What Are LA’s Hottest Startups of 2021? We Asked Top VCs to Rank Them
Despite — or in many cases because of — the raging pandemic, 2020 was a great year for many tech startups. It turned out to be an ideal time to be in the video game business, developing a streaming ecommerce platform for Gen Z, or helping restaurants with their online ordering.
But which companies in Southern California had the best year? That is highly subjective of course. But in an attempt to highlight who's hot, we asked dozens of the region's top VCs to weigh in.
We wanted to know what companies they wish they would have invested in if they could go back and do it all over again.
Startups were ranked by how many votes each received. In the case of a tie, companies were listed in order of capital raised. The list illustrates how rapidly things move in startup land. One of the hottest startups had not even started when 2020 began. A number doubled or even 16x'd their valuation in the span of a few short months.
To divvy things up, we delineated between companies that have raised Series A funding or later and younger pre-seed or seed startups.
Not surprisingly, many of the hottest companies have been big beneficiaries of the stay-at-home economy.
PopShop Live, a red-hot QVC for Gen Z headquartered out of a WeWork on San Vicente Boulevard, got the most votes. Interestingly, the streaming ecommerce platform barely made it onto the Series A list because it raised its Series A only last month. Top Sand Hill Road firms Andreessen Horowitz and Lightspeed Venture Partners reportedly competed ferociously for who would lead the round but lost out to Benchmark, which was an early investor in eBay and Uber. The round valued PopShop Live at $100 million, way up from the $6 million valuation it raised at only five months prior.
Scopely, now one of the most valuable tech companies in Los Angeles, was also a top vote getter.
The Culver City mobile gaming unicorn raised $340 million in Series E funding in October at a $3.3 billion valuation, which nearly doubled the company's $1.7 billion post-money valuation from March. It is no coincidence that that was the same month stay-at-home orders began as Scopely has benefited from bored consumers staying on their couch and playing ScrabbleGo or Marvel Strike Force.
The company's success is especially welcome news to seed investors Greycroft, The Chernin Group and TenOneTen ventures, who got in at a $40 million post valuation in 2012. Upfront Ventures, BAM Ventures and M13 joined the 2018 Series C at a $710 post-money valuation.
Softbank-backed Ordermark, which flew more under the radar, also topped the list. The company's online ordering platform became a necessity for restaurants forced to close their dining rooms during the pandemic and raised $120 million in Series C funding in October.
On the seed side, two very different startups stood out. There was Pipe, which enables companies with recurring revenues to tap into their deferred cash flows with an instant cash advance, and Clash App, Inc., a TikTok alternative launched by a former employee of the social network in August.
We will have the list of Southern California's top seed startups out tomorrow.
Hottest
PopShop Live ($100 million)
The live-streaming shopping channel created by Danielle Lin reportedly found itself in the middle of a venture capital bidding war this year. Benchmark eventually won out leading a Series A round, vaulting the app at a $100 million valuation. The Los Angeles-based platform has been likened to QVC for Gen Z and it's part of a new wave of ecommerce that has found broader appeal during the pandemic. Google, Amazon and YouTube have launched live shopping features and other venture-backed startups like Los Angeles-based NTWRK have popped up.
Boiling
Scopely ($3.3 billion)
One of the most valuable Southern California tech startups with a $3.3 billion valuation, the Culver City mobile game unicorn has benefitted from a booming gaming market that has flourished in this stay-at-home economy. Scopely offers free mobile games and its roster includes "Marvel Strike Force," "Star Trek Fleet Command" and "Yahtzee with Buddies." In October the company raised a $340 million Series E round backed by Wellington Management, NewView Capital and TSG Consumer Partners, among others fueling speculation that it was on its road to an IPO. Co-CEO Walter Driver has said that he doesn't have immediate plans to go public.
Ordermark ($70 million)
The coronavirus has forced the closure of many dining rooms, making Ordermark all the more sought after by restaurants needing a way to handle online orders. Co-founder and CEO Alex Canter started the business in 2017, which recently rang in more than $1 billion in sales. Ordermark secured $120 million in Series C funding by Softbank Vision Fund 2 in October that it will use to bring more restaurants online. The company's Nextbite, a virtual restaurant business that allows kitchens to add delivery-only brands such as HotBox from rapper Wiz Khalifa to their existing space through Ordermark, is also gaining traction.
Simmering
Cameo ($300 million)
Cameo, which launched three years ago, had its breakout year in 2020 as C-list celebrities like Brian Baumgartner banked over a million dollars from creating customized videos for fans. In the sincerest form of flattery, Facebook is reportedly launching a feature that sounds a lot like Cameo. Even though the company is still technically headquartered in Chicago, we included Cameo because CEO Steven Galanis and much of the senior team moved to L.A. during the pandemic and say they plan to continue running the company from here for the foreseeable future.
