Los Angeles has been fighting the stereotype that it's not a place for start-ups to begin their quest for billions. Critics blame everything from the constant sunshine to the glow of Hollywood for distracting what would otherwise be innovative and hardworking entrepreneurs.
But LA's start-up ecosystem is far stronger than its reputation. Incubators and accelerators, such as Mucker Labs and Science, are plentiful. And the cash is flowing to LA's young companies. In 2014, venture funding to tech start-ups in the greater Los Angeles area hit $2 billion across 194 deals—a 25 percent jump year-over-year, according to CB Insights.
Several LA start-ups have already hit it big. Virtual-reality headset maker Oculus VR was acquired by Facebook for $2 billion, and Disney spent nearly $1 billion scooping up the online video network Maker Studios. Snapchat made headlines for its reported $16 billion valuation, while SpaceX has been pegged at a reported $12 billion value.
There's a lot more happening among LA start-ups you may not have heard of yet. Check out these seven innovative companies—all pursuing big ideas and backed by big money from elite venture capital firms and major corporations.
—By Lindsay Blakely, special to CNBC.com
Posted 22 August 2015
The processes to produce and distribute the plant- and animal-based products that go into our food are costly and wasteful. And of course, turning those ingredients into dinner night after night is incredibly time-consuming. That's why one 26-year-old entrepreneur, Rob Rhinehart, decided in 2013 to engineer something more efficient. Soylent, which comes in powdered form, is a meal-replacement shake that contains almost all of the nutrients that a person needs daily.
It may sound like a joke—the connection to the sci-fi film Soylent Green doesn't help—but the food alternative is gaining traction. Investors, including Andreessen Horowitz, Lerer Ventures and Index Ventures, have put almost $25 million combined into the company. Soylent, which already is profitable, pulled in $10 million in revenue in 2014 and expects to increase that figure to $36 million this year.
As high-tech as digital billboards might seem, those stadium jumbotrons and electronic restaurant displays all suffer from the same problem: There is no universal operating system to easily program them. In fact, many of them simply cycle through staid PowerPoint slideshows. Enplug, which was founded in 2012, aims to create an operating system and app marketplace to support every digital billboard in the world.
The system involves plugging an HDMI device that comes preloaded with Enplug software into any monitor or display. With a mobile device running the Enplug app, users can then connect to and manage whatever content they want to display. A restaurant, for example, might show Facebook photos, Yelp reviews or anticipated wait times for a table.
Enplug, which has $4 million in venture funding from angel investors, including David Cohen of Interscope Records and Howard Marks of Start Engine, generated $1.1 million in revenue in 2014. The start-up has more than 500 customers, including Gap, BMW, Marriott and Porsche.
The Food Network is so last decade. For the smartphone-wielding globetrotting gourmands of today, there is Tastemade. Founded in 2012, the online video network produces food and travel shows built for viewing on any device. And rather than a cast of celebrity chefs, Tastemade features more than a thousand "tastemakers" from all over the world, creating shows such as "Raw. Vegan. Not Gross." A separate video-editing app also lets users create their own food and restaurant reviews and add them to Tastemade's city guides.
(Disclosure: Comcast Ventures is an affiliate of Comcast, the parent of NBC Universal, CNBC's owner.)
Finding good care for seniors is difficult, and it's going to become an even greater need as the 76 million baby boomers in the U.S. advance in age. Transferring a loved one to a dedicated facility is one option, but it comes with a loss of independence. In-home care is another route, but how do you screen and manage a caregiver, especially when you're not in the same city or state?
HomeHero is a website that launched in 2014 to connect families with qualified "heroes" that do everything from 24-hour care to periodic stopovers for cooking and cleaning. The company vets caregivers via background checks, reference checks and in-person interviews. Its algorithms help users find the right match according to their preferred location, gender, experience level and language. Caregiver profiles feature customer reviews and high-definition video interviews, so it's always clear exactly who will be coming over.
For additional peace of mind, you get voice recordings notifying you when caregivers clock in and out. HomeHero raised $3 million in seed funding from Science Inc., Social+Capital Partnership and Launch Fund last year.
The idea behind microfinance is to develop financial services for low-income individuals who don't have access to traditional banks. Often that means giving small loans to entrepreneurs and small businesses that don't even have bank accounts. Founded in 2011, InVenture has developed a novel way to determine a person's creditworthiness using their cell phone. The company has an Android app called Mkopo Rahisi (Swahili for "wall of love") targeting individuals in East Africa who don't have formal financial identities and can't get traditional loans.
Potential borrowers download the app, which sifts through 10,000 different indicators—including average call length, transaction data and social network details—to gauge their ability to repay a loan and qualify them for short-term loans. The whole process happens in under a minute. Later this year, InVenture will expand to other regions, including Asia and Latin America. To date, InVenture has paid out 30,000 loans, the majority between $20 and $100, with an average repayment rate of between 85 and 90 percent.
The start-up has raised more than $3 million in seed funding from Google Ventures, Lowercase Capital, Mesa Ventures and Collaborative Fund.
At first glance, the idea behind Tradesy doesn't seem all that novel: It's a marketplace for selling used clothing. EBay, Craigslist and local consignment shops already let you do the same thing. What makes Tradesy, which launched in 2012, different is its exclusive focus on clothing, particularly in-demand brands, combined with its mission to help customers earn cash from their closets. As the middleman, the company retouches product photos and provides sellers with shipping materials and then takes a 9 percent cut of the transaction. The company also will handle any returns.
Investors are convinced the model will scale: Tradesy has raised more than $44 million from Kleiner Perkins, Rincon Venture Partners, Richard Bransoand others.
Online retailers know that the best shot they have at getting you to buy—and keep coming back—is to know exactly what you want. But sussing out that information from buckets of data is harder than it looks. Retention Science, which was founded in 2012, promises its technology can connect those dots by accurately predicting what customers want and creating marketing messages that get their attention. Target, Neiman Marcus and NastyGal have all been Retention Science clients.
The company has raised $9.5 million from Upfront Ventures, Mohr Davidow Ventures and other investors.