Move Over Silicon Beach, DTLA is New Startup Hot Bed Study Finds

Downtown LA represents a blossoming startup scene, with an opportunity for further nurturing according to BCG. (*Photo: By Salewskia – CC BY-SA 4.0).

Bird and Snap are among the flashy startups grabbing headlines these days. But when it comes to innovation happening in greater LA, Silicon Beach is not the full story.

Downtown LA is where tech and innovation are really starting to take off.

That’s according to the latest research by Boston Consulting Group (BCG).

“We were surprised to see downtown Los Angeles scoring so well in this analysis,” says Alliance for SoCal Innovation Director Eric Eide, “the discrepancy between capability and perception for downtown seems like a compelling opportunity.”

VCs from Silicon Valley tend to scratch their heads when trying to decipher where exactly the epicenter of tech in Los Angeles is.

So the Alliance for Southern California Innovation (Alliance) and the Boston Consulting Group (BCG) are undertaking a joint effort to clarify the landscape. And also to help innovation, and connect founders with resources from engineering talent, to corporate partnerships.

So much innovation is happening in different pockets or tech hubs in LA today, making it challenging for VCs to navigate, evaluate, and or gauge founder potential.

Enter the new interactive map that will soon be released by the Alliance for Southern California Innovation.

Geographically speaking, the map extends from Santa Barbara to San Diego – covering a whopping 50,000 square miles. (Silicon Valley by comparison is a more compact, covering 47 square miles).

Creating the map entailed looking at various startup clusters. Each cluster of innovation was scored along various dimensions important to the overall startup ecosystem: the density of startups, investors, students, and corporations.

Getting Interconnected: A Sneak Peak at the LA Tech Data-driven Map:

  • BCG’s soon to be released data-driven map will delineate fourteen clusters of innovation spread out across Southern California
  • Of the 14 distinct geographic centers, each node is ranked as Mature (a critical mass of start-up ecosystem), Blossoming (an emerging startup-up scene), to being a talent anchor (an area that offer strong talent resources due to a university etc.), and or a corporate anchor
  • The goal of mapping the landscape is to help improve interaction, impact, and help each tech hub use its unique strengths in the overall Southern California tech ecosystem

SoCal Innovation: Strong on Research, “Usability” Not So Much
The big difference between Silicon Valley and the greater Los Angeles tech scene appears to be, in a word – usability.

Borrowing from Silicon Valley product engineer speak, the Alliance study found that Southern California’s tech scene (much like a tech device) also needs to address its usability factor.

Usability in the report is a term borrowed loosely from a jargon word bandied about in the hallways of Silicon Valley. Among product engineers in the San Francisco Bay Area, “usability” usually refers to, in regards the product development cycle, creating the ease of use and learnability of a product interface.

In other words, the good news is that Los Angeles tech is marked by a depth of strong research institutions and pockets of innovation.

And that’s also the bad news.

Southern California tech has a wealth of different ethnic groups, and diverse industries, and research institutions; it’s the next burgeoning region of innovation, but hard to capture in one sound bite or one central spot.

Different from Silicon Valley

A criticism of Los Angeles often made by Silicon Valley types, is the spread out nature of Southern California’s tech scene. Recode reporter Kara Swisher seems to sum up the Silicon Valley perception of LA (during an interview with Upfront Ventures VC Mark Suster) – “It [LA Tech] doesn’t feel tight.”

By contrast, San Francisco’s peninsula lends itself to population density and also VC offices are located in one convenient, and central location on Sand Hill Row. Unlike Silicon Valley’s peninsula, Southern California will need other factors besides population density, and or this so-called “network effect” to drive VC funding.

Connecting the Nodes: Helping SoCal Tech Reach Its Full Potential

Initial research by the Boston Consulting Group, reveals that LA is on a solid base already. So the interactive map will represent a deeper dive, on the potential and how to best resource the emerging innovators in Southern California.

Engineers: No shortage
Southern California has the largest concentration of research universities including USC, UCLA, Caltech, LMU, UCI, UCSD, Harvey Mudd. Greater LA boasts nine engineering schools.

Greater LA is the third largest city in the U.S. with a population of 19 million (roughly 7 million people live in the San Francisco Bay Area). The region graduates more tech PhDs than Silicon Valley.

As downtown LA innovators take the stage, a more accurate picture of Los Angeles innovation is emerging; BCG analysts hope that this data-driven interactive map will both provide context, and fuel growth.

And at least one Venture Capitalist, Mark Suster of Upfront Partners may not be sad to see the “Silicon Beach” moniker slowly fade out.

Today’s media perceives Silicon Valley as an idea and culture, deserving of its own television show. Los Angeles based entrepreneurs are not always perceived as the innovators pushing the needle. But according to Suster, in regards to innovation happening in greater Los Angeles for the past few decades, the facts tell a different story.

For example, Santa Monica based startup Applied Semantics acquired by Google in 2003, is largely credited with developing the fundamental algorithm technology behind what is today Google AdSense.

Suster (his VC firm’s Twitter hash tag is #LongonLA) sees LA tech on an upswing.

Today technology continues shifting away from circuit boards and silicon chips, and more VC money is being invested outside Silicon Valley. Both trends bode well for the opportunity for innovations coming out of Downtown LA.

Suster has never been a big fan of “Silicon Beach” because he doesn’t believe the label accurately reflects the past twenty years of entrepreneurship in LA; he sees today’s Los Angeles innovators putting in the long hours (i.e. not going to the beach), doing the research and or filing the patents, and working hard at solving today’s big problems.