In a year upended by crisis after crisis — the ongoing pandemic, the climate emergency, an insurrection in the capital — tech startup financing is not just bouncing back but altogether booming, and Los Angeles-based angel investors are a big part of that equation.
Angels usually take a stake in an emerging business using their own funds, before institutional investors are willing to throw more substantial resources behind an idea. Often, they start off as entrepreneurs or engineers themselves.
We surveyed dozens of prominent L.A. investors to find out who they believe to be the top angels in the city, as part of dot.LA's third VC sentiment survey. Then, we tallied the votes. dot.LA had to throw out a couple of top names because one angel no longer lived in Los Angeles and the other didn't appear to be actively investing.
For more from the latest survey, read about who to watch among L.A.'s hottest ecommerce startups.
The investors below are listed based on the number of votes they received. We deferred to alphabetical order when there was a tie. Without further ado, here are Los Angeles' top angels, according to their peers.
List tops this list despite maintaining a low profile compared to the five angels below. He's an early-stage investor whose portfolio includes mobile shopping startup Tapcart, glasses and contacts company Lensabl, as well as Brainbase, Candy Club, Citruslabs and other LA-based firms, per AngelList. His investments range between $25,000 and $100,000, according to his Signal investing page. List is also listed as the chief creative officer at brand studio Gazoozle, per Crunchbase. The agency mentions Uber, TBS and other big names as clients on its website.
When dot.LA reached out for more information about him and his recent investments, List responded via LinkedIn: "im all good man, i dont do any press. thanks though!" Thanks, indeed!
But Paul Bricault, co-founder and managing director of Amplify, who has several co-investments with him, said List really has a discerning eye. "While we have also passed on some things he has sent our way, they are always worth a hard look which is rare."
McInerney got his start as a software engineer at Apple and Sony. His L.A. investments include RentSpree, a tenant screening startup that just announced an $8 million series A; and Bird, the love-it-or-hate-it scooter rental service. Beyond the city, he's a backer of Notion, Segment and Dapper Labs. His exits include Lettuce, which sold to Intuit; and Shopflick, which sold to Popsugar.
Rascoff co-founded Zillow, Hotwire.com, real estate platform Pacaso, startup studio 75 & Sunny and this website, dot.LA. He's a former director of TripAdvisor and Zulily, and is a board member of the controversial data-mining company Palantir. When pressed on whether being a co-founder of dot.LA could have artificially boosted his vote count, Rascoff disagreed:
"I am just a really prolific L.A. based investor," he said. "I think we (75 & Sunny) did like 41 deals last year, of which 25 were in L.A., so that's why. I'm also an investor in many L.A. based venture funds (Crosscut, m13, Upfront, and others) so that helps me have a lot of connectivity to the L.A. tech community, which I'm sure boosts my vote count!"
Lee co-founded LegalZoom, ShoeDazzle and The Honest Company (of Jessica Alba fame), which went public in May and is now valued north of $894 million. "We have been fairly active this past year with 16 investments in total so far, and 8 of them in Los Angeles now," said Lee.
His LA-based investments include The NFT Company, guided breathing app Breathwrk and fantasy sports company Grin Gaming. Lee's exits include the infamous MoviePass (RIP), which sold to Helios and Matheson Analytics; Tapiture, which was bought by Playboy; and Stamped, which was snapped up by Yahoo, per Crunchbase.
O'Neill co-founded boutique candy brand Sugarfina. She also sat on the board of fintech company Happy Money and most recently cofounded early-stage investment fund Pure Imagination Brands in Santa Monica with her partner, Josh Resnick, who also made this list. Previously, O'Neill led marketing for Barbie at Mattel.
Resnick worked as a producer at Activision, the Santa Monica game publisher, before launching his own studio — Pandemic Studios — with backing from his former employer. Pandemic is known for developing Star Wars: Battlefront and later on was acquired by Electronic Arts with another studio in a combined $860 million deal. Resnick also cofounded Sugarfina and Pure Imagination Brands. The investor tells dot.LA that he's "done around a dozen deals so far this year with another 4 in the pipeline currently."
