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What Are LA’s Hottest Startups of 2022? See Who VCs Picked in dot.LA’s Annual Survey
Harri Weber
Harri is dot.LA's senior finance reporter. She previously worked for Gizmodo, Fast Company, VentureBeat and Flipboard. Find her on Twitter and send tips on L.A. startups and venture capital to harrison@dot.la.
In Los Angeles—like the startup environment at large—venture funding and valuations skyrocketed in 2021, even as the coronavirus pandemic continued to surge and supply chain issues rattled the economy. The result was a startup ecosystem that continued to build on its momentum, with no shortage of companies raising private capital at billion-dollar-plus unicorn valuations.
In order to gauge the local startup scene and who’s leading the proverbial pack, we asked more than 30 leading L.A.-based investors for their take on the hottest firms in the region. They responded with more than two dozen venture-backed companies; three startups, in particular, rose above the rest as repeat nominees, while we've organized the rest by their amount of capital raised as of January, according to data from PitchBook. (We also asked VCs not to pick any of their own portfolio companies, and vetted the list to ensure they stuck to that rule.)
Without further ado, here are the 26 L.A. startups that VCs have their eyes on in 2022.
1. Whatnot ($225.4 million raised)
Whatnot was the name most often on the minds of L.A. venture investors—understandably, given its prolific fundraising year. Whatnot raised some $220 million across three separate funding rounds in 2021, on the way to a $1.5 billion valuation.
The Marina del Rey-based livestream shopping platform was founded by former GOAT product manager Logan Head and ex-Googler Grant LaFontaine. The startup made its name by providing a live auction platform for buying and selling collectables like rare Pokémon cards, and has since expanded into sports memorabilia, sneakers and apparel.
2. Boulevard ($40.3 million raised)
Boulevard’s backers include Santa Monica-based early-stage VC firm Bonfire Ventures, which focuses on B2B software startups. The Downtown-based company fits nicely within that thesis; Boulevard builds booking and payment software for salons and spas. The firm has worked with prominent brands such as Toni & Guy and HeyDay.
3. GOAT ($492.7 million)
GOAT launched in 2015 as a marketplace to help sneakerheads authenticate used Air Jordans and other collectible shoes. It has since grown at a prolific rate, expanding into apparel and accessories and exceeding $2 billion in merchandise sales in 2020. The startup sealed a $195 million funding round last summer that more than doubled its valuation, to $3.7 billion.
The Best of the Rest
VideoAmp ($578.6 raised)
Nielsen competitor VideoAmp gathers data on who's watching what across streaming services, traditional TV and social apps like YouTube. The company positions itself as an alternative to so-called "legacy" systems like Nielsen, which it says are "fragmented, riddled with complexity and inaccurate." In addition to venture funding, its total funding figure includes more than $165 million in debt financing.
Mythical Games ($269.4 million raised)
Seizing on the NFT craze, Mythical Games is building a platform that powers the growing realm of “play-to-earn games.” Backed by NBA legend Michael Jordan and Andreessen Horowitz, the Sherman Oaks-based startup’s partners include game publishers Abstraction, Creative Mobile and CCG Lab.
FloQast ($202 million raised)
FloQast founder Michael Whitmire says he got a “no” from more than 100 investors in the process of raising a seed round. Today, the accounting software company is considered a unicorn.
Nacelle ($70.8 million raised)
Nacelle produces docuseries, books, comedy albums and podcasts. The media company’s efforts include the Netflix travel series “Down To Earth with Zac Efron.”
Wave ($66 million raised)
A platform for virtual concerts, Wave has hosted performances by artists including Justin Bieber, Tinashe and The Weeknd. The company says it has raised $66 million to date from the likes of Warner Music and Tencent.
Papaya ($65.2 million raised)
Sherman Oaks-based Papaya looks to make it easier to pay “any” bill—from hospital bills to parking tickets—via its mobile app.
LeaseLock ($63.2 million raised)
Based in Marina del Rey, LeaseLock says it’s on a mission to eliminate security deposits for apartment renters.
Emotive ($58.1 million raised)
Emotive sells text message-focused marketing tools to ecommerce firms like underwear brand Parade and men's grooming company Beardbrand.
Dray Alliance ($55 million raised)
Based in Long Beach, Dray says its mission is to “modernize the logistics and trucking industry.” Its partners include Danish shipping company Maersk and toy maker Mattel.
Coco ($43 million raised)
Coco makes small pink robots on wheels (you may have seen them around town) that deliver food via a remote pilot. Its investors include Y Combinator and Silicon Valley Bank.
HiveWatch ($25 million raised)
HiveWatch develops physical security software. Its investors include former Twitter executive Dick Costollo and NBA star Steph Curry’s Penny Jar Capital.
Popshop ($24.5 million raised)
Whatnot competitor Popshop is betting that live-shopping is the future of ecommerce. The West Hollywood-based firm focuses on collectables such as trading cards and anime merchandise.
