Downturn at LA’s Ports Could Imperil Clean Tech Startups

Lon Harris
Lon Harris is a contributor to dot.LA. His work has also appeared on ScreenJunkies, RottenTomatoes and Inside Streaming.
cargo ship on the ocean
Photo by Chris Pagan on Unsplash

This is the web version of dot.LA’s weekly newsletter. Sign up to get the latest news on Southern California’s tech, startup and venture capital scene.

For the most part, the “supply chain issues” that dominated headlines during the early days of the COVID pandemic and lockdown have started to ease. Major corporations have had time to adjust their schedules and routes to a new pandemic-era reality, and a still-slow Chinese economy continues shipping less overall freight to the rest of the world, freeing up bottlenecks and getting global commerce slowly flowing again.

While this is good news for consumers still desperately trying to get their hands on a PlayStation 5, not all of the news has been so positive, specifically for companies and workers tied to the local ports of Los Angeles and Long Beach.

As part of this global readjustment of the supply chain, and facing lengthy trucking and warehouse backlogs upon arriving in Southern California, many U.S. retailers and manufacturers figured out new shipping workarounds that moved business away from the region altogether. Ports on the East and Gulf Coasts have been steadily inheriting new business while the Los Angeles market loses out, and these trends seem unlikely to reverse even as China’s economy gears back up and shipping volume starts to approach pre-pandemic levels.

Exacerbating concerns about moving cargo through Southern California is the ongoing labor dispute between West Coast dockworkers and their employers. Though officials from both sides of the negotiating table have assured the press that they can reach a new contract without disrupting port operations, the situation has led to anxiety throughout the industry, and prompted some companies to begin diverting some freight around the West Coast, just in case. (The last time dockworkers and their employers had to work out a new contract – in 2014 and 2015 – it led to nine months of delays; the Obama administration ultimately intervened and forced through a new deal.)

While the Los Angeles and Long Beach ports combine to handle around 40% of U.S. imports from Asia – valued at around $469 billion a year – the actual amount of goods coming through has been dropping steadily. At various times over the past year, New York and New Jersey have briefly claimed the top spot as America’s busiest. With some retailers and manufacturers already investing in new facilities and processes at other locations across the country, it’s looking more and more like the changes may be permanent. One analysis by a New York investment firm predicted that West Coast ports could lose up to 10% of their overall cargo to destinations on the Atlantic coast.

On the most basic and immediate level, this has a direct impact on the local labor force. 175,000 Southern California residents are employed at the ports themselves or in directly related businesses. But a permanent downturn in local shipping would have far more significant and far-reaching ripple effects.

For example, the tremendous amount of freight coming into Southern California through the ports led to an explosion in the wider logistics sector, filling the Inland Empire with warehouses and fulfillment centers. Trucking has also remained a steady source of income for tens of thousands of local residents. Though the shipping backlog briefly meant a surplus of jobs for many of these workers, a permanent shift in cargo volume could force many to seek work in other markets.

Los Angeles’ predominance as a shipping hub has also led a number of technology companies and startups to cluster around the ports. An overall drop in traffic and revenue there could have devastating effects on a number of these efforts as well. San Pedro accelerator Braid Theory focuses specifically on the “blue economy” and ocean-related industries, working with startups in niche areas like port logistics, aquaculture and energy; less freight and traffic moving through the port could mean fewer potential partners and avenues for collaboration. Digital platform Dray Alliance builds solutions to make the movement of cargo from shipping containers to nearby warehouses more orderly and systematic. Their business naturally relies on a steady flow of freight coming in from foreign destinations to Los Angeles and Long Beach.

Gene Seroka, executive director of the Port of Los Angeles, remains confident that some of the traffic currently headed toward the East Coast will ultimately return to Southern California. To his view, skittishness about a possible strike or labor-related disruption to the ports has been driving a lot of these macro-level changes. He noted to Bloomberg in October that 2022 remained on track to be the Port of Los Angeles’s second busiest year. So theoretically, a resolution to the labor dispute, coupled with a permanent easing on the local backlog and related bottlenecks, could restore L.A.’s reputation as the nation’s #1 place to send your container ships.

