Which tech startups are hiring in LA?
Will Los Angeles become the new startup capital of the USA?
It started with a move from San Francisco to Los Angeles. When Tara Tiger Brown took this step in 2008, the startup founder and Forbes writer feared losing touch with the country's technology hub. She thought the people in Los Angeles were "attention whores" and had one thing above all: no idea about technology. But her husband persuaded her to move. She did not regret the change of location: The conversations with many artists, entertainers, musicians and technology experts broadened her horizons, she reported later.
When Brown co-founded a tech startup in 2010, she was surprised at the opportunities Los Angeles offered. The city has many great and diverse startups. Brown's ode to Los Angeles ended with the thesis that the city will replace Silicon Valley as the capital of tech startups.
Pitching at the cocktail party
Since then, forums, blogs and newspapers have regularly said that Los Angeles will be the next Silicon Valley.
Snapchat and Tinder are just two examples of how LA startups are successful around the world. Snapchat even managed to poach managers from shearweights like Google and Facebook several times in the past.
Entrepreneur Nanxi Liu says there are more undiscovered sources of money in Los Angeles. It is possible to meet rich people at cocktail parties who are willing to invest in a startup. But so far they have hardly been asked by a startup.
Many entrepreneurs report that Los Angeles employees are more loyal to their company and less likely to switch to their competitors. Even if it is sometimes more difficult to bring an IT talent to your startup in Los Angeles: Once you have found the employees, you can build on them.
For companies in the film sector, LA is more attractive
Andrea James is also convinced of Los Angeles. She founded the film production company "Thought Moment Media". "It's generally easier to operate from the Los Angeles area," said James. In Los Angeles there are many resources for media productions; the city is a talent factory for actors and film crews. "And Los Angeles is warmer than San Francisco," said the entrepreneur to the start-up scene.
Reason enough to take a closer look at the development of both cities. In absolute numbers, Los Angeles is still well behind San Francisco: According to a database of the Angel List portal, which brings together investors and startups, San Francisco has about three times as many startups as Los Angeles: 3039 in San Francisco, 1301 in Los Angeles (see table). How many startups have existed for a long time or were just founded last year cannot be analyzed with Angel List.
In any case, Tara Tiger Brown received a lot of responses to her prediction that Los Angeles would overtake Silicon Valley. Responses that were "overwhelmingly positive," Brown reported. In order to visualize the development of the city, she started the page “Represent LA” together with a friend. There are currently 1099 tech startups to be found there.
On Facebook, San Francisco is ahead
There is also a startup map for San Francisco. But it is less well maintained and only contains 379 startups.
It is interesting to take a look at social networks - Americans like to indicate where they work. According to research by the Gründerszene, 599 Facebook users currently state in their profile that they are “Founders” and live in Los Angeles. There seem to be significantly more founders in San Francisco: According to their Facebook profile, 2194 people are founders who live in San Francisco. However, this includes founders of all kinds, not just founders of a modern tech start-up. It is noticeable in Los Angeles that a particularly large number of them work in the film and media sectors.
The growth in LA is a little bigger
If you put the numbers in relation to the inhabitants, the picture is even clearer. In Los Angeles, which has around 3.9 million inhabitants, there are only around 1.52 founders for every 10,000 inhabitants. In San Francisco (around 805,000 inhabitants) there are more than 27 founders per 10,000 inhabitants. A clear win for San Francisco.
So it's clear that Los Angeles would have a lot to do to catch up with San Francisco and Silicon Valley. But what about growth? Does Los Angeles even have the growth potential to overtake San Francisco and other Valley cities? Jean-Francois Gauthier from the data service provider Compass has calculated for Gründerszene how much the number of tech startups is increasing in Silicon Valley and Los Angeles. Gauthier concluded that the tech startups in Los Angeles are growing faster. The growth rate in Los Angeles is 17 percent. In Silicon Valley, including San Francisco, the growth rate is two percentage points lower, at 15 percent. Unfortunately, according to Compass, a growth rate only for San Francisco without the rest of Silicon Valley cannot be calculated. To calculate the growth rates, Compass used the average annual growth from 2012 to 2015.
The positive result from Los Angeles is probably also due to another advantage, which a study by Compass indicates: The local sales market in the city is 61 percent larger than in Silicon Valley. So it also depends on whether the aim is to develop an innovative website that can be visited from any WiFi network in the world - or to build a product that first has to be costly to be transported to the customer.
San Francisco is further ahead
San Francisco still holds the leading position in the exciting duel; The “City by the Bay” still has more founders and startups than Los Angeles. The percentage of people starting up in business is also significantly higher in San Francisco. But in the long run, things can change in the situation. The conditions in Los Angeles are already better for film and music productions. The number of tech startups is also growing faster there than in San Francisco. Now only more founders like Nanxi Liu have to get to know their business angels at cocktail parties in Los Angeles. Or how Tara Tiger Brown found happiness through an unexpected move.
There are so many startups in US cities
San Francisco: 3039
New York City: 2302
Los Angeles: 1301
Palo Alto: 369
Mountain View: 257
San Jose: 166
Santa Clara: 54
USA total: 16258
Source: angel.co, as of 02/02/2016
Photo: Some rights reserved by Sharon Mollerus
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