Mothership ($64 million)
Co-founded by CEO Aaron Peck, Mothership provides freight forwarding services intended to streamline the shipping experience. The company's tracking technologies connect shippers with nearby truck drivers to speed up the delivery process. It raised $16 million in Series A venture funding last year, driving the platform to a $48 million pre-money valuation.
Nacelle ($6.7 million)
Founded in 2019, Nacelle's ecommerce platform helps retailers improve conversion rates and decrease loading speeds for their sites. The software integrates with Shopify and other services, offering payment platforms and analytics integration, among dozens of services. Nacelle raised about $4.8 million earlier this year with angel investors that included Shopify's Jamie Sutton, Klaviyo CEO Andrew Bialecki and Attentive CEO Brian Long.
Boulevard ($30 million)
Matt Danna and Sean Stavropoulos came up with Boulevard when an impatient Stavropoulos was frustrated wasting hours to book a hair appointment. Their four-year-old salon booking and payment service is now used by some of Los Angeles' best-known hairdressers. Last month, the two secured a $27 million Series B round co-led by Index Ventures and Toba Capital. Other investors include VMG Partners, Bonfire Ventures, Ludlow Ventures and BoxGroup.
CloudKitchens ($5.3 billion)
Uber co-founder Travis Kalanick CloudKitchens rents out commissary space to prepare food for delivery. And as the pandemic has fueled at-home delivery, the company has been gobbling up real estate. The commissaries operate akin to WeWork for the culinary world and allow drivers to easily park and pick-up orders as the delivery market has soared during pandemic. Last year, it raised $400 million from Saudi Arabia's colossal sovereign wealth fund.
GOAT ($1.5 billion)
Founded by college buddies five years ago, GOAT tapped into the massive sneaker resale market with a platform that "authenticates" shoes. The Culver City-based company has since expanded into apparel and accessories and states that it has 20 million members. Last year, Foot Locker sunk a $100 million minority investment into 1661 Inc., better known as Goat. And this fall it landed another $100 million Series E round bankrolled by Dan Sundeheim's D1 Capital Partners.
Savage X Fenty
The lingerie company co-founded by pop singer Rihanna in 2018 is noted for its inclusivity of body shapes and sizes. It has raised over $70 million, but The New York Times' DealBook newsletter recently reported that it's been on the hunt for $100 million in funds to expand into active wear. The company generates about $150 million in revenue, but is not yet profitable, according to the report. It became the focus of a consumer watchdog investigation after being accused of "deceptive marketing" for a monthly membership program.
Warming Up
FabFitFun ($930 million)
The lifestyle company provides customized personal subscription box services every three months with full size products. Started in 2010 by Daniel Broukhim, Michael Broukhim, Sam Teller and Katie Rosen Kitchens, it now boasts more than one million members. Last year, the company raised $80 million in a Series A round led by Kleiner Perkins last year and appears to be preparing for an eventual IPO as it slims down costs and refocuses on its high value products.
Dave ($1 billion)
Launched in 2016, the finance management tool helps consumers to avoid overdrafts, provides paycheck advances and assists in budgeting. Last year, it began to roll out a digital bank account that was so popular that two million users signed up for a spot on the waitlist. The company, run by co-founder Jason Wilk, has raised $186 million in venture capital and counts billionaire Mark Cuban as an early investor and board member. Other backers include Playa Vista-based Chernin Group.
Sure ($59 million)
SURE offers multiple technology products to major insurance brands — its platform can host everything from renter's insurance to covering baggage, so customers never have to leave an agency's website. It also offers its platform to ecommerce marketplaces, embedding third-party insurance protections for customers to purchase all on the same webpage. Founded in 2014, the Santa Monica-based startup last raised an $8 million Series A round led by IA Capital in 2017.
Zest AI ($90 million)
Founded in 2009 by former Google CIO Douglas Merrill and ex-Sears executive Shawn Budde, Zest AI provides AI-powered credit underwriting. It helps banks and other lenders identify borrowers looking beyond traditional credit scores. It claims to improve approval rates while decreasing chargeoffs. The company uses models that aim to make the lending more transparent and less biased. This fall the company raised $15 million from Insight Partners, MicroVentures and other undisclosed investors, putting its pre-money valuation at $75 million, according to PItchbook.
PlayVS
Santa Monica-based PlayVS provides the technological and organizational infrastructure for high school esports leagues. The pandemic has helped the company further raise its profile as traditional sports teams have been benched. Founded in early 2018, PlayVS employs 46 people and has raised over $100 million. In addition to partnering with key educational institutions, it also has partnerships with major game publishers such as Riot and Epic Games.
