Sea, sand & start-ups

Forget Silicon Valley and Silicon Alley, the start-up scene is migrating to LA’s ‘Silicon Beach’


It’s being dubbed Silicon Valley’s funkier, even funner – and slightly sandier – younger brother. Welcome to ‘Silicon Beach’ – the Westside region of the Los Angeles metropolitan area, which is fast becoming a contender for the crown of start-up epicentre.

In Issue 25 we caught up with Walter Grieves, co-founder of ROC, a co-working space in LA. The three floor building is home to up to 150 businesses with one to 30 staff members who are working, networking and creating wildly, whilst dogs wander the hallways.

In 2014, the Los Angeles-Long Beach area struck 171 venture capital deals for a total of US$2.05 billion, whilst Google is expanding its office on Venice Beach and recently bought 12 acres of land in nearby Playa Vista. This particular ROC co-working space, which is located in Santa Monica, has hosted events with Microsoft and is currently home to CliqueMe and StartEngine. Add to this recent local successes, such as Snapchat, TrueCar, Rubicon Project and Maker Media, who all had billion-dollar exits, and suddenly the opportunities seem as golden as the sand.

“In the past four years since we opened, over 600 companies have come through,” says ROC’s co-founder Walter Grieves. “When we started, people weren’t taking LA seriously on a tech level but now international entrepreneurs are moving here and investors are coming from across the country.”

So, apart from the fact a wetsuit is appropriate office attire, what else makes Silicon Beach so appealing?

“I used to live in San Francisco but it’s unrecognisable to me now,” says Walter. “In my opinion it’s become an elitist, clicky city that’s very hard to break into. It used to be an artist’s haven but, because of the influx of money, it can now feel unfriendly and materialistic. In Silicon Beach, the environment seems to be more supportive and social currency is still stronger than the number of stock options you have.”

When strolling through Santa Monica, you can see signs the start-up scene is making an impression. In the Dogtown Coffee house – a favourite hangout for creatives who come and sip ‘Matte Lattes’ – a sign stuck on the noticeboard advertises a course called, ‘Silicon Beach Startup 101’, where attendees can “learn to pitch and meet with real investors and become part of the Silicon Beach Community.”

If you stroll along the boardwalk between Santa Monica and Muscle Beach, you’ll pass by the Mobli Beach House – the software company’s content creation hub – which has an impressive recording studio and workspace where start-ups can collaborate with content producers. Meanwhile, the invitation-only Silicon Beach Surfers club is also, according to insiders, a prime place for business networking, attracting more than 430 members of the tech scene who hang out when not hanging 10.

The Santa Monica Daily Press has a regular section called ‘Faces of Silicon Beach’ where they profile local entrepreneurs, including Million Maps App’s Matthew Gibbons and Hoovy’s Eugene Stark.

But it’s not only the surfboards that shape this start-up scene, it’s also the proximity to Hollywood and the artistic heritage of the area. Two particularly strong industries in Silicon Beach are video gaming and advertising technology.

“That’s where LA is strong,” says Walter. “In the past, a lot of technology was developer-based but now that we have the pipes ready to go, it’s about being creative. LA is home to creatives, which is why we’re rising up. I think LA will always be ruled by entertainment, even the technology. It’s about the relationships you can build with the YouTubes and the Hulus to get deals done.”

The area’s artistic edge is also catching the eye of overseas investors – particularly from China. In 2011, the Chinese Internet company Tencent bought a majority stake in Santa Monica based company Riot Games for US$400 million, and at the recent Silicon Beach Fest – a three-day start-up festival attended by over 2000 entrepreneurs – a panel talk was dedicated to the topic ‘Chinese Investment in Silicon Beach’.

“There’s a lot going on in LA, and Chinese investors have heard about it and are interested,” said speaker Kai Tao, partner of Park One Capital. It also helps that big-name angel investors live in the vicinity (Ashton Kutcher, Jessica Alba and the Olsens) although often their business dealings are elusive.

“Down here a lot of investment goes on but you don’t hear about it as much,” says Walter. “In Silicon Valley someone sneezes US$150,000 and they send out a press release but here it can be different. It’s often a private investor, a celebrity or a real estate guy who doesn’t want people to know what they’re spending their money on.”

If anything represents the start-up space in LA it is this – ambition merged with tech knowhow, illuminated by star power. Even Hollywood heavyweights like Disney and Warner Bros. have launched start-up accelerators to help local tech entrepreneurs evolve rapidly.

“To me LA is the new city of dreams,” says Walter, “You can come here with nothing but dreams and willpower and be successful.” Just add water (and sand).

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