Plus we still have the best tacos. - Lon Harris

Here's What Happened In LA's Entertainment Tech World This Week 🍿

A digital art show in L.A. merged auction with ecommerce.

Amazon’s new virtual studio aims to cut production costs.

Trump and the art of the poorly-timed celebrity NFT.

Social Media 📱

ChatGPT is all the rage, but will it cause more cheating in schools?

The latest Ticketmaster fiasco fuels more antitrust questions.

Influencers target Discord and Twitter in pump and dump scheme.

Influencers are outsmarting TikTok’s algorithm.

Clean Tech  ♻️

PG&E’s new pilot program will pay EV owners to send electricity to the grid.

CPUC votes to change compensation for rooftop solar energy.

Vinfast cars are coming to the U.S., but not as planned.

Space 🚀

Why SpaceX has a growing monopoly on government contracts.

We’ve accomplished nuclear fusion ignition, now what?

Listen Up 🎧

LA Venture: Crush Ventures’ Andrew Kahn on finding music tech’s next big thing.

Office Hours: Julia Boorstin on how female founders thrive.

Also...

Robots have made their way to California nursing homes.

FCTRY LAb raises $6M to continue expansion.

ChatGPT is all the rage, but will it cause more cheating in schools?

Get caught up on this week's career moves in L.A.'s tech world with our weekly roundup.

And check out our weekly 'Raises' roundup of the L.A. VC scene.

Subscribe to our newsletter to catch every headline.

🏰 Disney's Epic Investment Stands Out Amidst Gaming Industry Layoffs

Christian Hetrick

Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.

🔦 Spotlight

In the midst of widespread gaming industry layoffs, a glimmer of positive news emerges as Disney announces a significant move: a $1.5 billion investment in Epic Games. 🏰💰🐭

Image Source: Disney

Disney's $1.5 billion investment in Epic Games, disclosed late Wednesday, signals a strategic alignment aimed at expanding the success of "Fortnite." The deal enhances Epic's growth prospects after financial setbacks, including layoffs, and strengthens the partnership between the two companies. With Disney gaining a larger equity stake in Epic, the collaboration will broaden the integration of beloved Disney franchises like Marvel, Star Wars, Pixar, and Avatar into the game, potentially boosting its appeal and longevity. This significant investment underscores Disney's commitment to interactive entertainment and signifies a shift towards games as a primary revenue stream, aligning with the growing trend of digital engagement among younger demographics. Moreover, the potential for crossover sales of physical Disney products within "Fortnite" and the exploration of new content distribution channels are just some of the opportunities arising from this partnership.

For LA tech, the Disney-Epic Games partnership represents a validation of the region's burgeoning tech and gaming ecosystem. The substantial investment in Epic, who maintains a large Los Angeles office with 1,000+ employees (according to LinkedIn), reflects confidence in the LA’s talent pool and innovation potential. Additionally, this partnership between two industry giants fosters an environment for further collaboration, investment, and growth within LA's tech sector. As Disney and Epic Games deepen their ties and explore new avenues for content integration and distribution, it not only elevates the prominence of LA as a tech hub but also stimulates economic growth and job creation in the region. This partnership highlights LA's unique position as a hub where technology and entertainment converge. With its ability to integrate diverse industries, LA is driving innovation and expansion in digital entertainment. 🚀💸🎮