First Resonance ($19.4 million raised)
Founded by former SpaceX engineer Karan Talati, First Resonance runs a software platform for makers of electric cars and aerospace technology. Its clients include Santa Cruz-based air taxi company Joby Aviation and Alameda-based rocket company Astra.
Open Raven ($19 million raised)
Founded by Crowdstrike and Microsoft alums, Open Raven aims to protect user data. The cybersecurity firm’s investors include Kleiner Perkins and Upfront Ventures.
Fourthwall ($17 million raised)
When an actor faces the camera and speaks directly to the audience, it’s known as “breaking the fourth wall.” Named after the trope, Venice-based Fourthwall offers a website builder that’s designed for content creators.
The Non Fungible Token Company ($15 million raised)
The Non Fungible Token Company creates NFTs for musicians under the name Unblocked. Its investors include Jay Z’s Marcy Venture Partners and Shawn Mendez.
Safe Health Systems ($15 million raised)
Backed by Mayo Clinic Ventures, Safe Health develops telehealth software and offers tools for enterprises to launch their own health care apps.
Intro ($11.6 million raised)
Intro’s app lets you book video calls with experts—from celebrity stylists, to astrologists, to investors.
DASH Systems ($8.5 million raised)
With the tagline “Land the package, not the plane,” DASH Systems is a Hawthorne-based shipping company that builds hardware and software for automated airdrops.
Ettitude ($3.5 million raised)
With a focus on sustainability, Ettitude is a direct-to-consumer brand that sells bedding, bathroom textiles and sleepwear.
Afterparty ($3 million raised)
Along similar lines as Unblocked, Afterparty creates NFTs for artists and content creators such as Clay Perry and Tropix.
Heart to Heart ($0.75 million raised)
Heart to Heart is an audio-focused dating app that “lets you listen to the story behind the pictures in a profile.” Precursor Ventures led the pre-seed funding round.
Frigg (undisclosed)
Frigg makes hair and beauty products that contain cannabinoids such as CBD. The Valley Village-based company raised an undisclosed seed round in August.
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Harri Weber
Harri is dot.LA's senior finance reporter. She previously worked for Gizmodo, Fast Company, VentureBeat and Flipboard. Find her on Twitter and send tips on L.A. startups and venture capital to harrison@dot.la.
You've been eyeing a new startup for a while now. It seems like they're doing well一they just received a new funding round and are growing like crazy. So you take a chance and apply to one of their positions. Before you know it, you're in the final round of the application process.
Now comes the inevitable discussion about compensation. The hiring manager explains that you can choose between more cash and less equity, or vice versa. What do you do?
If you've worked at a startup before, you are familiar with this tricky situation.
If the startup keeps knocking it out of the park, you're bound to feel some of that upside in your wallet at some point. That said, the fact that only 10% of startups become successful makes the odds seem pretty grim. Can your team make it to an exit point?
With the startup market in Los Angeles booming, we decided to delve into the topic of startup equity. Read on to understand what startup equity is, how to think about the tradeoff between cash and equity, and why startups give their equity away (or not).
What Does Startup Equity Actually Mean?
Having equity means you have a financial stake in a startup. Typically, equity is used to incentivize employees to work towards a common goal, whether that be becoming the next unicorn or being acquired by a major enterprise. CEOs have good reason to offer equity. Hourful CEO and founder Walter Aguilera puts it this way:
"It's important to approach the process of building a company with a team mindset. Knowing there's equity involved helps everyone push through practically working for free at the early stage of a business."
That sounds all well and good, but it means you're putting a good deal of faith in your company's leadership team and coworkers to make the business successful. It's important to remember that equity gets diluted based on the company's performance and valuations that might not have anything to do with how well you, as an individual, perform.
Plus, you don't exactly have that hypothetical money at your fingertips. There are stipulations tied to how much stock you get, how long you have to stick around to realize your full equity package, and how you can exercise your options in the future.
What Should You Consider Before Accepting?
If you're considering roles at startups, expect to get varying levels of equity as part of your offer. Think hard about your level of risk tolerance as you prepare to negotiate 一 and maybe accept 一 the offer,.
L.A.-based NextStep Careers founder and CEO Emily Taylor suggests that job seekers ask one simple question when considering equity:
"Would you invest your own money in this company? Because that is essentially what you are doing," she says.
To answer that question, you may want to step back and do an objective assessment of the company. Here are a few questions to get you started:
- Is the startup bootstrapped, or have they successfully raised funding? If the startup received funding, who backed them, and how reputable are they?
- What stage is the startup at? What is their plan to make it to the next stage?
- What is the size of the market this startup operates in?
- Who are the startup's biggest customers?
- Who are the startup's biggest competitors and do you think the company can build and maintain a moat?
- What's the startup's estimated cash flow?
- How much do I resonate with the founder's vision and mission?
You may not be able to find all this information, but you can get scrappy about it. Find and reach out to people who currently work there or worked there in the past to validate what you've found and get more insight. Look up the company on AngelList, Crunchbase, and review sites like Glassdoor. Read the startup's most recent press releases and announcements to find out what product features are coming down the pike and any notable new hires they've made. These could be fantastic clues as to how profitable the company might become over time.
