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XWhat Are LA’s Hottest Startups of 2021? We Asked Top VCs to Rank Them
Ben Bergman
Ben Bergman is the newsroom's senior finance reporter. Previously he was a senior business reporter and host at KPCC, a senior producer at Gimlet Media, a producer at NPR's Morning Edition, and produced two investigative documentaries for KCET. He has been a frequent on-air contributor to business coverage on NPR and Marketplace and has written for The New York Times and Columbia Journalism Review. Ben was a 2017-2018 Knight-Bagehot Fellow in Economic and Business Journalism at Columbia Business School. In his free time, he enjoys skiing, playing poker, and cheering on The Seattle Seahawks.
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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Ben Bergman
Ben Bergman is the newsroom's senior finance reporter. Previously he was a senior business reporter and host at KPCC, a senior producer at Gimlet Media, a producer at NPR's Morning Edition, and produced two investigative documentaries for KCET. He has been a frequent on-air contributor to business coverage on NPR and Marketplace and has written for The New York Times and Columbia Journalism Review. Ben was a 2017-2018 Knight-Bagehot Fellow in Economic and Business Journalism at Columbia Business School. In his free time, he enjoys skiing, playing poker, and cheering on The Seattle Seahawks.
https://twitter.com/thebenbergman
ben@dot.la
These 2 Los Angeles Startups Are on the Forefront of a New Space Health Care System
06:00 AM | January 01, 2023
As human space tourism ramps up, and we continue to explore deeper into the cosmos, one alarming fact is becoming more evident: Despite decades of human spaceflight, we still have very limited information about how going to space, or staying there for sustained periods of time, affects our bodies.
So far, flights to low Earth orbit are relatively stable, and thankfully no one has perished on a trip yet. But there’s also more to come; Virgin Galactic is planning more space tourism trips next year and beyond that, longer-term missions like Elon Musk’s pet project to colonize Mars could come with some serious health risks. And, like any mission to space, nearly every variable has to be considered before launch to ensure the people undertaking these journeys are as healthy as possible.
That’s where private industry comes in. There’s a handful of startups that are focused on developing technology to make it easier to monitor human health in space. And while it may seem like a far-away pipe dream, they’ll be the first to tell you that having startups begin to develop health care products for space-related exploration is key to ensuring there aren’t mass casualties.
“The truth is, there is little that is more complex than space, and biology, and these are not things that have fast development times,” said Elizabeth Reynolds, a biologist and director of the Starburst Aerospace Care in Space Challenge. The challenge recently awarded six winning startups (three were local to Southern California) a $100,000 investment from pharmaceutical company Boryung, support for on-orbit experimentation by Axiom, a Houston-based company making private space stations, and acceptance into Starburst’s 13-week accelerator program.
“As we talk about deep space exploration, that is a point where we get into high amounts of cosmic radiation and it's an environment that will kill us,” Reynolds said. “We need solutions that are completely untethered from Earth.” Reynolds said she was “less concerned” about space tourism, and more focused on long-term habitation.
Reynolds did note that there’s one easy option, one that NASA’s relied on heavily up until now: send robots into space to do human work. That’s possible, but she noted, “I cannot imagine a future where we continue to only explore space by robots.”
There’s a myriad of issues that people face when spending long durations of time in space. Some side effects can range from motion sickness to radiation poisoning to heart and muscle atrophy. Others include bodily fluid shifting due to zero gravity, changes in vision, loss of muscle strength and changes in gut biome behavior. Of course, there’s also a host of potential mental side effects too, including depression or anxiety. A 2021 study published in the Journal of Clinical Nursing noted that these effects can also persist even after a person comes back from orbit.
Kay Olmstead, CEO of San Diego-based NanoPharma Solutions, was one of the companies selected by Starburst. She told dot.LA the company is working on a way to deliver drugs to people in space to maximize their effects.
Olmstead told dot.LA., NanoPharma “uses [a] nanocoating method developed by NASA to nanosize drugs to improve biosorption – [the] smaller the particle size, better solubility of [the] drug, hence better absorption into our body which is mostly water.”
The importance of nano-soluble drugs is key, since it could limit side effects that come from typical ingestion of drugs, such as liver and kidney damage, or systemic toxicology (when a drug is absorbed by or distributed to other parts of the body besides the specific target area), Olmstead explained.
She added that NanoPharma is working on using vacuum pressure in low Earth orbit to deliver drugs to diseased organs without needles, a potential groundbreaking solution since right now, most life-saving drugs need to be administered via IV and that’s “not suitable for space travelers.” Instead, NanoPharma is working to patent several methods of drug delivery including a nano-nasal spray and a nano-inhaler.
