tech investors don’t seem to mind that attitude: Science has raised $110 million in the last year—$90 million of it from Silicon Valley.
Jones notes that LA has always been closer to pop culture than other cities, giving it an edge in the development of mass-market products. That doesn’t just apply to mobile apps and entertainment/video startups. E-commerce sites like Nasty Gal and its successful cohorts Figs, Milk & Honey and Poprageous have a finger on that button as well.
It’s true that in terms of sheer money, LA’s not even nipping at Silicon Valley’s heels. In 2012, the area received 6.2 percent of the total venture capital invested, compared to the San Francisco Bay area’s 40.4 percent. In the first quarter of 2014, it got 5.49 percent versus the Bay Area’s 49.6 percent. But that fiscal chasm may be beside the point.
“People are blown away that we measure success through incremental growth and profit here,” said Scott Painter, CEO of the auto sales site TrueCar. “That’s just so not part of the language up north. There, it’s expand first, figure out money later. Here, we tend to build businesses.”
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