• After WeWork, VC's noticed a major shift in how founders were pitching their companies. Growth and costly customer acquisition strategies are out while profitability is in.
  • Some VC's, scared off by high valuations, are holding back their dry powder waiting for the market to cool. For instance, PLUS Capital's team compiled a list last year of companies it wanted to invest in if only the price was cheaper.
  • VC's are excited about employees leaving SpaceX and starting new companies. "That talent is going to be game changing."

As the new decade begins, Southern California's tech scene continues to sizzle. More than 7,000 investors have poured money into 4,768 startups, ranging from a unicorn that aspires to have scooters whizzing through every city on earth to one that has ambitions to colonize Mars to the thousands of smaller companies just trying to get to their Series A, according to data analyzed by dot.LA.

"No one is doubting L.A.'s place in the tech ecosystem anymore," said Arteen Arabshahi, vice-president at WndrCo. "People realize L.A. is meaningful."

Last year ended with what is arguably the most consequential local acquisition to date when Paypal bought Honey for $4 billion. According to Pitchbook, L.A. VC exit deal flow hit $8.4 billion last year, the second highest amount ever after 2017, when Snap went public.

"I don't think Los Angeles will ever be Silicon Valley," said Brian Lee, co-founder and managing director of BAM Ventures. "We don't have grandparents named Fairchild Semiconductor and we don't have aunts and uncles named Google and Yahoo. But we are growing and we do have some great businesses being started here."

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Since the widespread protests against police brutality in the wake of the murder of George Floyd, Breonna Taylor, Rayshard Brooks, and countless others — large-scale public conversations have followed. Many companies have shared statements expressing their condolences to and solidarity with their Black employees and customers, and outlining their commitment to fighting racism.

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After California voted to legalize recreational cannabis in late 2016, companies rushed in to be the first big mover in the multi-billion-dollar market. L.A.-based Genius Fund, run by two inexperienced twenty-somethings from well-to-do families and backed by a billionaire Russian oligarch, had the means and positioning to feed growing demand across the state, but things played out differently.

In a rural town just across the California border from Reno, Nevada, in the northernmost portion of the Sierra Nevada mountain range, Genius Fund set up an outpost in early 2019 called Nature's Holiday. There, the company planned to grow 1,000 acres of hemp — which executives wanted to be the largest such farm in the state — for use in CBD products, according to former employees, corporate documents and the company's website.

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