Alliance Newsletter - November 2, 2018

Venture Funding is piling up and being deployed at a record pace; is it a bubble?

It seems like every day there’s another huge funding or acquisition announcement that, while awesome, makes one wonder how this pace can be sustainable. According to Pitchbook, US VC firms are on pace to set a fundraising record this year with over $40B raised so far. Exhibit A: in one week in October, we saw announcements of mega-funding like TigerGlobal ($3.75B), Thrive Capital ($1B), Bessemer’s 10th fund ($1.85B). Later this year, Sequoia is expected to announce an $8B growth fund. Wow.

Thanks in part to mega-deals in the first three quarters of 2018, investors already broke the record for annual deal value and are on pace to deploy over $100B this year. Add to this, anticipated unicorn IPO’s of Uber, Lyft and Palantir along with Qualtrics, Cloudflare, and SoCal’s own CrowdStrike plus IBM’s acquisition of RedHat ($34B) there is an enormous amount of activity in the sector.

Some are calling it a tech bubble and one columnist is already anticipating what happens to startups during the next recession--kudos for thinking ahead!? Clearly we’ve reached a new level of investor confidence in this sector, and there are always overvalued assets out there, but when you look at the companies getting the capital (and the amounts) it’s hard to say that there’s an irrational frenzy like past bubbles.

Given the geographic dispersion of these investments both inside and outside of Silicon Valley, it’s encouraging for all of us growing and nurturing innovation ecosystems. At the Alliance, we have begun tracking investment in SoCal ventures based anywhere from Santa Barbara down to San Diego. Look for more data and analysis on the region as a whole in upcoming editions of the newsletter.

We will also embark on programming in 2019 that will support and nurture the various centers of excellence (we call “nodes”) around the region. This will help us leverage our geographic and technical diversity as a marketable strength that attracts more investment. The excellence is already there, so the rest should be easy, right? Thanks for all your support and we hope to see you at an event in the coming weeks (especially ours, see below)

So do you think there’s a bubble? Let us know what you think: 

Register for The First Annual Unicorn Quest
(promo code below)

Meet and learn from investors and founders of SoCal unicorns such as Adam Miller (Cornerstone OnDemand), Chang Xu (Upfront Ventures), Hemi Zucker (j2 Global) and Jamie Montgomery (March Capital Partners) on a panel moderated by TechCrunch editor Jonathan Shieber.

Then participate in the panel-led Q&A with each high-flying startup on a trajectory to the illustrious unicorn club. Do they have what it takes? You be the judge.

The Unicorn Quest celebrates the ambition and massive successes of SoCal’s innovation ecosystem as told by the founders and investors themselves. Plus you will meet high-flying startups on a trajectory to unicorn status and the potential for meaningful impact on the SoCal ecosystem.

Newsletter subscribers get $10 off when using this promo code: Unicorn2018-NP

Learn more about the event and register here:

In The News


Startup Competition in San Diego

Startup developing an opioid alternative wins San Diego fast pitch contest and pockets $50K cash prize. Note: Alliance’s Andy Wilson was a judge on the panel. Read more

VC Funding Breaks Records

“Through the first three quarters of 2018, US venture capital firms were on pace to set an annual fundraising record. Is such a pace sustainable? This week brought nearly 7 billion new reasons to think so...The presence of all that cash likely means more mega-deals on the way...”  Read more

PledgeLA Addresses Diversity & Inclusion in Tech

Over 80 Los Angeles investors and entrepreneurs launched PledgeLA, a diversity and inclusion program spearheaded by Mayor Eric Garcetti and the Annenberg Foundation. “The initiative is one way in which the Los Angeles technology community is attempting to ensure that it does not repeat the same mistakes made by Silicon Valley and San Francisco and alienate fellow citizens who could feel left out of the opportunities created by tech’s rise to prominence in the city.”  Read more

Caltech's Frances Arnold Named Nobel Laureate

Add another Nobel Laureate to SoCal’s growing list of exceptional scientific accomplishments. But this time is a little more special since the Chemistry award went to a woman for only the fifth time since 1901. Congrats to Dr. Frances Arnold from Caltech!  Read more

Other news

San Diego matures as a tech hub, says Tealium founder Mike Anderson:

Here’s a fun map of “silicon beach” that shows “500+ technology companies and 175+ startups worth over $155 billion in valuation”:

SoCal saw a slight dropoff of investment in Q3, according to the CB Insights Money Tree report:  

Upcoming Events 

It’s almost time for InnovateLA, “a two week, countywide celebration of the breadth of innovation and creativity within our region. From cleantech to gaming, aerospace to digital media and beyond, Los Angeles is a leading global center for innovation and entrepreneurship and we’re showcasing and celebrating that with a series of events, lectures and talks all over LA.”

If you see one event in November, we recommend our Unicorn Quest which is one of the featured events, but there is an amazing array of other exciting programs available across LA County and beyond.
Copyright © 2018 Alliance for Southern California Innovation, All rights reserved.

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