The Los Angeles Technology Market

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LA ecosystem is heating up

LA is #3 largest tech ecosystem in the US…

Source: AngelList – startup companies by region as of July 31, 2014.

Note: SoCal includes LA (69%), San Diego (15%) , Orange County (9%), and other areas (6%), Northwest includes Oregon & Washington. Silicon Valley includes San Francisco & Bay Area. 3

24%

14% 12%

4% 4% 3% 2% 2% 2%

Silicon Valley

New York SoCal Northwest Boston Chicago Austin DC Colorado

Share of US Early-Stage Startups (%) AngelList startups by region

…and #1 fastest growing

Source: AngellList – startup companies by region by month.

Note: Compound monthly growth rate of new startups by region from Jan 2014 to June 2014 4

5.3% 4.7% 4.6% 4.5% 4.4% 4.1% 4.0% 3.9% 3.8%

SoCal Northwest Chicago New York DC Boston Silicon Valley

Colorado Austin

2014 1H Monthly Startup Growth AngelList startups by region

Capital flowing to LA: $1.5B+ invested in LA in 2013, a 30% CAGR since 2010

5 Source: CB Insights – LA Funding Report (July 2014) Notes: US VC grew at 7% CAGR from 2010 ($23.7B) to 2013 ($29.2B) via CB Insights.

$700 $920 $1,040

$1,550

$860

172

225

281 302

2010 2011 2012 2013 2014

# Deals

Invested Capital ($M)

1H

LA has grown 4X faster than US average

250 companies have raised $1M+ since 2012

2012 2013 2014 YTD

$1M+

$10M+

$50M+

Sources: CB Insights, Crunchbase

Prominent SoCal companies by last round of financing

7 Source: CB Insights, Yahoo Finance (9/3/14 EOD), TechCrunch

Large valuable companies are built in LA

8 Source: CB Insights, YCharts.

Increasing number of prominent successful exits

$8B+ in 2014 so far with more to come

Acquired (Facebook)

Acquired (Disney)

IPO IPO

Acquired (Apple)

Acquired (AOL)

Acquired (Apple)

Acquired (Opera)

Acquired (AOL)

Acquired (Red Hat)

Why tech thrives in LA

9

10 Source: Kauffman Index of Entrepreneurial Activity, April 2014

LA is built on entrepreneurship

530 490

440 400

360 360 360 350 310 290

240 240 200 200 190

LA

Mia

mi

SF

Hou

ston

NY

C

Atla

nta

Pho

enix

Riv

ersi

de

Dal

las

Sea

ttle

DC

Bos

ton

Chi

cago

Phe

lphi

a

Det

roit

2011-2013 Entrepreneurs per 100,000 people

Early successes have seeded the ecosystem’s new era growth

11

LA Tech 1.0 LA Tech 2.0

Seasoned entrepreneurs and recycled capital drive new ventures

LA graduates the most engineers in the US…

Sources: US News & World Report, Accreditation Board for Engineering and Technology (ABET); Includes graduate universities within 150 miles of metropolitan area 12

6,811

7,561

9,862

10,945

New York

Bay Area

Boston

LA

Engineering Graduate Enrollment

…from some of the most prominent schools

Sources: US News & World Report, Accreditation Board for Engineering and Technology (ABET); Includes graduate universities within 150 miles of metropolitan area 13

14 Source: CB Insights

LA has a strong base of local investors…

Rank   Investor  1   Upfront  Ventures  2   Mucker  Capital  3   500  Startups  4   Greycro=  Partners  5   SV  Angel  6   Siemer  Ventures  7   Rincon  Venture  Partners  7   Double  M  Partners  9   Baroda  Ventures  10   First  Round  Capital  10   Google  Ventures  

…who are actively writing LA checks

15

LA-based Venture Firm

Most Active VC Investors in LA

Source: CB Insights – LA Funding Report (July 2014)

Supportive incubators, accelerators, and community spaces foster early stage growth

Source: RepresentLA 16

Living in LA is more affordable compared to other tech centers

Source: Cost of Living from Council for Community and Economic Research (via Areavibes) 17

LA   SF   NYC  

Overall  Index   127   152   148  

Groceries   106   119   149  Housing   176   243   166  ULliLes   112   90   131  TransportaLon   106   109   128  Healthcare   110   111   127  Goods  &  Services   103   119   144  

Equivalent  Standard  of  Living   $50,000     $59,807     $58,197    vs  Los  Angeles   20%   16%  

And, of course, the weather doesn’t suck

Source: Kelly Norton, Kellegous.com “The Pleasant Places to Live” graphic & analysis using NOAA data 18

Pleasant days: Days with (1) mean temperature between 55° F and 75° F, (2) minimum temperature above 45° F, (3) maximum temperature below 85° F, and (4) no significant precipitation or snow depth

But it’s not about the “next” Silicon Valley

19 Source: Slate.com

20

Tech has moved beyond servers & switches – we are shifting to the application layer

Personal computing

Telecommunications

Open source software

Application Layer

Scalable computing & storage

21

We’ve seen this before – every technological revolution goes through the same cycle

The Industrial Revolution

Age of Steam & Railways

Age of Steel, Electricity, & Heavy Engineering

Age of Oil, Automobiles, & Mass Production

Age of Information and Telecommunications

1771

1829

1875

1908

1971

1829

1873

1920

1974

?

