Silicon Valley-based Plug and Play is coming to downtown L.A.
The organization, known for its accelerator programs and status as a VC firm, held an event announcing the news on Tuesday at 1010 Wilshire Blvd, where its newest cohort will be based.
Plug and Play aims to match local startups up with corporations that can help them develop. It has already invested in several L.A.-based startups, including browser extension coupon service Honey and real estate marketing startup Zentap.
The organization plans to devote 100 units in the building to startups involved in the program as well as to invest in more L.A.-based companies. Ten startups that are accepted to the program will receive six months free rent.
"We want to bring startups here, we want to bring corporates here, and we want to make everybody work together and we want to see relationships flourish," Plug and Play Senior Associate Tanya Ma said in an interview before the event. "That's kind of the ultimate goal of this project."
A consortium of civic and business groups that includes the Downtown Center Business Improvement District (DCBID), the Los Angeles Area Chamber of Commerce and the Alliance for SoCal Innovation say they'll aid the project through things like research, technical assistance and connecting local startups with Plug and Play.
The partnership has been a long time coming, said the DCBID's Executive Director Nick Griffin.
"[This project is] almost like formalizing what was already happening," he said. "There's already a great deal of innovation and collaboration and cross pollination going on in the downtown ecosystem."
Downtown L.A. has the resources to be one of the region's largest startup ecosystems, according to a report by the Alliance for SoCal Innovation, but very little recognition. Upon making this realization in 2018, the Alliance began working with other organizations such as the DCBID on a plan to create housing, office spaces and leisure activities in the same areas, often in the same buildings.
Their work, according to Alliance's Director of Ecosystem Development Eric Eide, helped lure Plug and Play downtown, in part because the company's holding company already owns a series of live-work developments throughout Southern California, including the one at 1010 Wilshire.
"And here we are, connecting the dots," said Eide. "This smaller group really has a lot of the firepower to make this a reality."
Plug and Play has launched similar projects in cities like Topeka, Kansas and Munich, Germany.
PayPal Inc. has gobbled up another Southern California startup.
After acquiring Honey, a modern twist on coupons, in 2019, PayPal announced Thursday it has purchased Santa Monica-based Happy Returns. Terms of the deal were not disclosed.
The company allows online shoppers to return items at one of 2,600 physical stores like Paper Source and Cost Plus Market in 1,200 metro areas instead of the more cumbersome process of having to pack up and mail items back to a retailer. That allows independent retailers to have a shot at competing against the likes of Amazon and Walmart.
"Today, the box-free, in-person return process we pioneered is now table stakes in ecommerce," co-founders David Sobie and Mark Geller wrote in a blog post announcing the deal. "Hundreds of brand partners use our returns software and reverse logistics services, and our momentum is accelerating, enabling us to bring delightful returns experiences to a growing population of online shoppers."
PayPal first made a strategic investment in Happy Returns in 2019 and the company plans to further integrate Happy Returns as part of its transition from a payments platform to what it calls a "digital commerce enablement engine."
While Honey helps users before they make a purchase, Happy Returns comes in after they buy something. Ecommerce sales shot up during the pandemic, as did item returns. Online sales often frustrate retailers because the return rate is much higher than in-store purchases.
The 2019 B Round valued Happy Returns at $55 million, according to Pitchbook data.
The exit is a coup for Upfront Ventures, which led Happy Returns' 2015 seed round at a $6 million post-money valuation."In the nearly seven years since they started the business, venture and tech deal dynamics have gone through an incredible evolution, and return logistics software was not a slam-dunk sale in the early years," Upfront partner Greg Bettinelli wrote in a blog post. "It's a true testament to David and Mark's skill and resilience that they continued to build Happy Returns feature by feature, logo by logo, always keeping an eye toward operational and cash efficiency without sacrificing customer experience. They made returns a thing."
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Two months ago, Ken Lian, co-founder and CEO of Cheese, applied for a checking account at a major bank. He was rejected again, despite his sterling 800+ credit score.
Since immigrating from China to the U.S. in 2008 he has been routinely denied from opening bank accounts, had to pay thousands of dollars in fees and been limited to the least desirable no-rewards credit cards.
"This is a common issue," he said.
So, Lian decided to start his own challenger bank aimed at Asian Americans and other recent immigrants. It launches Wednesday with a zero-fee debit card offering cash back rewards, putting a modern twist on what Pasadena-based East West Bank has done since 1973.
"We run it not like a bank but put users first," Lian said. "We really are putting the user at the center."
While traditional banks frown on frequent address and phone number changes, Cheese takes a more holistic approach. It is looking at accepting visas and other forms of identification. The bank will also market in places favored by immigrants – think WeChat rather than Facebook – and is partnering with community leaders to help reach a population that has historically been distrustful of banks.
"Both my parents are immigrants and they have a lot of problems walking into a bank and feeling comfortable with that experience," said actor and advocate Jimmy Wong, Cheese's chief community ambassador.
There are nearly 21 million Asian Americans living in the U.S. and they represent the fastest growing, most affluent and educated of any racial or ethnic group.
A quarter of all households don't have full access banking services and half of foreign-born noncitizens are unbanked or underbanked, according to the FDIC.
Cheese co-founders from left to right: Zhen Wang, Ken Lian, Qingyi Li.
Based in Pasadena, Cheese, which is named for the popular slang term for money, is national but has a focus on three cities with the largest Asian populations – San Francisco, Los Angeles and New York City.
Though targeted at Asian Americans, anyone can sign up and Cheese said its waiting list is multiracial, with a third of prospective users self-identifying as Black and another third as white.
Lian worked a brief stint in business development in 2016 at Honey, the browser extension that helps consumers find deals and rewards and was acquired by PayPal in 2019. From that, he said he learned the popularity of rewards, which Cheese plans to dole out liberally.
Users can earn up to 10% cash back at popular merchants like Netflix and Starbucks as well as Asian grocers 99 Ranch Market and YamiBuy.
As part of its launch, Cheese has pledged $100,000 to nonprofits and community service programs in support of Asian neighborhoods and businesses hardest hit by hate crimes and economic hardship during the pandemic.
Cheese is the just the latest VC-backed challenger bank to target niche demographics including Black and LGBTQ people and take on the legacy banking industry. OnJuno, which launched last year in San Francisco, also caters to Asian immigrants.
Editor's note: This story has been updated to clarify where the bank's service is offered, as well as accepted id verification.