🤝 Venture Deals

LA Companies

  • ProducePay, a financing and marketplace platform for the fresh produce market, raised a $38M Series D led by Syngenta Group Ventures joined by Commonfund, Highgate Private Equity, G2 Venture Partners, Anterra Capital, Astanor Ventures, Endeavor8, Avenue Venture Opportunities, Avenue Sustainable Solutions, and Red Bear Angels. - learn more
  • Blush, an invite-only dating app that drives users to local businesses on dates, raised a $7M Seed Round from individuals like Naval Ravikant. - learn more
  • Mogul, a startup founded last year that provides an overview of an artist's royalty earnings and identifies areas where money is owed but has not yet been collected, raised a $1.9 million seed round from Wonder Ventures, United Talent Agency, AmplifyLA, and Creator Partners. - learn more
  • Avnos, a hybrid direct air capture startup, raised a $36M Series A led by NextEra Energy and joined by Safran Corporate Ventures, Shell Ventures, Envisioning Partners, and Rusheen Capital Management. - learn more
  • AI.fashion, startup whose mission is to help retailers enhance the online shopping experience by providing consumers with virtual try-ons and personalized fashion recommendations, raised a $3.6M Seed Round led by Neo. - learn more
  • Suma Wealth, startup that aims to demystify financial topics and provide culturally relevant content, virtual experiences, and resources to help Latino users navigate financial challenges and opportunities, raised a $2.2M Seed Round . Radicle Impact led, and was joined by Vamos Ventures, OVO fund and the American Heart Association Impact Fund. - learn more
  • 222, a startup that helps users discover their city and meet new people through unique social experiences, raised a $2.5M Seed Round. Investors included 1517 Fund, General Catalyst, Best Nights VC, Scrum Ventures, and Upfront Ventures. - learn more
  • LimaCharlie, a security operations cloud platform, raised a $10.2M Series A led by Sands Capital. - learn more
  • Polycam, an app that uses a smartphone’s sensors to capture 3D scans of objects, raised an $18M Series A co-led by Left Lane Capital and Adjacent, and joined by Adobe Ventures and individuals like Chad Hurley and Shaun Maguire. -learn more.

LA Venture Funds

Actively Raising

  • ReelCall, Inc., an entertainment technology company focused on powerful apps and platforms that help build and maintain the professional network of connections vital to career growth, is raising a $850K Pre-Seed Round. - learn more
  • CZero, a startup building software to decarbonize logistics for logistics businesses and goods business through a vetted marketplace and optimization software. - learn more
  • Couri, a technology startup addressing last-mile delivery issues, is raising a $450K Pre-Seed Round at a $2.2M post money valuation. - learn more
  • Sweetie, a marketplace to help people plan date nights, is raising a $1.5M Pre Seed Round. - learn more
  • StartupStarter, an investment platform that provides real-time data and analytics on startups, is raising an $850K Angel Round. - learn more

If you’re a founder raising money in Los Angeles, give us a shout, and we’d love to include you in the newsletter!

Venture Waves, Climate Tech Wins, and Silicon Beach's Ongoing Evolution

Christian Hetrick

Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.

Anduril Seeks $1.5B in VC Funds

Defense company Anduril Industries Inc., based in Costa Mesa and founded by Palmer Luckey, is seeking to raise $1.5 billion in fresh funds to boost its valuation to $12.5 billion or more, according to sources quoted by The Information. This fundraising effort, if successful, would mark one of the largest venture capital rounds of the year.

Image Source: Anduril

Anduril recently secured a contract to develop and test small unmanned fighter jet prototypes under the Air Force’s Collaborative Combat Aircraft (CCA) program, beating out major defense companies like Boeing, Lockheed Martin, and Northrop Grumman. Alongside General Atomics, Anduril will design, manufacture, and test these aircraft, with a final multibillion-dollar production decision expected in fiscal year 2026. This program aims to deliver at least 1,000 combat aircraft to fly in concert with manned platforms and is part of the Air Force’s Next Generation Air Dominance initiative. Central to Anduril’s success in this contract is the Fury autonomous air vehicle, acquired through the purchase of Blue Force Technologies. This victory underscores Anduril's rapid advancement in the defense sector, aligning with Luckey's vision of building faster and more cost-effective defense assets. - learn more

Los Angeles Ranks Number 1 in Emerging Climate Tech Hub

The 2024 Emerging Climate Tech Hubs Report by Revolution highlights Los Angeles as a burgeoning center for climate tech innovation. LA's growth in this sector is driven by its diverse talent pool, strong research institutions, and a culture of environmental consciousness. The city's unique mix of legacy industries, such as entertainment and aerospace, alongside emerging tech companies, positions it as a pivotal player in the climate tech landscape. This shift reflects a broader trend of decentralized climate tech funding across the U.S., reducing the historical dominance of California's traditional hubs. - learn more

Silicon Beach: Looking Back, Moving Forward

Assessing the overall health of the startup market is challenging, especially as venture capital funding has decreased by an average of 61% from 2021 to 2023 across the top VC markets in the US. Markets with robust ecosystems in AI, SaaS, Biotech, Healthtech, and Fintech appear to be weathering the downturn better than those focused on Consumer and Gaming industries, areas where Los Angeles traditionally excels.