Source: Chart adapted from Carlota Perez’s “Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages” who describes the two phases as “Installation” & “Deployment” periods

1797

1847

1893

1929

2001

•  Manufacturing industry •  Open trade

•  Standardizing time •  Catalog sales •  Economies of scale

•  Urban development •  Interventionism

•  Interstate highways •  IMF, World Bank, BIS

Infrastructure Layer

Application Layer

TODAY

22

The focus is increasingly on what we actually DO online: the 3 C’s

Infrastructure Layer

Application Layer

Content Commerce Communication

This is what LA does best

23 Source: eMarketer, April 2014. Note: Adults 18+, time spent with each medium (regardless of multitasking). Excludes time spent watching digital video via console, connected TV or OTT device.

Content is increasingly consumed online… Content

2010 2011 2012 2013 2014

Avg Time / Day with Major Media by US Adults (hh:mm)

Digital

Radio

TV

3:11 4:33 5:14

3:49 5:46

Total 10:46 11:49 12:03 11:18 12:14

Print Other

% of Time 30% 39% 43% 34% 47%

24 Source: eMarketer, April 2014. Note: Adults 18+, time spent with each medium (regardless of multitasking). Excludes time spent watching digital video via console, connected TV or OTT device.

US adults watch 5+ hours of video per day. In the future, video will be an online medium.

2010 2011 2012 2013 2014

Avg. Time / Day Consuming Video by US Adults (hh:mm)

TV

Mobile Online

4:24 4:38 4:31 4:34 4:28

0:06 0:21 0:22 0:12 0:22 0:08 0:22 0:03 0:33

Total 4:30 5:07 5:15 4:49 5:23

Content

LA is the creative capital of the US, specializing in video content

25

1 in 7 people in LA are employed in a creative field

#1 metro area for Art, Design, & Media employment

$140B+ annual economic impact from creative industry

Sources: 2013 Otis College of Art and Design; Bureau of Labor Statistics 2012

Content

Video & content startups are succeeding in LA

26

And many more…

#1 producer & distributor of online video

6.5B+ monthly views 450M+ subscribers

Leading artist social network

300M pieces of art 30M+ members

Largest Latino online video network

400M+ monthly views 40M+ subscribers

Sources: Maker, DeviantArt, Mitu

Content

$225 $263

$304 $347

$393

$440

$492

5.3% 5.8%

6.4% 7.0%

7.6% 8.2%

8.9%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

$-

$100

$200

$300

$400

$500

$600

2012 2013 2014 2015 2016 2017 2018

27 Source: eMarketer April 2014. Note: includes products or services ordered using the internet, regardless of the method of payment or fulfillment, excludes travel & event tickets.

Commerce also shifting online: 14% CAGR vs. 3.5% for offline US retail

US Retail eCommerce Sales ($B)

eCommerce % of total retail sales

Commerce

LA is the retail & trade capital of the US

Sources: Kyser Center for Economic Research International Trade Outlook – The Southern California Region 2013-2014. Bureau of Labor Statistics 2012. CIT & CFA Fashion Industry Profile and 2014 Outlook 28

#1 metro area for Retail & Trade sector employment

$400B+: imports / exports through LA ports in 2012, a new record for the US

36% of US apparel manufacturing jobs are in LA

Commerce

LA commerce startups have taken the lead

29 Sources: WSJ 8/26/14 on Honest Co, Re/Code 8/28 on JustFab, TrueCar S-1

And many more…

Subscription-based fashion retail $400M sales

projected for 2014

Car buying & selling platform 7,000+ dealers 1.1M+ car sales

Eco-friendly baby & home products $150M+ revenue projected for 2014

Commerce

30 Sources: The Economic Times 8/1/14 (Snapchat), Sean Rad interview at 2014 Upfront Summit (Tinder), Mashable 3/11/14 (Whisper)

Three of the top social apps located in LA

Photo messaging app 700M+ snaps / day 20%+ MoM growth

Mobile dating app 10M+ DAU

750M swipes / day

Anonymous social network

3.5B page views / mo

Communication

31

Further, LA is tackling the hard technology problems to lead the next revolution

Space VR / AR Power

32

Fastest growing tech ecosystem

Come join us!

Talent + Capital + Lifestyle

Big fundings, big exits, & big ambitions for the future: space, energy, VR, & more

Well-positioned for the three Cs: Content, Commerce, Communications

Recap: the future is sunny in LA

The Los Angeles Technology Market