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Los Angeles is home to around 5,000 startups, the majority of which are in their young, formative years.
Which of those thousands are poised for a breakout in 2021? We asked dozens of L.A.'s top VCs to weigh in. We wanted to know which companies they would have invested in if they could go back and do it all over again.
Yesterday, our investors picked their favorite Series-A or later startups, and not surprisingly there was more consensus, with familiar names like PopShop Live and Scopely leading the way.
But the most lucrative returns come from identifying companies in their infancy, as recent blockbuster IPOs vividly demonstrate. For instance, Sequoia's $600,000 seed check to Airbnb in 2009 accounted for 70% of its shares in the company and helped it get into competitive later rounds. When the vacation rental service went public last month, Sequoia's stake was worth $4.8 billion.
What will be the next breakout? The complete list is below and is ranked in random order except for the first three, which stood out by virtue of getting multiple votes: Pipe enables companies with recurring revenues to tap into their deferred cash flows with an instant cash advance. Clash App, Inc., is a TikTok alternative launched by a former employee of the social network in August. And XCLAIM allows bankruptcy claims to be digitally traded.
Pipe provides financial services to help cloud service companies tap into their deferred cash flows, allowing them to continue growing without taking on debt or giving up ownership. For subscription-based businesses, this makes it "as if all of your customers converted to annual plans overnight," according to the company.
Founded by Harry Hurst, Josh Mangel and Zain Allarakhia, the company raised $66 million of seed funding earlier this year in a deal led by Craft Ventures and Fin Venture Capital.
Created by former Vine-r Brendon McNerney and entrepreneur and marketing expert P.J. Leimgruber, Clash App is a short form video platform similar to TikTok, but without built-in sound libraries. It's geared toward empowering creators with innovative monetization options and inclusive communities.
XCLAIM has created an electronic platform where bankruptcy claims that take a notoriously long time to process can be digitally traded. Founded in 2018 by Matthew Sedigh, who has operated in the corporate restructuring field for more than a decade, the company says "rather than wait years for the bankruptcy court process to issue payment distributions, creditors can now access immediate liquidity by selling their claim to interested buyers." Earlier this year, it raised a $4 million seed round led from Luma Launch, First Round Capital and Freestyle Capital.
Freck Beauty manufactures beauty products intended to make the user feel seen. Remi Brixton, the company's chief executive officer, founded the startup in 2015 when she was in search of a freckle makeup product. When she couldn't find one, she launched her own, the FRECK OG. The East Los Angeles-based company raised an undisclosed amount of seed funding in a deal led by KarpReilly and Stage 1 Fund earlier this year.
The Skills wants to be the master class on sports and life. The Los Angeles-based startup launched two months ago and offers classes from gold medal Olympians — including swimmer Michael Phelps and volleyball player Kerri Walsh Jennings — and Grand Slam tennis Champion Maria Sharapova. In December, it closed a $5 million seed round backed by Boston-based Will Ventures, Global Founders Capital, 8VC, Maveron, Hack VC and Correlation VC.
Founded by Shaun Cooley, former chief technology officer of Cisco's Internet-of-Things (IoT) and Industries division, Mapped provides IoT services in El Segundo.
The company raised $3 million of seed funding in a deal led by Greycroft earlier this year, putting its pre-money valuation at $9 million.
Created in 2016 by Geoffrey Michener, Dataplor indexes micro-businesses in Mexico (and will soon be expanding to other countries in Central and South America) and sells the data to larger companies.The company relies on contractors in those countries to collect the information from local businesses. It raised $4 million from ff Venture Capital, Quest Venture Partners and Space Capital earlier this year and expects to use it to expand into more Latin American countries.
Launched by serial entrepreneur Joe Bayen, Grow Credit helps customers improve their credit score by providing credit for subscription services like Netflix and Spotify. Their MasterCard can help consumers with thin or damaged credit scores and the small line of credit can be upgraded for a fee. The company closed a $2 million seed round earlier this year with participation from Mucker Labs.
The two-year-old Santa Monica-based company has seen business boom during the pandemic as retail stores shut down and online orders surged. The direct-to-consumer outdoor furniture brand uses backyards as showrooms and raised $4.3 million in a seed round earlier this year led by Mucker Capital. Founded by Jake Liu and Terry Lin, a former designer at Pottery Barn, Outer aims to appeal to Restoration Hardware and Pottery Barn shoppers.
