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SoCal Venture Pipeline, Pacific Western Bank Partner on Getting Early-Stage LA Startups VC Funding
Kristin Snyder
Kristin Snyder is dot.LA's 2022/23 Editorial Fellow. She previously interned with Tiger Oak Media and led the arts section for UCLA's Daily Bruin.
The SoCal Venture Pipeline program is partnering with Pacific Western Bank to continue connecting early-stage startups with venture capital.
Now formally known as the SoCal Venture Pipeline powered by Pacific Western Bank, the program has matched new startups with investors since launching in 2021. Pacific Western will serve as its lead sponsor, joining continuing supporters Wilson Sonsini and KPPB LLP. The Pipeline originally only considered startups looking for Series A funding, but expanded to include seed funding in February. Alliance managing director Eric Eide said adding Pacific Western to the program will further help its startups navigate both Series A and seed fundraising.
“That's really been where we've seen a lot of founder demand,” Eide said. “The amount of founders applying has tripled since [adding seed funding]. There's a lot of interest, particularly amongst the VC community or network, to see high-quality, vetted deal flow.”
Since launching a year ago, the Pipeline has accepted 31 of its 247 applicants. As a rolling program, the selection committee reviews applications on a monthly basis. Companies must be tech-focused and based in Southern California. For Series A funding, Eide said they look for teams that have already raised $500,000 angel or seed investment and are looking to raise at least $4 million. He said companies have to show demonstrable traction at the seed level, have a compelling market opportunity, and have raised at least $250,000.
Eide said they work closely with the chosen founders to connect them to the Pipeline’s network of 200 venture capitalists. Joining the program as a new sponsor, Eide said Pacific Western Bank will help advise founders and secure capital. The Cove Fund venture partner JC Ruffalo, who volunteers to help the program’s founders, told dot.LA in an email that the Pipeline exposes venture capital firms to companies that they might not otherwise have a chance to connect with.
“The SoCal Venture Pipeline is supporting and building a legacy of tech and medtech innovation and growth which will create a more robust and stronger innovation ecosystem here in Southern California,” he said.
Pacific Western Bank SVP Mark diTargiani said the bank was drawn to the Pipeline’s wide reach across Southern California. For early-stage startups, the bank provides free banking services, high-yield checking accounts, and a bit of unsecured credit card debt. diTargiani said they have already begun giving advice to companies in the program and have also introduced new investors to the Pipeline.
“What we saw was an opportunity to help to build a community of early-stage startups throughout the L.A. ecosystem,” diTargiani said.
Despite the unstable market, there is plenty of capital for early-stage startups, diTargiani said. Though the funding environment has changed in recent months, Eide said people are still making deals—and the Pipeline’s investor network can help founders make important connections to get those deals.
“It's still a good time to be raising relatively even if it's a little bit different than the heady days of last year,” Eide said.
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Kristin Snyder
Kristin Snyder is dot.LA's 2022/23 Editorial Fellow. She previously interned with Tiger Oak Media and led the arts section for UCLA's Daily Bruin.
https://twitter.com/ksnyder_db
How Influencers Became Key to Big Brands During the Pandemic — and Why They'll Continue to Grow
07:00 AM | November 30, 2020
- Influencer marketing has surged during the pandemic as more consumers have moved online and brands have been forced to adapt to new challenges.
- The rise of ecommerce and social media continues to usher in a wave of less formal and potentially cheaper marketing from online icons directly connected to audiences that brands can target.
- Marketers expect the trend to continue, which could lead to more unexpected brand partnerships, like a KFC line of Crocs or Forever 21's Cheetos apparel.
Mix together a cup of cold brew, three pumps of caramel syrup, a splash of whole milk and a generous portion of TikTok and you've got yourself "The Charli" – Dunkin' Donuts' new menu item promoted in partnership with Charli D'Amelio, a superstar social media influencer and the drink's namesake.
Influencer marketing campaigns are not new, but the coronavirus pandemic has accelerated their appeal as companies have been forced to ramp up their online presence. Marketers expect that to continue, due to a combination of changing consumer behavior, a growing sophistication of data and analytics, and tighter ad budgets.
As these forces take shape, subscription streaming services expand and cable's decline continues, could it spell the end of TV commercials?
The Rise of Influencer Marketing
Fundamentally, an influencer is someone with a level of knowledge, expertise or social following that enables them to, well, influence other people's decisions. That premise has existed for a long time, but the internet and social media gave rise to a new capability for companies to target specific audiences with more precision than a television or radio commercial. As a result, niche, direct-to-consumer businesses offering specific products, and online influencers to peddle those products, have bloomed.
Before the pandemic set in, Influencer Marketing Hub, a research firm, reported influencer marketing was expected to grow to a $9.7 billion business in 2020, nearly a 50% increase from 2019. More recent evidence suggests that companies are still piling in, even faster than predicted.
