The L.A. tech scene is booming despite a year-plus pandemic and a string of natural disasters. Rocket makers, sneaker sellers and fusion power creators were among those that dominated the list of L.A. venture deals for the first half of 2021.
On Wednesday, the National Venture Capital Association and Pitchbook released their Venture Monitor report which tracks investment across the country. Both Los Angeles and the U.S. overall notched record-breaking levels of VC investment as the COVID-19 pandemic rebound continues.
A few highlights from the report:
- At the national level, megadeals of $100 million have become more common, and L.A. appears to be no exception, with all 10 of its largest deals coming it at $100 million-plus.
- VC investment in Q2 for the Los Angeles-Long Beach area totaled $8.5 billion, spread across 365 different deals. That's slightly down from Q1's $9.4 billion, but still more than double the investment from the same time period last year ($3.9 billion).
- Los Angeles remains a powerhouse, but it still lags behind Silicon Valley. The $8.5 billion dollars of Q2 investment puts Los Angeles-Long Beach second, behind only the Bay Area ($26.7 billion) and New York City ($12.6 billion) in terms of total VC deal activity. Boston, Seattle and Denver round out the top 6.
- The white-hot market streak continues. For the year to date, VC investment in the Los Angeles-Long Beach area has totaled $17.9 billion across 762 deals. That's easily on pace to shatter 2020's record total of $22.7 billion.
- The three largest deals in the Los Angeles-Long Beach area came from the aerospace industry. Elon Musk's SpaceX raised $1.2 billion while upstart rival 3-D rocketmaker Relativity Space pulled in $650 million sending its valuation soaring to $4.2 billion. Defense contractor raised $450 million catapulting the Irvine-based company's valuation to $4.6 billion.
- Of the top 10 largest deals, three were fintech software companies.
- Energy and software also received large investments in excess of $100 million.
- Santa Monica scooter company Bird Rides, which is plotting out an IPO via SPAC, also made the list. The blank-check company Switchback II Corporation was marketing a PIPE offering to investors.
- All of the top 10 largest VC investments were later stage investments—a trend which was generalizable across the entire United States.
- Exits were strong nationally and for the Los Angeles-Long Beach area, with IPOs representing the dominant pathway to liquidity. The region's largest exits came from FIGS, ZipRecruiter and Bridg.
- FIGS, the Santa Monica Healthcare apparel brand, IPO'd for an exit of $3.4 billion.
- ZipRecruiter, the Santa Monica online recruiting platform, also IPO'd for an exit of $2.4 billion.
- Bridg, the Los Angeles SaaS data infrastructure company, was acquired by Cardlytics for an exit of $350 million.
Here's a look at Pitchbook's list of the biggest second-quarter deals in Southern California — from the Santa Barbara area to Orange County:
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- VCs See Valuations Reach Record Highs as Optimism Stays High - dot.LA ›
Four years ago, Bird Rides Inc. boldly began parking its first-generation e-scooters on the sidewalks of Santa Monica even though it lacked the proper permits.
What started as a novelty has now become a $800-billion worldwide business, with the devices now ubiquitous throughout the world. The scooters also became one of the most visible symbols of Santa Monica's booming and carefree tech scene, with top VCs scootering into the office with the ocean air blowing through their hair.
But as Bird prepares to go public via a blank check acquisition, the company is facing the embarrassment of being kicked out of its hometown this summer just as the tattered micromobility business recovers from pandemic lockdowns.
With a population of less than 100,000 residents, Santa Monica is not a financially important market for Bird. But the clashes it has had with city regulators are emblematic of what it has encountered worldwide after expanding to more than 150 cities.
Even though Santa Monica's transportation department was authorized by the City Council to permit four scooter operators, it chose just three – Spin, Veo and Lyft – for the next phase of its shared mobility pilot program, which lasts from July 1 to March 30, 2023. Bird placed fourth.
Bird declined to make anyone available for an interview but in a statement sent to dot.LA, it indicated it plans to appeal the decision.
"We are disappointed by the current recommendation for the next phase of the Santa Monica Micromobility Program and look forward to taking the opportunity to further demonstrate Bird's commitment to the city during the comments and objections process," the company said.