Tapcart ($40 million)
A SaaS platform helps Shopify brands create mobile shopping apps. The marketing software saw shopping activity jump 50% over 90 days as the pandemic walloped traditional retailers. Founded by Eric Netsch and Sina Mobasser, the company raised a $10 million Series A round led by SignalFire, bringing the total raise to $15 million.
Papaya ($31.8 million)
Papaya lets customers pay any bill from their mobile devices just by taking a picture of it. The mobile app touts the app's ease-of-use as a way to cut down on inbound bill calls and increase customer payments. Founded by Patrick Kann and Jason Metzler, the company has raised $25 million, most recently a S10 million round of convertible debt financing from Fika Ventures, Idealab and F-Prime Capital Partners.
Floqast ($250 million)
FloQast is a management software that integrates enterprise resource planning software with checklists and Excel to manage bookkeeping. The cloud-based software company claims its system helps close the books up to three days faster. It is used by accounting departments at Lyft, Twilio, Zoom and The Golden State Warriors. In January, it raised $40 million in Series C funding led by Norwest Venture Partners to bring the total raise to $92.8 million.
Brainbase ($26.5 million)
The company's rights management platform expedites licensing payments and tracks partnership and sponsorship agreements. It counts BuzzFeed, the Vincent Van Gogh Museum and Sanrio (of Hello Kitty and friends fame) among its clients. In May it announced $8 million in Series A financing led by Bessemer Venture Partners and Nosara Capital, bringing the total raised to $12 million.
OpenPath ($28 million)
The Los Angeles-based company provides a touchless entry system that uses individuals cell phones to help with identification instead of a key card. The company offers a subscription for the cloud-enabled software that allows companies to help implement safety measures and it said demand has grown amid the pandemic. Founded by James Segil and Alex Kazerani the company raised $36 million led by Greycroft earlier this year, bringing its total funding to $63 million.
FightCamp ($2.5 million)
FightCamp is an interactive home workout system that turns your space into a boxing ring with a free standing bag, boxing gloves and punch trackers. The company is riding the wave of at-home fitness offerings including Peloton, Mirror and Zwift that have taken off during the pandemic as gyms closed. The company has raised $4.3 million to date.
Numerade
The Santa Monica-based company provides video and interactive content for education in math, science, economics and standardized test prep. Founded in 2018 by Nhon Ma and Alex Lee, who previously founded Tutorcast, an online tutoring service, the company gathers post-graduate educated instructors to create video lessons for online learning.
Our Place ($32.5 million)
The creator of a pan with a cult following on social media, this Los Angeles-based startup designs and retails cookware and dinnerware. Founded by Amir Tehrani, Zach Rosner and Shiza Shahid, the company completed its Series A funding earlier this year, bringing its total raised to date to $10 million.
Tala ($560 million)
For customers that have no formal credit or banking history, this company's application promises more financial access, choice and control. It gathers data to create a credit score that can be used to instantly underwrite and disburse loans ranging from $10 to $500. Co-founded by Shivani Siroya and Jonathan Blackwell, Tala has raised $217.2 million to date. Its investors include PayPal Ventures, Lowercase Capital and Data Collective.
ServiceTitan ($2.25 billion)
Founded in 2007 by chief executive Ara Mahdessian and president Vahe Kuzoyan, ServiceTitan operates software that helps residential home contractors grow their businesses. It provides businesses tools like customer relationship management and accounting integration to streamline operations. The company closed a $73.82 million Series E funding round from undisclosed investors earlier this year.
100 Thieves ($160 million)
Founded in 2017 by former professional "Call of Duty" player Matthew Haag, 100 Thieves manages esports competitions in major titles including "Counter Strike Global Offensive" and "League of Legends." The company also produces apparel and merchandise, opening a physical store and training ground called the "Cash App Compound" in collaboration with Fortnite earlier this year. The company has raised $60 million to date, from investors including Salesforce CEO Marc Benioff and Aubrey Graham, better known as the rapper Drake.
Emotive ($16.5 million)
This AI-powered customer service platform automates text conversations between customers and businesses to increase sales. Emotive uses their sales team to verify questions, distinguishing it from other bot-driven marketing services, according to the company. The company was founded in 2018 by Brian Zatulove and Zachary Wise, who serve as the chief executive and the chief operating officer, respectively. It has raised $6.65 million to date, from Floodgate Fund and TenOneTen Ventures.
Everytable ($33 million)
Created by former hedge fund trader Sam Polk, the Los Angeles-based startup wants to be a healthy fast food chain. It prices its healthy pre-packaged meals around $5 in underserved communities while costing more in other neighborhoods with the goal of reducing so-called food deserts in low-income neighborhoods. It also offers a subscription delivery service. The company recently closed a $16 million Series B round led by Creadev along with Kaiser Permanente Ventures.