Influencer MarketingHub's 2020 report, based on a survey of 4,000 professionals, forecasted a massive rise in the growth of influencer marketing. Courtesy Influencer MarketingHub
In the quarter from June through August, for example, across a sample of 4,500 ecommerce retailers, sales and customers driven to brands' websites through YouTube influencers are up 80% year over year, according to MagicLinks, an L.A.-based social media marketing company that helps firms track the performance of their influencer campaigns. Applications from influencers wishing to use MagicLinks' sales tools have grown nearly fivefold from the start of the pandemic. And across MagicLinks' retail customers, which include the likes of Walmart, Target, L'Oreal and Best Buy, influencer-driven sales are up 115%.
Several other marketing agencies also told dot.LA they've seen increased spending on influencer content, and an expansion of the types of companies that use influencer marketing, compared to pre-COVID.
Part of that is out of necessity. With film production shut down due to the pandemic, traditional commercial advertising was hampered. And with marketing budgets crimped, potentially cheaper advertising routes, such as a well-targeted influencer campaign, grew more attractive.
Influence in the Wake of Ecommerce
The pandemic has also caused ecommerce to skyrocket and led people to spend more time on social media, both of which have increased the supply of potential customers for brands to target with influencers.
"Consumers crave real-life stories and authenticity, and influencers are able to highlight brands in a way that feels real and accessible. We are seeing that during the pandemic, this need is further heightened as more consumers are spending more time on social platforms," Grubhub's director of content and social Mandy Cudahy told dot.LA.
The growing sophistication of data and analytics on the effectiveness of influencer marketing has also helped companies create more targeted ad campaigns likely to reach spenders. For example, tools are improving to help brands find the right influencer, track their ability to drive purchases, and even predict how well an influencer campaign will do.
"There's been a much bigger push around nailing down the attribution and ROI," said Kevin Gould, co-founder of three L.A.-based ecommerce brands that rely heavily on influencer marketing and collectively earn over $60 million in annual revenue.
That push, in turn, is helping to nudge brands that have historically shied away from influencer marketing. Part of what has held them back is the fact that the data from traditional channels like television and radio advertising is far more robust than what's available in the influencer space, if only because it is relatively new.
"You're going up against hard sets of data since like the birth of Macy's, so it didn't become a priority," said Jennifer Piña, MagicLinks' director of brand partnerships. "Now it's being forced to become a priority."
As a result, bigger, more traditional brands are moving into what has until now been a channel primarily used by smaller, direct-to-consumer brands. Tito's Vodka, for instance, ran its first influencer campaign in August with Brooklyn-based First Tube Media. Prior to the campaign, "Tito's had never spent a dollar in influencer marketing," First Tube CEO Andrew Beranbom told dot.LA. Superdry, a publicly-traded British clothing company founded in 1985, is partnering with MagicLinks to launch its first large influencer campaign in advance of the holiday season.
How Influencers Change What We Buy, and What They Make
KFC Crocs, an unholy creation of influencer marketing.
Influencer marketing has also given rise to new partnerships between brands that arguably have nothing to do with each other, with influencers as the linchpin linking them together. Examples include a KFC line of Crocs, e.l.f. Cosmetics' Chipotle burrito-inspired handbag and makeup kit, and Forever 21's Cheetos apparel line.
"It's this idea of like, a brand is a brand," said Piña. "What they actually sell or what people purchase from them is oftentimes irrelevant. It's more about the packaging and the moment and the feel and that's what social media does: it creates excitement for something that is not necessarily exciting. Like Crocs: Crocs is like your dad's brand. But it can immediately become cool, at the drop of a pin, once you get the right influencers involved."
Even as data attribution improves and consumers spend more time online in the land of influencers, one key downside to influencer marketing remains: limited control. A company can manage every element of a commercial shoot or Facebook ad, but using an unscripted TikTok or Instagram influencer requires letting go.
"Brands in some categories historically have been super fearful of letting influencers tell their story because it is so important to the sanctity of the brand to keep the messaging really succinct and in line with the brand guidelines," Piña said.
Yet that informality is part of the appeal of influencer marketing.
"Brands get stuck on needing to be perfect or scripted, whereas influencers talk to you like they're your next-door neighbor," said Brian Meert, chief executive of L.A.-based AdvertiseMint, a digital advertising agency. "It's very organic; it doesn't feel like a pushy ask. I think those kinds of elements have enabled us to grow sales for our clients using more of these influencer- and consumer-generated type videos."
Piña noted that while Ralph Lauren, a premium fashion retailer, has been wary of using influencers because of "brand safety," the company recently approached MagicLinks to build out a year-long TikTok strategy. Even as the social video giant's fight with the White House threatened to upend the living of its influencers, TikTok's hold on the traditionally elusive younger demographic – along with other user-generated video platforms like Instagram, YouTube, Twitch and Snap – has become increasingly hard for companies to ignore.
"Any brand that wants to connect with Gen Z, and sell whatever product or service they have, has to engage (with these platforms)," said Glenn Ginsburg, SVP of global partnerships at influencer marketing agency The QYOU. "Moving forward I think we'll see brands start to build deeper relationships with influencers."
Not every brand is poised to get the same value from an influencer campaign, however. An influencer is unlikely to save the day for a travel and tourism company ravaged by the pandemic, for instance. And it remains a challenge to reliably execute an influencer campaign, notwithstanding the emergence of new tools to do so.
