

Get in the KNOW
on LA Startups & Tech
X
Shutterstock
Venture Deals in LA Are Slowing Down, And Other Takeaways From Our Quarterly VC Survey
Keerthi Vedantam
Keerthi Vedantam is a bioscience reporter at dot.LA. She cut her teeth covering everything from cloud computing to 5G in San Francisco and Seattle. Before she covered tech, Keerthi reported on tribal lands and congressional policy in Washington, D.C. Connect with her on Twitter, Clubhouse (@keerthivedantam) or Signal at 408-470-0776.
It looks like venture deals are stagnating in Los Angeles.
That’s according to dot.LA’s most recent quarterly VC sentiment survey, in which we asked L.A.-based venture capitalists for their take on the current state of the market. This time, roughly 83% of respondents reported that the number of deals they made in L.A. either stayed the same or declined in the first quarter of 2022 (58% said they stayed the same compared to the fourth quarter of 2021, while 25% said they decreased).
That’s not hugely surprising given the sluggish dynamics gripping the venture capital world at large these days, due to macroeconomic factors including the ongoing stock market correction, inflation and Russia’s invasion of Ukraine. While startups and VC investors haven’t been hit as hard as public companies, it looks like the ripple effects are beginning to bleed into the private capital markets.
Image courtesy of Hagan Blount
In addition to slowing deal volumes, most investors said they’re seeing startup valuations lose momentum, as well: Roughly 81% said valuations either stayed the same or decreased from the previous quarter, with nearly 39% noting a decline.
Should that sentiment continue moving forward, it could spell bad news for startups as far as raising the money they need for growth, investors said.
“If I was a startup right now, I would be making sure I have plenty of runway,” said Krisztina ‘Z’ Holly, a venture partner at Good Growth Capital. “When it looks like there's some potential challenges ahead in the market, it’s good to fill your war chest.”
Among VC respondents, about 86% said they believed that valuations in the first quarter were too high—one potential reason why deals slowed down in the first quarter, according to TenOneTen Ventures partner Minnie Ingersoll. She noted that L.A.’s growing startup scene features more early-stage ventures, whose valuations haven’t come down the way later-stage startup valuations have.
“I would say we are just more cautious about taking meetings where the valuations are at pre-correction levels,” Ingersoll said. “We didn’t take meetings because their valuations weren’t in line with where we thought the market was.”
While most respondents said the Russia-Ukraine war didn’t have much impact on their investment strategies, some 22% said it did have an effect—with one VC noting they had to pass on a deal in Russia that they liked.
Is There a Flight Out of Los Angeles?
Los Angeles was heralded as the third-largest startup ecosystem in the U.S. at the beginning of the year, behind only San Francisco and New York. Yet nearly one-third (31%) of VC respondents said that at least one of their portfolio companies had left L.A. within the past year. It won’t come as a huge surprise that the city of Austin, Texas has been one of the prime beneficiaries of this shift—with roughly half of those who reported that a portfolio company had left L.A. identifying Austin as the destination.
The tech industry’s much-hyped “exodus” from California has been widely reported on, especially as more companies have embraced the work-from-home lifestyle and also opted to move their operations to lower-cost cities and states. Most notably, Elon Musk has recently moved two of his companies, electric automaker Tesla and tunnel infrastructure startup The Boring Company, from California to Texas (with both of those firms moving in and around Austin).
“In today's competitive market with lots of capital to invest, we think the next generation of successful VCs are going to be diverse in markets (not just Silicon Valley)... [and] have access to undiscovered founders from everywhere,” said one survey respondent.
NFTs Aren’t Popular With VCs—But Web 3 Is
“It’s the future,” according to one respondent. “Buckle up and get on board.”
Are NFTs...
More than 71% of VC survey respondents said they were bullish on Web3—the new blockchain-enabled iteration of the internet, which promises decentralization and a whole range of applications involving cryptocurrencies, NFTs, DeFi and more. It’s the same sentiment informing Santa Monica-based VC firm M13’s new $400 million fund, which considers Web3 a core piece of its investment thesis.
In Q2 2022, do you expect your portfolio companies to:
L.A. is home to an ever-growing cadre of Web3-focused startups operating across the realms of finance, entertainment and other industries. But while local investors are willing to pour money into blockchain-related ventures, one segment of the space continues to evoke skepticism: Only 18% of respondents would describe NFTs as “a good investment,” while 33% thought they were “bad” investments and 39% said they were unsure.