A livestreaming reseller of collectibles like FunkoPop vinyl figurines, Pokémon cards and sports cards, WhatNot taps into a growing retail trend and promises that the collectibles are verified, much like sneaker reseller GOAT.
The startup secured $4 million in seed funding this month from Scribble Ventures, Wonder Ventures, Operator Partners, Y Combinator, Liquid 2 Ventures, Twenty Two Ventures and other investors. The company plans to use the funds to expand into video games, comics books, designer toys and vintage fashion.
Fourthwall is the developer of an internet platform that helps content creators launch fully-branded websites focused on interacting with fans. Their website tag phrase is "Make a living doing what you love," which is complemented by their model, which provides creators 100% ownership of their website and brand.
Founded by Walker Williams and Will Baumann, the company has raised $4 million to date, from investors Defy Partners, Lightspeed Venture Partners and Initialized Capital Management.
Shop LatinX calls itself the "leading beauty, fashion, and lifestyle ecommerce designed by and made for Latinas." The brainchild of two Los-Angeles-based Latinas, Brittany Chavez and Raquel Garcia launched their website before Black Friday in 2016. It features more than 200 brands.
Founded by former SpaceX software engineer Karan Talati and Neal Sarraf, First Resonance promises to ease the workflow for manufactures with software intended to provide greater visibility into production and test product development lifecycle. The company raised $1.75 million of seed funding last year from Wavemaker Partners, Stage Venture Partners and PLG Ventures, among clothes.
Vurbl offers curated, one-stop-shop of what it calls the best audio on the internet, which can include podcasts but also goes well beyond that from religious sermons to court arguments. The new platform founded by CEO Audra Gold is being built with the $1.3 million pre-seed round Vurbl closed in September led by AlphaEdison with participation from Halogen Ventures and Ten13.
Former Disney executive Chris Williams founded the studio that produces family-focused content from YouTube stars. This year it launched clock.work, an advertising agency designed to help major brands reach kids. Investors include Viacom, Greycroft, Third Wave Digital and United Talent Agency, along with strategic angels including Robert Downey Jr. and Jon Landau.
The app allows renters to see and share apartments that will soon be available before they're listed — reducing the time properties sit vacant and potentially heating up competition among apartment hunters. It launched earlier this year. The company has $2.8 million in seed funding led by David Sacks' Craft Ventures along with Abstract VC, Wonder Ventures and angel investor Spencer Rascoff, co-founder of Zillow and dot.LA.
The audio-based social platform promises to be the spot for "live, supportive, feel good conversations—just like hopping on the phone with a friend when you need it most." It lets people start a conversation around any topic or join by listening. Quilt raised an undisclosed amount of venture funding from Freestyle Capital in 2019.
Founded by Abhi Nayar, Chris Garwood and Igor Licthmann, Tonebase provides high-level music education online. Yale School of Music alumnus Garwood and Lichtman told their alma mater that it built with the idea that it was "a way for people everywhere to learn from the very best musicians around the world — individuals who, due to their busy performing and teaching careers, are traditionally accessible to only a select few." The company has raised an undisclosed amount from Launch fund, e.ventures and other undisclosed last May.
Launched in 2013 by Jeff Su, Yu-Han Chang and Rajiv Maheswaran, Second Spectrum already has deals with the NBA and English Premier League. This year it scored another one with Major League Soccer to use its optical tracking system to evaluate and analyze performance.
Second Spectrum puts their tracking cameras inside the stadium. Machine learning and AI-powered analytics provide detailed data that helps coaches and others better understand the game from player speed and deceleration to shot velocity in near real time. That technology can also be used on broadcast platforms to give fans more insight. The company raised about $20 million backed by CAA Ventures, Raine Ventures and The Chernin Group in 2018.
Founded by CEO Taylor Nieman, Shaun Merritt and Brandon Dietz, Toucan is a Chrome browser extension that lets people learn a new language. It scans websites you visit and translates some words into the language you want to learn. The Santa Monica-based company most recently raised a $3 million round backed by GSV Ventures, Amplifyher Ventures, and Wonder Ventures, among others.
Created by former SpaceX engineers, Serve Automation aims to change the way foods get delivered. It has secured $7 million in a seed round and is operating in stealth mode.
Lead art by Candice Navi.
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In the middle of 2005, Apple added a little-noticed feature to its iTunes Music Store – podcasts. A decade and a half later, the form is mainstream, with 144 million Americans having listened to at least one, ranging from The Joe Rogan Experience to Serial. But little about the technology or podcasting platforms has changed in the intervening years.