Lead art by Candice Navi.
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Once a small health care provider co-founded by two colleagues in Aliso Viejo, Crossover Health has grown into one of the biggest names in the industry and is expected to rake in $165 million in revenue by year's end.
Facebook, LinkedIn and Comcast are among its clients and its providers now oversee 400,000 patients across the country. But their most well-known partnership is with Amazon, which is using the company to power their 17 in-person clinics, including one near its fulfillment center in San Bernardino.
Crossover promises to lower the cost of health care for employers by providing primary and preventive health care at a pre-fixed rate. In addition, it says it can save companies 15% on average on their health care costs by emphasizing preventive care.
Co-founder Scott Shreeve said he started to think about this idea after seeing a rotating door of patients with various ailments in the emergency room.
"I would do my best to take care of my 30 or so patients every day that came in and try to address their issues," Shreeve said. "And then the next day there'd be 30 more, and then 30 more. It just felt like, 'what can I do to get ahead of this, to get upstream of these problems?'"
Crossover's Series D round was led by Deerfield Management Company. The goal is to help the company grow faster.
Founded in 2010 by Shreeve, an emergency medicine doctor, and health insurance expert Nate Murray, the company runs 48 health clinics that are based employer sites or close by. The company, like Forward and One Medical, uses comprehensive analytics platforms to track and enable patient health care.
Crossover nabbed its first big client, Apple, in 2011 as the tech giant was developing on-site clinics.
Its success can be attributed to the growing number of self-insured companies. Rather than paying money to an insurance company, a business will take on the risk of paying health care providers itself. They often still use insurance to handle the administrative tasks, but use primary health clinics like Crossover Health to handle the everyday needs of their employees.
Crossover Health announced a partnership with Amazon in 2020 to develop a slew of health clinics scattered across the country meant for Amazon workers who might work odd hours. It has opened up 17 clinics in five states, including the San Bernardino area. The clinics operate from 7 a.m. to 11 p.m. and offer everything from primary care to behavioral health services for workers and their families.
"If you come in and you've got a back injury that's that's causing depression, we're not going to just treat your back injury and punch you out of here," Shreeve said. "We have a physical therapist and a mental health therapist as part of a similar team and they work to provide that comprehensive care."
Crossover Health may not be Amazon's only provider. Wyoming-based Care Medical, which contracts with Amazon to offer Washington employees in-person and virtual care, filed paperwork to do business in other states, according to STAT News. It is unclear if this is a joint venture with Amazon.
A New Model for Tech Companies
Many tech companies have adopted on-site or near-site clinics in order to proactively lower health insurance costs. If employees have easy access to quality primary and preventative care that can manage or stave off chronic conditions, the employer pays less on reactive care for high-risk issues.
The self-insured model has historically worked best for large businesses who can offer hundreds of employees to, and afford to broker deals with, health care providers. Eighty-four percent of large companies were self-insured in 2020. Disney and Walmart are both self-insured, and Walmart flies its employees over state lines to see specialists in its network.
"If you're a little company and you have one person that works for you that has a really bad accident, that can blow your budget for five years. Then you have to buy reinsurance to protect you against that," Glenn Melnick, a professor at the USC Price School of Public Policy. "There's no savings there... whereas if you're a big company, administrative costs are spread out among a lot of employees."
In addition to Crossover Health's on-premise and virtual clinics staffed by doctors, therapists and other care providers, the company offers fitness classes and resources on grocery shopping and other extrinsic factors that play a role in determining one's health.
"They have a real incentive to keep all their members healthy," said Eunjoo Pacifici, a professor at the USC School of Pharmacy. "Their expenses are kind of fixed for paying for doctors and infrastructure. If they can keep the cost of care down, they can keep more of their profits."
It also has a network of specialists and can schedule appointments with them on behalf of a patient. Specialists are not covered under Crossover Health. The company uses an in-house data analytics technology platform that allows them to collect an employee's medical history with their permission, create a baseline of health, track 40 metrics of health, identify potential risk factors and proactively encourage employees to get treated.
The platform is a portal by which patients can securely contact health care experts and access their health records. In turn, Crossover Health recommends flu shots, physicals and other services based on the employee's health profile.
While this model is shown to be effective in managing care, according to Melnick, not all preventative health care is cost effective. Some chronic diseases — like diabetes, cancer and heart disease — require years of preventative health care to slow the effects, and those preventative treatments may not outweigh the cost of treating the disease.
"It improves quality of life," Melnick said. "There are other reasons to do it, but for other things it is not economically justified."
Crossover Health says while chronic conditions are more expensive to treat, they're balanced out by the employees who require very little care.
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