Of the deals he has closed in 2021 to date, he says eight were based in Los Angeles. His investment portfolio includes Culver City-based digital pharmacy Honeybee Health and virtual reality training platform Vantage Point.
Lead art by Candice Navi.
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The Honest Company, the packaged consumer goods company founded by actor Jessica Alba and serial entrepreneur Brian Lee in 2011, filed paperwork with the Securities and Exchange Commission Friday to go public.
Selling everything from eco-friendly diapers to skincare products, it has never turned a profit. The Santa Monica-based brand is seeking to raise $100 million by going public, a move which it has flirted with several times during its past few tumultuous years. It will trade on the NASDAQ under the ticker symbol "HNST."
The SEC filing reveals Honest recorded a net loss of $14.5 million last year, which was hardly unusual. It has carried over $243 million in losses since 2017.
"We have incurred net losses each year since our inception and we may not be able to achieve or maintain profitability in the future," the filing warns.
Honest revealed it increased gross margins by 35.9% last year with revenue soaring by 27.6%, to $300.5 million in 2020 from $235.6 million in 2019. The wellness category did especially well, bolstered by the pandemic which drove sale of disinfecting and sanitizing products. Revenue in that category skyrocketed 116%.
Much of Honest's business hinges on its partnership with two mega retailers, which accounted for 45% of its revenue last year. And 70% of all retail sales came from Target and Costco, where the company is competing for shelf space against larger, more well-funded brands.
"The loss of our relationship with Target, Costco or any other large retail partner could have a significant impact on our revenue," the filing warns. "We also face severe competition to display our products on store shelves and obtain optimal presence on those shelves. Due to the intense competition for limited shelf space, retailers are in a position to negotiate favorable terms of sale, including price discounts, allowances and product return policies."
Honest was rumored to be preparing an IPO in 2016, and Lee, who departed in 2017, reportedly had been thinking about it since 2014, but after soaring growth in its infancy, the company struggled amidst quality control problems and investors who had grown wary of direct-to-consumer businesses that had to compete against the likes of Amazon.
In 2015, Honest became a unicorn, valued at $1.7 billion. But two years later it was raised a dreaded down round amidst stagnating revenue.
Several incidents tarnished its central marketing promise as a safe alternative to traditional brands. The company voluntary recalled its baby powder and baby wipes in 2017 after concerns they could cause skin and eye infections. The year before, it reformulated its laundry detergent after reports that it misled consumers about ingredients.
Unliever was reportedly close to buying Honest in 2016 but ultimately decided to acquire one of its main competitors, Seventh Generation.
Jessica Alba's The Honest Company is quietly preparing to file an initial public offering, Bloomberg reported. The personal and baby care products brand could seek a valuation of $2 billion, anonymous sources shared with Bloomberg.
The company could reportedly go public as soon as Friday. The Honest Co. did not immediately respond to a request for comment.
Alba, known for her roles in "Fantastic Four" and "Dark Angel," co-founded Honest in 2012 with former chief executive Brian Lee, chief operating officer Sean Kane and former chief product officer Christopher Gavigan. In its first year, the company reached $12 million in revenue.
The Los Angeles-based company was rumored to be preparing an IPO in 2016, and Lee, co-founder of the company, reportedly has been thinking about it since 2014. However, Honest hit some speed bumps that year when The Wall Street Journal reported the company was using an ingredient in their detergent they had "pledged to avoid." The following year, the company recalled its baby wipes and faced a class action lawsuit about its products' chemical makeup.
The Honest Co. was reportedly raising a down round in 2017, at a valuation much lower than $1 billion. Lee also stepped down as CEO, and former Clorox chief operating officer Nick Vlahos took his place as Honest turned to focus on the core products that brought their early success.
"As we continue pursuing our mission to inspire everyone to love living consciously, we regularly explore all various financial strategies and options," a representative for Honest said in a statement to Bloomberg. Bloomberg also reported that L Catterton, an investor in Honest, declined to comment.
According to PitchBook, the company has raised over $500 million in funding. Its investors also include IVP, Lightspeed Venture Partners and General Catalyst.
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