"The podcast is very archaic," said Audra Gold, founder and CEO of Vurbl, a Los Angeles startup that is launching a new platform Wednesday with an audacious goal of being the Youtube of audio. "It's astounding how underserved audio is."
Vurbl wants to fill the gap by providing a curated, one-stop-shop of the best audio on the internet, which can include podcasts but also goes well beyond that. For instance, Vurbl found people were frequently searching for religious sermons and bible readings but Google and Youtube often did not return good results.
"Millions of people are looking for it," Gold said. "So we started a Vurbl bible station. We have someone whose job it is to curate that content. We are just queuing up one great thing after another on a religious theme."
Other content on Vurbl's 40-plus categories include guided meditation, political speeches, courtroom arguments, old time radio shows, comedy sets and earnings calls. In all, the platform will offer more than 20 million pieces of curated audio at launch.
"All that matters is we are feeding people information on topics they care about," said Gold, who previously founded Product N, a product management consulting and recruitment firm.
Once people start listening to Vurbl, they will also be served up advertising that probably will not sound very different to them but in fact represents a significant step forward for how ads are usually consumed on podcasts.
Brands will be able to purchase real-time programmatic audio advertising to target specific categories and demographics just like they would with Google search. Unlike most audio platforms, Vurbl knows when someone listens to their ad, which Gold says has been a big sticking point for brands to invest more ad dollars in audio.
Spending on podcast advertising next year is forecast to grow 45% to $1.13 billion in the U.S., according to eMarketer. YouTube alone brought in $5 billion in advertising revenue in just the third quarter of this year.
"Audio is right up with video online and the ad dollars are a fraction," Gold said.
The new platform is being built with the $1.3 million pre-seed round Vurbl closed in September led by AlphaEdison with participation from Halogen Ventures and Ten13.
That's a much cheaper investment than companies who have created their own content. Wondery is reportedly considering a sale that could value the company as high as $400 million. Spotify paid around $200 million to buy Gimlet last year. Luminary raised more than $160 million to fund a subscription model but has struggled to attract subscribers.
For now, Vurbl will only be available through web browsers but the company is working on an iOS version it hopes will be ready by next month and an Android version to roll out early next year.
Another key Vurbl feature is the ability for listeners or Vurbl curators to easily splice up audio to share it on social media or post highlights on the platform. Gold thinks this will be popular because the best parts of podcasts often get buried inside 90 minute episodes listeners don't have the time to wade through.
"We're finding the good parts of podcasts and clipping them into playlists," Gold said.
Will creators mind having their work spliced and diced? Gold says they won't, because the clips will only help promote their shows. It is a similar argument Buzzfeed or the Huffington Post make when they aggregate a New York Times story.
"They still own that content and we only link back to them," Gold said. "We think creators are going to love having their content snipped up."
With an ambitious goal to building the Youtube of audio, Los Angeles-based Vurbl announced Monday it has closed its $1.3 million pre-seed round with lead investor AlphaEdison with participation from Halogen Ventures and Ten13. The funds will be used to launch a platform later this year with millions of pieces of audio and podcasts.
"We know how user generated content works, we know how social and SEO work, we know how digital advertising work, and most importantly, we keenly understand the particular way you must stitch them all together to make a great UX for listeners, creators AND advertisers," founder and CEO Audra Gold wrote in an email to dot.LA.
As opposed to audio streaming companies such as Spotify and Luminary which have spent millions acquiring shows, Vurbl plans to differentiate itself by providing mostly cheaper user-generated content. It says it will also be the first scaled open market, realtime programmatic audio ad platform, doing for audio what has been so lucrative for video on Youtube.
"Because of this, Vurbl is poised to revolutionize the world of digital audio advertising," Gold said.
Gold previously founded Product N, a product management consulting and recruitment firm, and led product teams at Rubicon Project, The Mighty, Pluto TV, Fourthwall Studios and Defy Media (formerly Break Media). She also held senior product roles at WeddingChannel/TheKnot, Viviendi Universal's online division, and IGN.com.Apple owns the dominant podcasting platform even though audio is low on its list of priorities. Spotify has been on a spending spree to acquire more big name podcasts like Joe Rogan. Luminary raised more than $160 million to fund a subscription model with a hefty marketing budget but has burned through cash and struggled to attract subscribers.
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