As in our last survey several months ago, it appears that NFTs continue to divide opinion, with respondents expressing differing perspectives on their value and utility. One referred to them as “get rich quick schemes,” but added that the art pieces and social communities that emerge from them may be valuable. Another said that “NFTs as a digital medium are a legitimate thing”—but noted the vast majority are “awful investments with no intrinsic value.”
Graphics courtesy of Hagan Blount.
From Your Site Articles
- Los Angeles Venture Funds Grow, but Spend Less in LA - dot.LA ›
- LA's Top Venture Capitalists of 2022 - dot.LA ›
- Los Angeles Venture Capital News - dot.LA ›
- Here Are Los Angeles' Top Venture Capitalists - dot.LA ›
- Venture Deals Fall in LA Amid Economic Worries - dot.LA ›
Related Articles Around the Web
Keerthi Vedantam
Keerthi Vedantam is a bioscience reporter at dot.LA. She cut her teeth covering everything from cloud computing to 5G in San Francisco and Seattle. Before she covered tech, Keerthi reported on tribal lands and congressional policy in Washington, D.C. Connect with her on Twitter, Clubhouse (@keerthivedantam) or Signal at 408-470-0776.
https://twitter.com/KeerthiVedantam
keerthi@dot.la
Guide: How To Safely Invest in Crypto, NFTs and Digital Assets
10:38 AM | September 14, 2022
Photo by Quantitatives on Unsplash
With the continually surging popularity of cryptocurrencies and NFTs, there has been an increase in scams targeting unsuspecting consumers. Even “ crypto winter” hasn’t slowed grifters looking to make big bucks by ripping off crypto and non-fungible token enthusiasts. In an August report, blockchain analytics firm Elliptic noted that investors had lost $100 million to NFT scams between July 2021 and July 2022. That was pocket change compared to cryptocurrency thefts—also in August, blockchain analytics firm Chainalysis reported $1.6 billion in total crypto losses from hackers attacking services designed to help investors transfer digital assets from one network to another.
Moneymaking potential in cryptocurrencies and NFTs is touted across the web, but the potential for digital highway robbery is just as great. That’s why it’s a good idea to armor yourself with information about how to avoid the many dangerous dark alleyways found along the blockchain’s supposed paths to wealth.
Scams can take many forms, from fake investment opportunities to phishing attacks. For example, “Web 3 Is Going Just Great” reports that in May 2022, a crypto project was launched with the title “Day of Defeat.” The project's developers called it a “radical social experiment token” that promised, “to give holders 10,000,000X PRICE INCREASE.” This meant anyone who purchased $1 of the token would receive massive rewards.
By the time the token’s price plummeted by 96%, investors had purchased $1.35 million worth of coins. Unfortunately, the scammers took all the liquid assets with them. It was a classic “ rug pull.” That’s an apt term to describe what happens when investors are lured to a new crypto investment opportunity only to have the developer pull out and usually vanish—websites and social media accounts deleted or locked. Rug pulls aren’t that new, but crypto’s widespread adoption has provided plenty of opportunities for the sufficiently motivated to create new ones.
In June 2022, actor Seth Green fell prey to a classic phishing scam focused on his Bored Ape Yacht Club (BAYC) NFTs. After Green bought legit Bored Apes, someone sent him a phishing email disguised as an alert about sketchy activity on his OpenSea account, where his apes were stored. He followed a link from the message to a site that looked enough like OpenSea to fool the Robot Chicken co-creator into typing in his login information. But as is usually the case with a phishing scam, Green’s info was sent to a command and control server where it was accessible to whoever built the fake login page.
In no time, hackers had grabbed some of Green’s most valuable NFTs and sold them to another account. As a result, the actor had to pay at least $260,000 to get his Bored Apes back.
While Seth Green was getting in on the latest thing—as Hollywood creators like to do—you can take steps to reduce your risk of falling into the trap that ensnared him.
Here are six to start:
Do your research
Before spending a dime, examine the account offering the NFT or tokens. Does the marketplace offer verification? Opensea, for example, verifies accounts with a blue checkmark. It requires specific benchmarks for verification, stating that an account that owns “collections with at least 75 ETH of volume sold” may qualify if they also “meet other criteria like minimum activity levels and social presence.” Ensure you’re buying from a seller with a checkmark.
