Raising SoCal’s Collective Ambitions One Unicorn At A Time
By Steve Gilison
After hosting the SoCal First Look event at UCLA on June 20, the Alliance staff took a beat to reflect on the progress we’ve made so far and to plan the next phase of our fledgling organization. Our first two events showcased some of the top SoCal startups and entrepreneurs — prime examples of the region’s strengths — in order to educate and connect investors directly to opportunities in SoCal. The rationale for these events was based on the invaluable analysis and recommendations from The Boston Consulting Group (BCG) who compared the SoCal region to other leading tech hubs around the world using a variety of criteria (see graphic below).
Looking ahead, specifically as we plan our next event (likely November 2018 — more details to follow), we will continue to carry on our mission of helping innovators bring their breakthroughs to the world and promoting the strengths of the region’s tech ecosystems.
One of the key hallmarks of a strong tech ecosystem is the presence of “Unicorns” (startups valued at $1B+). SoCal has seen its share of recent Unicorns such as Snap, Ring, Honest Company, Dollar Shave Club, Cornerstone onDemand, BlackLine and Bird, to name just a few. Globally, the number of Unicorns have exploded in recent years (see graphic below), spiking in July 2015. Despite some predictions that the overheated market will cool, Crunchbase just reported that July 2018 set a record with 55 venture capital rounds over $100 million.
So who will be the next SoCal Unicorn? And why does it matter?
Let’s tackle the second question first. If we go back to BCG’s recommendations, there are two that stand out as particularly relevant here:
“Recommendation 4: Elevate the Collective Ambitions of SoCal Founders
Our interviewees consistently brought up the advantage of the Bay Area’s swing-for-the- fences mentality — the permission to fail in the name of a bold and audacious goal. That mentality is a big reason why so many venture firms are based there and why many serial entrepreneurs often prefer to remain. We recommend that the business community develop a “band of angels” similar to Silicon Valley’s comprising seasoned entrepreneurs who encourage this attitude. Such a group would build on existing networks of investors in the area and share their experiences with less seasoned founders. Much like Sam Altman’s Startup School in the Bay Area, such a group can democratize know-how and expertise.
Recommendation 6: Highlight SoCal’s Tech Capabilities Locally and Beyond
The robustness of the SoCal innovation economy was a surprise even to some of the stakeholders we interviewed. The area must do a better job at marketing the region’s strengths both at home and beyond. The Alliance is hosting a series of technology showcases in 2018 and a startup competition that should give exposure to some of the best ideas and brightest individuals in the SoCal ecosystem.”
-Excerpt from “Stars Aligning: How Southern California Could Be the Next Great Tech Ecosystem”, BCG
The existence of unicorns provides a natural boost to ambitions and it also says a lot about the strength of the ecosystem. Large rounds often lead to large exits which creates wealth locally (especially if local investors get in on the action) and propagates a virtuous cycle of more local expertise and capital to launch more startups taking moonshots, and so on.
In addition, the recently published Global Tech Hubs Report by CB Insights found that Los Angeles ranks fourth in the world for the total number of tech deals completed (2,659) since 2012. If expanded to include all of SoCal, we’d likely be third. But does anyone else really know that? Fourth in the world is pretty amazing given the current hype around the momentum in Beijing, China and other emerging markets for tech innovation. We need to continue to drive this message.
We came to the conclusion that the next Unicorn is lurking in the region, perhaps unknown to the outside world. In keeping with the BCG recommendations, we felt our next event should squarely focus on uncovering the Unicorns of the future who are currently building momentum in the region and headed for splashy headlines. If we’re really successful, our event could even accelerate their trajectory!
We hope you can join us. Get on our mailing list and we’ll send you more details on our events as well as our monthly newsletter. Also, send us companies that you think are headed for the Billion dollar club. Thanks!