How Much Equity Should You Expect?
Equity packages come in all shapes and sizes, but how much you get depends heavily on what stage your startup is at. Usually, 10% - 20% of total shares go towards the employee equity pool. This means that at very small startups (pre-seed to seed), you may be compensated only in equity. While that's not nice for your wallet now, it can be a fantastic time to get in, since shares will only continue to get diluted with more and more fundraising rounds.
"We gave equity to our first employees because, in my view, early-stage employees are critical to what you're building," says Val Young, former co-founder and co-CEO of apparel company RecRoom. "They ought to have both skin in the game and the opportunity to reap the rewards if things go well."
If you're joining a later-stage startup, on the other hand, you will probably be offered a mixture of equity and cash. Initial shares will have already been absorbed by current employees and investors.
"Many companies will be open to trading off between salary and equity and this can be an excellent negotiation tactic," Nextstep's Taylor writes. "That said, doing so depends on their cash flow - they might be flush after a venture round or are pinching pennies until the next fundraise. So if you are leaving a role with greater cash compensation, it's a good idea to set a total amount of salary + bonus + equity to keep you whole."
Another thing to keep in mind is that the amount of equity you get can hinge on your role. Many companies tend to give employees focused on technology more equity than those with business-oriented roles. According to TechCrunch, a senior engineer might be granted 1% of the company, whereas an experienced business development employee is given a .35% share.
As you might expect, job title plays a role as well. VPs and above are likely to get a much larger stake in the company than more junior employees. Browse AngelList's salary and equity data to see what might be reasonable in your startup's category and your career level.
Understanding Your Equity Offer
Not all equity packages are created equal, so it's important to educate yourself on the ways equity can differ from company to company.
One thing to bear in mind is that startups often denote equity in terms of shares in an offer letter. 50,000 shares can sound like an awful lot, but that may only be 0.05% of the total company shares. A quick way to level-set on how much you're really getting is to ask how many shares are outstanding. The number of shares you're offered, divided by the total number of shares will give you the percent of the company you own.
Another thing to examine in your offer letter is your vesting schedule. It's fairly common to have a 4-year vesting schedule at startups, meaning you gain 25% of the total shares you're given with each year you stay on with the company.
Of course, you won't actually receive your equity in dollars until an exit event. If your startup exits with a huge valuation, your equity could be worth a lot. But, if your startup never goes public and never sells, you may only get paid out what's left of the company's revenue according to your contract.
Finally, pay attention to what happens to your equity when you leave. Sometimes employers have a clause stripping away your equity, even if you've put in a full year. This practice, called a "one-year cliff," acts as a form of insurance so the startup doesn't relinquish precious equity to people who aren't fully dedicated for the long haul.
Should You Take It?
Working at startups isn't a walk in the park. Oftentimes you're doing multiple jobs at once for lower pay. Equity offers can be overwhelming, but all of your sleuthing and pre-research should bolster your confidence in the company's potential—what really matters most.
VoyageLA Founder and CEO, Mayank Bhandari, advises that the decision on whether to accept equity should be part and parcel of your decision to work at a startup.
"You should only work for a startup if you really believe in the mission and team. But if you do, then taking equity is a no-brainer," he says.
Are you in the midst of making a final decision? Let us know how it went!
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Elizabeth Melton
Liz is a problem solver who takes great pleasure in finding new ways to drive business value. Her background in consulting, product management and strategy has helped her cultivate relationships with partners including Target, Madison Reed, Nestle, Experian and Databricks.
https://www.linkedin.com/in/elizabethmelton1/
Image Source: Joby Aviation
🔦 Spotlight
Joby Aviation, a pioneering electric air taxi company, has achieved a significant milestone by successfully flying a hydrogen-electric aircraft demonstrator for 523 miles with only water as a byproduct. This groundbreaking flight showcases the potential for emissions-free regional travel using vertical take-off and landing (eVTOL) aircraft, eliminating the need for traditional runways. The company's innovative approach combines its existing battery-electric air taxi technology with hydrogen fuel cells, paving the way for longer-range, environmentally friendly air travel.
For LA residents, this development holds exciting implications for future transportation options. Joby's technology could potentially enable direct flights from LA to destinations like San Francisco or San Diego without the need to visit conventional airports, offering a cleaner and more convenient alternative to current travel methods. The company's progress in both battery-electric and hydrogen-electric aircraft positions it at the forefront of next-generation aviation, promising to revolutionize urban and regional mobility.
Notably, Joby Aviation has already made strides in Southern California by securing an agreement with John Wayne Airport earlier this year to install the region's first electric air taxi charger. This strategic move sets the stage for LA to be among the initial markets where Joby will launch its electric air taxi service. With plans to commence commercial operations as early as 2025 using its battery-electric air taxi, LA residents may soon have access to a fast, quiet, and environmentally friendly mode of transportation that could significantly reduce travel times and traffic congestion in the region. In the not too distant future, LA might find itself in an identity crisis without traffic and excess smog 🤞🤞.
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