Bird has not filed an appeal as of Monday but has until May 26 to do so, according to Constance Farrell, a spokeswoman for the city.
Santa Monica transportation staff made their selection based on 10 different criteria. Bird was dinged for affordability, customer service, durability, safety and maintenance/ operations.
It performed well in the local preference category, though Bird received the same ranking as Lyft, which is based in San Francisco.
Bird also originally did not make it into the city's first e-scooter pilot in 2018 but was later added back in because of its hometown presence, according to the Santa Monica Daily Press, which was first to report Bird's pending removal.
Though Bird is still based in Santa Monica, its presence has been greatly diminished over the past year. It laid off half of its employees there last year as the pandemic ground worldwide ridership to a halt and put its airy headquarters up for sublease in October.
Bird has had a rocky relationship with Santa Monica, ever since deploying its scooters there in 2017, before it received the city's permission.
"We felt we were in a gray area," Bird founder and CEO Travis VanderZanden said at the time.
The city disagreed and sued, contending e-scooters were endangering local residents and visitors. Bird signed a plea agreement with Santa Monica in 2018 and paid $300,000 in fines. It also agreed to bring down maximum speeds from 21mph to 15mph.
"With this agreement, Bird and VanderZanden acknowledge that they failed to comply with the City of Santa Monica's business licensing requirements which are designed to protect the safety of the public," Deputy City Attorney Eda Suh said in a statement announcing the settlement.
As part of going public, Bird revealed last week it has been involved in more than a hundred lawsuits involving "brain injuries, internal injuries, and death," many of which are still pending.
- Bird Plans to Go Public via SPAC at $2.3 Billion Valuation - dot.LA ›
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- Bird Seeks to Unload Santa Monica HQ - dot.LA ›
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Bird Rides Inc. made official Wednesday what dot.LA first reported Sunday night: The Santa Monica unicorn that started the e-scooter craze in 2017 will go public via SPAC at a $2.3 billion valuation.
The company also provided more details about its finances as well as potential risks to its business model, one of which is a spate of serious injuries and even deaths involving the company's e-scooters – which frequently have to navigate busy streets and sidewalks.
For the first time, Bird revealed it has been involved in more than a hundred lawsuits involving "brain injuries, internal injuries, and death," many of which are still pending.
Bird added that it has seen "significant" increase in litigation costs the past two years. It said if that continues the company may have trouble getting insurance.
Some law firms have already set up pages dedicated to e-scooter injuries, helping injured users navigate Bird's user agreement.
The $2.3 billion valuation Bird is going public at is well below the $2.85 billion it fetched in the beginning of 2020, something founder and CEO Travis VanderZanden shrugged off in a rare interview with CNBC on Wednesday.
He said he views going public as merely a financing event and he is focused on returns many years from now.
"We didn't want to be greedy on valuation," VanderZanden said. "We wanted to figure out what price made sense for getting long term investors into the stock."
VanderZanden also dismissed concerns about an unraveling SPAC market while acknowledging "the SPAC market has had its ups and downs."
Speaking about last year, he said "It felt like things were a little frothy where you had some science projects." But he said this year is different.
"I think we've really entered SPAC 3.0 where you're going to see companies with real business models and real revenue starting to SPAC," VanderZanden said. "We're excited to be part of this new wave of SPAC 3.0."
VanderZanden said he first started talking to Switchback II, the SPAC taking Bird public, at the beginning of this year. He found their visions and missions aligned, despite the fact that Switchback focuses on clean energy.
VanderZanden was criticized for selling tens of millions worth of shares in the company in 2018, but he said Wednesday he felt confident enough to buy more shares last year and that no Bird employees are getting cashed out in the SPAC.The CEO put his 10,000 foot Bel Air mansion on the market in April for $25 million, just six months after purchasing it for $21.7 million from The Daily Show's Trevor Noah.
- Bird Reportedly Explores Going Public via SPAC - dot.LA ›
- Bird Plans to Go Public via SPAC at $2.3 Billion Valuation - dot.LA ›