Use reputable platforms
Crypto and NFT purchases generally require setting up a digital wallet. To that end, there are plenty of sites offering crypto wallet functions. Still, only the ones that have been around for a few years (Coinbase, for example, launched in 2012) and have real name recognition can guarantee that they at least take security very seriously. Known and generally reliable sites offering wallets include Coinbase, Trezor, Metamask, Public.com, and Ledger. Of course, those aren’t the only ones; they’re a good place to start.
Use the wallet’s security settings wisely
Good wallets have the kind of security protocols we might expect from our banks or email accounts. For example, using two-factor authentication is a must, especially if you don’t want to end up paying through the nose for apes you’d already purchased, like Seth Green.
Look for rug-pull red flags
These include mysterious, anonymous developers. If you research projects on Twitter, for example, there are frequent mentions of “doxxed” developers. In this context, doxxed just means the devs are telling potential investors who they are, likely with an open, transparent, and consistent web presence that goes back further than just a few months. Be wary of new social accounts and examine websites and white papers describing the project and its purpose. If they are vague or the sites seem thrown together (multiple pages with no content or TBAs), be very wary.
Be suspicious of 'pie in the sky' promises regarding profits
If you refer back to “Day of Defeat,” the project that rooked investors to the tune of $1.35 million, one of the easiest methods of spotting a possible scam is right there—the promise that those who purchased tokens would see a 10,000,000X increase in price. CoinTelegraph puts it succinctly in their recommendations about taking care with crypto and NFTs: “If the yields for a new coin seem suspiciously high, but it doesn’t turn out to be a rug pull, it’s likely a Ponzi scheme.”
Look for skewed numbers
According to Matthew Callahan—founder and CEO of Delphi, a Web3 consulting agency—other red flags to watch out for include projects where the number of “Twitter and Discord follower numbers seem disproportionate to their engagement.” That is, small numbers of users contrasted with active, vocal engagement can suggest sock puppetry at work. Callahan also suggests that “advertising the project on Twitter/Instagram” could be a red flag. Why? A paid ad campaign could indicate an attempt to obscure a lack of organic engagement. The account isn’t relying on word of mouth so much as paid views, which artificially boosts its profile, obscuring the fact that there’s “no real community engagement on social platforms.”
Frankly, there is still no surefire way to avoid all online scams. The key is to be a little paranoid, ultimately. Keep your digital head on a swivel, check all corners, and don’t go big at the start. Extra vigilance will improve your chances of not getting scammed into oblivion.
From Your Site Articles
- Are NFTs a Good Investment? We Asked Local VCs - dot.LA ›
- iTrustCapital Lets People Invest Their IRAs In Crypto - dot.LA ›
- Dave Lands FTX Investment To Grow Crypto Presence - dot.LA ›
- Kim Kardashian’s Crypto Fine Chills Celeb Shills' Spines - dot.LA ›
- BTS Label HYBE Launches NFT Project - dot.LA ›
- Top 10 TikTok Gadgets To Buy This Holiday Season - dot.LA ›
- Tips On Avoiding Black Friday and Cyber Monday Scams - dot.LA ›
- Will SBF Interest Translate Into a Streaming Scammer Series? - dot.LA ›
- People Claim LA Times Super Bowl NFTs Were A Scam - dot.LA ›
Related Articles Around the Web
Read moreShow less
Steve Huff
Steve Huff is an Editor and Reporter at dot.LA. Steve was previously managing editor for The Metaverse Post and before that deputy digital editor for Maxim magazine. He has written for Inside Hook, Observer and New York Mag. Steve is the author of two official tie-ins books for AMC’s hit “Breaking Bad” prequel, “Better Call Saul.” He’s also a classically-trained tenor and has performed with opera companies and orchestras all over the Eastern U.S. He lives in the greater Boston metro area with his wife, educator Dr. Dana Huff.
steve@dot.la
Veo CEO Candice Xie Is Bringing an Anti-Tech Bro Approach to Micromobility
06:00 AM | February 07, 2022
Image courtesy of Veo
Yet another micromobility startup will soon call Los Angeles home, bringing its two-wheel sensibilities to what’s long been a four-wheel city.
Veo, an e-scooter and e-bike-sharing startup, will open its new headquarters on Santa Monica’s Third Street Promenade later this month. Originally hailing from Chicago, Veo plans to hire up to 200 employees locally, as it outlined in application documents filed with local authorities. The company currently operates in more than 25 cities, including Santa Monica, and plans to launch across wider Los Angeles by the end of this month.