Percent Change In VC Funding By Region

CB Insights

LA Times paints a rather bleak outlook on the Los Angeles tech scene noting venture capital funding in Greater Los Angeles plummeted 73% from 2021 to 2022. Silicon Beach, once a vibrant tech corridor, currently faces high vacancy rates and lacks late-stage financiers, especially in the AI sector. However, there are positive signs, including growth in aerospace startups and increased venture capital investment in early 2024, suggesting a potential rebound for LA's tech ecosystem.

While LA may not be exceeding expectations during this period, its tech ecosystem warrants a nuanced evaluation, given the broader market dynamics and its strong performance in specific sectors. Reach out to us with your thoughts.

🚀 SpaceX gears up for another stellar year, active raises, and more

Christian Hetrick

Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.

Happy Friday Los Angeles! You made it through the first week of 2024!

🔦 Spotlight

Elon Musk may be a divisive (albeit entertaining) figure, but the continued success of SpaceX is pivotal for the aerospace industry in Los Angeles and more broadly around the world.

Image Source: SpaceX webcast

What happened with SpaceX in 2023?

  • Elon Musk challenged Facebook founder, Mark Zuckerberg to a cage fight.
  • SpaceX launched 96 successful missions with its Falcon series of rockets, a 57% increase over its previous annual record.
  • SpaceX conducted two test flights of the largest and most powerful rocket ever built, Starship.
  • Roughly two-thirds of SpaceX's launches in 2023 were devoted to building out Starlink, the company's satellite-internet megaconstellation.
  • Isaacson’s Elon Musk biography was published in September including everything from Musk’s tumultuous relationship with his father to his work ethic and “demon mode”.

Moving forward what can we expect from SpaceX and its controversial founder? Continued innovation pushing the aerospace industry to new limits? Yes. More drama? Without a doubt.

Here is some of what is to come in 2024:

🤝 Venture Deals

Just Announced

Check back next week!

LA Exits

  • CG Oncology, an Irvine, CA-based developer of immunotherapies for bladder cancer, filed for a $100M IPO. It plans to list on the Nasdaq (CGON) with Morgan Stanley as left lead underwriter, and has raised around $317m in VC funding. - learn more
  • McNally Capital agreed to sell Advanced Micro Instruments, a Costa Mesa, CA-based maker of gas analyzers and sensing technologies, to Enpro (NYSE: NPO). - learn more

Actively Raising

  • ReelCall, Inc., an entertainment technology company focused on powerful apps and platforms that help build and maintain the professional network of connections vital to career growth, is raising a $850K Pre-Seed Round. - learn more
  • CZero, a hard-tech startup that is developing a technology for decarbonizing natural gas, is raising a $1.5M Seed Round. - learn more
  • Couri, a technology startup addressing last-mile delivery issues, is raising a $450K Pre-Seed Round at a $2.2M post money valuation. - learn more
  • Sweetie, a marketplace to help people plan date nights, is raising a $250K Angel Round. - learn more
  • StartupStarter, an investment platform that provides real-time data and analytics on startups, is raising an $850K Angel Round. - learn more

If you’re a founder raising money in Los Angeles, give us a shout, and we’d love to include you in the newsletter!

📅 LA Tech Calendar

Sunday, January 7th

Wednesday, January 10th

  • Startup Cafe: Networking with a Kick - Entrepreneurs, Startups, and Tech Enthusiasts join together to meet and connect with like-minded people, industry professionals and investors, while enjoying a nice cup of coffee in Venice at The KINN. This week’s interactive discussion about AI’s evolution in entertainment will feature Dr. Sam Khoze and Rachel Joy Victor.
  • Venice Tech Happy Hour- Join Startup Coil and FoundrHaus Wednesday evening and enjoy the sunset from the rooftop, grab a bite overlooking Abbot Kinney, and mingle with other tech enthusiasts and entrepreneurs by the bar on the patio.

Have an awesome event coming up? Reach out to be featured on next week’s Newsletter!

📙 What We’re Reading

RELATEDEDITOR'S PICKS
Trending