"A lot still depends on relationships, conversations and trial and error," said Darren Litt, chairman and co-founder of L.A.-based talent marketplace MarketerHire. "A successful influencer campaign requires a detailed understanding of an influencer's brand, and that's hard to do with tech and AI alone."
Achieving the cost-efficiency of a well-targeted campaign also remains most viable for companies that are best positioned to drive online purchases. Using Kim Kardashian to sell clothing that flatters one's figure, for example, is more likely to drive trackable sales than, say, pushing Pepsi.
"For mass-market products looking to reach a broad audience, TV advertising remains effective because you get the upside of wide reach with the downside of limited targeting," said Litt. That's especially true for products that people don't typically purchase online.
But much like a song that goes viral on TikTok can drive a listening bump on streaming platforms like Spotify, so, too, it appears, can an influencer campaign drive offline purchases.
After all, Dunkin' Donuts saw sales surge following its D'Amelio partnership, even though the girl with over 100 million TikTok followers has reportedly never ordered "The Charli" herself.
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Sam Blake primarily covers media and entertainment for dot.LA. Find him on Twitter @hisamblake and email him at samblake@dot.LA.
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Sam Blake
Sam primarily covers entertainment and media for dot.LA. Previously he was Marjorie Deane Fellow at The Economist, where he wrote for the business and finance sections of the print edition. He has also worked at the XPRIZE Foundation, U.S. Government Accountability Office, KCRW, and MLB Advanced Media (now Disney Streaming Services). He holds an MBA from UCLA Anderson, an MPP from UCLA Luskin and a BA in History from University of Michigan. Email him at samblake@dot.LA and find him on Twitter @hisamblake
https://twitter.com/hisamblake
samblake@dot.la
Bilingual Publisher Encantos Raises $2 Million to Launch Subscription Box, Expand Spanish Content
04:09 PM | February 10, 2020
Encantos
A then-tech executive at Oracle in 2015, Steven Wolfe Pereira was a new father and wanted to do some more meaningful work. So with his wife, who had run Twitter's multicultural market strategy, and their two good friends, they began pitching an idea of a bilingual children's book series to publishers.
"I was aghast at the responses I was getting," he said. "They were like, 'Latinos really don't read'. It was really insulting."
So, the four — all with Latin immigrant roots — came up with their own brand, Encantos, that loosely translates in Spanish to "charming." It started with a board book, app and YouTube channel that had traditional Latino children's songs in Spanish and English like Los Pollitos Dicen or a different take on Happy Birthday, Las Mañanitas. They called it Canticos.
Two years after launching, Encantos picked up a deal with Nickelodeon to license Canticos. And the company has been expanding their edu-tainment brand since. Pereira, whose family is from the Dominican Republic and who took over as chief executive last year, said the public-benefit company aims to be a culturally authentic direct-to-consumer brand for preschoolers.
Last month, the company raised $2 million in an oversubscribed seed round Oakland-based Kapor Capital with Boston Meridian Partners, Chingona Ventures, Human Ventures, and MathCapital.
Encantos plans on using the funds to launch a subscription box service tied to their TinyTravelers series, books exploring cultures around the world. It also is looking to grow their brands. Chef and television personality Aliya LeeKong announced last week she is launching "Issa's Edible Adventures" in partnership with Encantos. The book, app, and animated series is centered around a "feisty, funny, and resourceful" 7-year-old, half-black and half-Indian girl.
Wolfe Pereira, who helped bootstrap the company, said Encantos wants to tell stories that aren't being told elsewhere and will be using a diverse cadre of writers.
"Part of the issue is we don't have enough diverse voices in 'the room where it happens' so we can have culturally authentic voices sharing their everyday lived experiences," he said.
About 41 million Americans speak Spanish, but options for Spanish children's books have been slim, he noted.
Many blame this on the lack of diversity in the publishing, which recently came under fire over "American Dirt," a novel by Jeanine Cummins about a woman who fled Mexico to escape cartels. Latinx writers challenged the portrayal of the immigrant experience as a cheap stereotype that sailed through the largely white literary world because there are few people of color in the upper ranks of the industry.
"Lots of people talk about diversity, equality and inclusion — but year after year it's just that: talk," Wolfe Pereira said. "This is impacting every industry, not just the publishing industry. But for some reason, it's really pronounced in publishing. 'American Dirt' is just one of many, many examples where folks miss the mark. It's 2020, and over half of all kids in America are multicultural. Diversity is a business imperative today."
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diversity in techencantossteven wolfe pereiranickelodeonkapor capitalboston meridian partnerschingona ventureshuman venturesmathcapitalamerican dirtpublishingaliya leekoongdirect-to-consumer
Rachel Uranga
Rachel Uranga is dot.LA's Managing Editor, News. She is a former Mexico-based market correspondent at Reuters and has worked for several Southern California news outlets, including the Los Angeles Business Journal and the Los Angeles Daily News. She has covered everything from IPOs to immigration. Uranga is a graduate of the Columbia School of Journalism and California State University Northridge. A Los Angeles native, she lives with her husband, son and their felines.
https://twitter.com/racheluranga
rachel@dot.la
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