“With this kind of active user base year round, it’s like heaven for us,” according to Veo CEO Candice Xie. Both Xie and her co-founder, Veo president Edwin Tan, have moved to the L.A. area as part of the relocation.
Founded in 2017 as a bike-sharing startup, Veo has since expanded to include e-scooters in its offerings. It is also the only major micromobility operator run by a female CEO. Xie and Tan were inspired to launch Veo after witnessing the bike-share boom in Asia, but their ambitions were decidedly greener: Rather than sourcing cheap bikes that would eventually end up in a landfill, they wanted to build their own quality product and provide a scalable, sustainable service for communities.
Veo CEO Candice Xie.
Image courtesy of Veo
Tan, formerly an engineer for bicycle manufacturer Trek, brought his experience in manufacturing and supply chain logistics, while Xie—a former financial planner for Schneider Electric—brought her business background. They initially named the company VeoRide, as in “we all ride.”
As Veo grew its offerings from bikes and e-bikes to e-scooters in 2019, it continued its commitment to accessibility for all riders across socio-economic demographics. That’s a notable goal given how, according to a 2020 report by the L.A. Department of Transportation on the county’s micromobility pilot program, 64% of riders identified as male, 58% were aged 18-to-34 and nearly a quarter earned over $100,000.
After Veo built its first standup scooter in 2019, Xie saw an opportunity to develop a product that could appeal to a more diverse user base. “As a woman—and I cannot speak for all women—I am a more risk-averse person,” she said. “So standing there [going] 15 miles per hour, with cars riding side-by-side with me, made me a little bit freaked out.”
In 2020, Veo debuted the Cosmo, a sit-down e-scooter with a larger wheelbase and lower center of gravity. Xie said that they wanted to appeal to women who might wear high heels or skirts to work, as well as older users who would feel more comfortable sitting down. A Veo user survey last year found that women, people with disabilities and riders taking longer trips all preferred it to Veo’s standup scooter.
Xie believes that the future of micromobility is in a multi-model approach.
“I don't believe it if someone says, ‘This is the perfect scooter,’” she said. “No, it's not; we're just a couple of years into this industry. There are still a lot of things we can build from the safety, sustainability and inclusivity side.”
Veo plans to roll out more vehicle types and features, appealing to a wide range of users and use cases, in the coming months.
So far, it seems like Veo’s city-by-city strategy is paying off. It’s the only company operating in both Santa Monica and New York City—where, alongside Bird and Lime, it’s part of the Big Apple’s recently launched micromobility pilot program. (Bird was notably kicked out of Santa Monica last year, while Lime pulled out of the city in 2020.) Veo also raised $16 million in new funding last year to support its expansion into new markets.
Xie noted that cities are maturing in their approach toward micromobility after the industry’s tumultuous beginnings, with municipalities choosing companies that are willing to operate as community partners rather than chasing riders at all costs.
In December 2020, Xie took to Medium to call out other operators for prioritizing rapid growth at the expense of building a sustainable business model. She pointed out that Veo—and not Lime, as that company’s CEO Wayne Ting had intimated—was the first micromobility company to achieve profitability.
While Xie does not hesitate to throw down the gauntlet, being a female CEO is not without its challenges. She mentioned one investor forum where, as the only woman in the room, another attendee handed her his drink thinking that she was a server.
“A lot of products used by females are actually designed by males,” she said. “And I do think that’s something that needs to be improved.”
From Your Site Articles
- Los Angeles Micromobility News - dot.LA ›
- Scooter Startup Bird 2021 Revenue and Losses Were Up in Q2 - dot ... ›
- LINK Will Add Another 1500 E-Scooters to LA Streets - dot.LA ›
- Move Slow and Fix Things: E-Scooter Startup Superpedestrian ... ›
- Ca Wheels’ Get More Underserved Angelenos to Ride E-Bikes? - dot.LA ›
- Veo Expands Into the City of LA - dot.LA ›
Related Articles Around the Web
Read moreShow less
Maylin Tu
Maylin Tu is a freelance writer who lives in L.A. She writes about scooters, bikes and micro-mobility. Find her hovering by the cheese at your next local tech mixer.
RELATEDTRENDING
LA TECH JOBS