

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
People Who Bought the LA Times NFT Claim the Newspaper Scammed Them
04:00 AM | January 31, 2023
Last year, on the day of the 2022 Super Bowl, the Los Angeles Times announced they would be selling limited-edition collectible NFTs. At the time, a local newspaper getting into the NFT game seemed like an unlikely twist. But given that other publishing brands – including TIME Magazine and the New York Times – jumped headfirst into the hype a year prior, it wasn’t so surprising.
But since the announcement, buyers in the official Discord server set up by the Times alleged the entire project was a scam. “You and your team have no credibility,” one person said of the LA Times last June. “Just admit that we were scammed and our NFT's are worthless.”
The Times sold most of the NFTs for around $30. But the most expensive, a digital copy of the LA Times’ front page from Feb. 13 commemorating the Ram’s win, received bids as high as $4,000.
The problems with the Times’ NFT drop, however, began early. On the day the project went live, some users chimed in to the Discord to question GuardianLink, the Indian blockchain company tapped to set up the infrastructure for selling the NFTs. GuardianLink also operates the exchange BeyondLife.club, where the NFTs were traded.
Within a day of the launch, buyers also expressed concerns about their ability to resell the NFTs, since they were being traded on a foreign exchange where the NFL’s brand carries less heft.
Some read the project’s fine print, which stated that “you shall have the limited ability to sell or transfer your LA Times NFT,” and one user in the Discord noted that the sale would be voided and the owner of the NFT could lose their license if they tried to sell it on another platform. Many users expressed the desire to trade on OpenSea, a popular North American NFT exchange, instead.
In response to these concerns, one moderator from GuardianLink promised users on Feb. 14, 2022 that they would “soon” be able to trade their NFTs on other marketplaces, a promise that the buyers on Discord claim never came to fruition.
As one potential buyer pointed out in the Discord, “this isn't how NFTs work, or any merch/collectives actually. Since when [does] the company you buy something from keep the rights to control what you do with it.”
In the months after the announcement, skepticism morphed into concern, then outright anger as mods stopped responding to inquiries last September. “Bunch of crooks,” one buyer wrote in the Discord following the radio silence. “None of them give a s—.”
That same month, another Discord user said, “mods are not even online on this server. No communication… Just dead. We have been royally rugged!!”
One buyer claimed their only recourse was to take “legal action.” Though to date, no one has filed suit against the Times with regard to this situation.
It’s unclear how much total money was lost on the Times’ NFT sale. Vishal Master, a buyer from India, told dot.LA he lost $150, adding that he bought several NFTs ranging from $30- $50. Another buyer in the Discord said last June they lost $100.
According to LA Times spokesperson Hillary Manning, the blame resides with the crypto market. “While the offering was well-received, the overall NFT market declined – and later crashed – after we concluded the auction,” Manning said. “We understand the disappointment the NFT holders have experienced and have worked with our partner in good faith to address the feedback they received from holders, specifically by providing other items of value.”
Those items, according to Manning, included free digital subscriptions to the LA Times and discounts to its online store and were granted as a way to provide “other items of value” to disgruntled buyers.
Master, however, said he’d never heard from the Times about any of this. “Many tried but gave up” getting refunds, he added. “That NFT flopped and it surely was to dupe people [out of] money.”
In addition, the Times also offered buyers an additional free NFT. Master said he never received the free NFT either. Adding that even if he had, he and other buyers wouldn’t be able to sell those NFTs since they were still offered on GuardianLink’s BeyondLife platform. Which he added had meager demand, because the exchange is based in Asia, where fewer people have heard of the LA Times.
Ultimately, the ordeal caused some people in the Discord to question whether or not the trusted newspaper brand was even affiliated with the project. That said, the site where the NFTs were sold remains live and the Times appears to still be selling them.Read moreShow less
Samson Amore
Samson Amore is a reporter for dot.LA. He holds a degree in journalism from Emerson College. Send tips or pitches to samsonamore@dot.la and find him on Twitter @Samsonamore.
https://twitter.com/samsonamore
samsonamore@dot.la
Here's How To Get a Digital License Plate In California
03:49 PM | October 14, 2022
Photo by Clayton Cardinalli on Unsplash
Thanks to a new bill passed on October 5, California drivers now have the choice to chuck their traditional metal license plates and replace them with digital ones.
The plates are referred to as “Rplate” and were developed by Sacramento-based Reviver. A news release on Reviver’s website that accompanied the bill’s passage states that there are “two device options enabling vehicle owners to connect their vehicle with a suite of services including in-app registration renewal, visual personalization, vehicle location services and security features such as easily reporting a vehicle as stolen.”
Reviver Auto Current and Future CapabilitiesFrom Youtube
There are wired (connected to and powered by a vehicle’s electrical system) and battery-powered options, and drivers can choose to pay for their plates monthly or annually. Four-year agreements for battery-powered plates begin at $19.95 a month or $215.40 yearly. Commercial vehicles will pay $275.40 each year for wired plates. A two-year agreement for wired plates costs $24.95 per month. Drivers can choose to install their plates, but on its website, Reviver offers professional installation for $150.
A pilot digital plate program was launched in 2018, and according to the Los Angeles Times, there were 175,000 participants. The new bill ensures all 27 million California drivers can elect to get a digital plate of their own.
California is the third state after Arizona and Michigan to offer digital plates to all drivers, while Texas currently only provides the digital option for commercial vehicles. In July 2022, Deseret News reported that Colorado might also offer the option. They have several advantages over the classic metal plates as well—as the L.A. Times notes, digital plates will streamline registration renewals and reduce time spent at the DMV. They also have light and dark modes, according to Reviver’s website. Thanks to an accompanying app, they act as additional vehicle security, alerting drivers to unexpected vehicle movements and providing a method to report stolen vehicles.
As part of the new digital plate program, Reviver touts its products’ connectivity, stating that in addition to Bluetooth capabilities, digital plates have “national 5G network connectivity and stability.” But don’t worry—the same plates purportedly protect owner privacy with cloud support and encrypted software updates.
5 Reasons to avoid the digital license plate | Ride TechFrom Youtube
After the Rplate pilot program was announced four years ago, some raised questions about just how good an idea digital plates might be. Reviver and others who support switching to digital emphasize personalization, efficient DMV operations and connectivity. However, a 2018 post published by Sophos’s Naked Security blog pointed out that “the plates could be as susceptible to hacking as other wireless and IoT technologies,” noting that everyday “objects – things like kettles, TVs, and baby monitors – are getting connected to the internet with elementary security flaws still in place.”
To that end, a May 2018 syndicated New York Times news service article about digital plates quoted the Electronic Frontier Foundation (EFF), which warned that such a device could be a “‘honeypot of data,’ recording the drivers’ trips to the grocery store, or to a protest, or to an abortion clinic.”
For now, Rplates are another option in addition to old-fashioned metal, and many are likely to opt out due to cost alone. If you decide to go the digital route, however, it helps if you know what you could be getting yourself into.
From Your Site Articles
- 8 Alternatives to Uber and Lyft in California - dot.LA ›
- Automotus Will Monitor Santa Monica's New Drop-Off Zone - dot.LA ›
- Metropolis CEO Alex Israel on Parking's Future - 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
RELATEDTRENDING
LA TECH JOBS