Olmstead noted that there’s a number of companies working on private space stations – besides Axiom, she also cited Northrop Grumman, Nanoracks and Sierra Space, who all have “grand plans of infrastructure building in space for private space travelers and in-space manufacturing.”
There’s a couple dueling local companies with ambitions to build private space stations as well: Vast Space, and Orbital Assembly.
Olmstead noted that there will have to be construction workers in space overseeing building of these outposts, and added, “Care for these space travelers and workers is the most important concern of these aerospace companies aside from the station building/maintenance.” She also said that outposts on the moon, which will likely be built after stations in low Earth orbit, come with “even more severe health hazards.”
Another local startup that won the Starburst challenge was Vibo Health. Based in Los Angeles and led by physicist and CEO Gil Travish, Vibo develops wearable health tracking technology that uses wrist scanning to give users insight into their health, with the goal of finding health risks without invasive tests.
Right now, Vibo has a growing business terrestrially, but Travish told dot.LA he’s eager to see how the tech could be applied to astronauts. “It is a niche, of course, but it's a growing niche,” Travish said. He noted that Vibo hopes to do in-space testing within the next two years.
For now, though, both Vibo and NanoPharma said they will continue developing and testing their technology on the ground with the goal of bettering patients’ lives here on earth. Travish said he’s optimistic that the work will not only better conditions for space-faring humans, but also unlock information about the human condition.
“It’s not just about going to space, it’s about learning more about ourselves,” Travish said.
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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
Mullen Automotive Pays Millions to Settle Lawsuit with Qiantu
05:05 AM | March 22, 2023
Image Courtesy of Mullen Automotive
Like a zombie from the grave, Mullen Automotive’s electric sports car grift lives once more. Earlier this week, the Southern Californian company announced that it had resolved its contract disputes with Chinese manufacturer Qiantu and would begin to “re-design” and “re-engineer” the DragonFLY K50 platform for sale in the United States.
On the surface (or if you just read the press release) this would seem to be excellent news for the Californian EV startup. But the saga of the Mullen/Qiantu partnership is long, and in the context of their shared history, the deal’s terms look considerably less favorable for Mullen.
Back in May 2019, after months of negotiations, Mullen entered into an agreement with Qiantu. As part of that deal, Mullen agreed to buy DragonFLY K50 “kits” from the Chinese manufacturer and assemble and resell them in the United States. A short time after the deal was inked, Mullen claimed it had signed the wrong version of the paperwork, according to court documents filed by Qiantu. Instead of simply correcting the error, the documents allege that Mullen tried to use the delay to renegotiate key parts of the deal. For reasons that are unclear, Qiantu agreed to come back to the table, and a second agreement was eventually drafted with essentially the same terms, but a different payment schedule. Mullen signed the agreement and initialed every page.
The documents allege, however, that Mullen’s next move was to claim that it was again unaware of the very same revised payment schedule it had just worked to renegotiate. By August 31, 2019, Mullen had missed its very first payment to Qiantu. The Californian company would go on to default on the rest of its payments as well, despite continuing to advertise the K50 as “coming soon” on its website in subsequent months.
In October 2019, after missing its first two payments, Mullen filed a suit against Qiantu for breach of contract, again alleging that the Chinese manufacturer had sneaked in the details of the payment schedule without Mullen’s knowledge.
This suit has now been settled.
Under the terms of the agreement, Mullen will pay Qiantu $6 million, plus warrants that allow the purchase of up to 75 million shares of MULN at 110% of the price of the common stock. These warrants are exerciseable for one year, starting in September 2023.
There’s also an item that stipulates that Mullen pays an additional $2 million for “deliverable items under the IP Agreement,” and another which mandates that Mullen pay Qiantu a royalty fee of $1,200 for each K-50 it manages to sell in the United States over the next five years. Finally, and perhaps worst of all for the Californian company, Mullen also agrees to buy “a certain number of vehicle kits every year from Qiantu.”
Even without the vague promise to buy more vehicles from Qiantu, the math adds up to at least $8 million that Mullen will have to pay out, not including royalties. Mullen basically went to court, wound up with the same deal, and lost millions of dollars in the process.
Making this look even worse is the fact that the K-50 is now a three-year old car. While the car still looks great and boasts some pretty legitimate specs, Mullen will still need to make sure the K-50 complies with the standards and regulations in the United States—a process that is often incredibly expensive and time consuming. So far it’s unclear how Mullen, a company that has never manufactured a production vehicle before, will tackle that challenge.
With how ragged things look from the outside, it’s hard to even predict if Mullen will exist come September.
Update: This story has been corrected to provide a more accurate description of the financial terms of the settlement between Qiantu and Mullen.
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David Shultz
David Shultz reports on clean technology and electric vehicles, among other industries, for dot.LA. His writing has appeared in The Atlantic, Outside, Nautilus and many other publications.
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