Follow me @samirkaji for my always random, sometimes relevant thoughts on the world of venture investing and startup (the below is a repost from an article I posted on CB Insights) When ranking US startup hubs, it’s widely accepted that New York City stands out clearly as the largest venture ecosystem outside of Silicon Valley. Startup formation and funding data seems to confirm this notion as the area consistently ranks as the second-largest region fortotal venture capital funding. Although the region was weighted down by unrealistic early expectations, it’s easy to build a bull case for NYC. Just check out a sampling of private companies that have originated out of New York including Betterment, WeWork, Oscar,Bonobos, Kickstarter, and Sprinklr. Undeniably, a strong list and one that promises to grow over time. On the other hand, all the way across the country, Los Angeles remains a bit of an enigma for those attempting to evaluate it as a standalone hub. Perhaps it’s LA’s proximity to Silicon Valley or its reputation as a region that’s strictly media-focused. Either way, many continue to question the region’s ability to become a long-term, standalone venture capital and tech hub and often view it as a remote extension of Silicon Valley. Having spent a lot of time in the area over the past few years, I’m very excited about LA becoming a legitimate startup and venture hub. With universities like UCLA, Cal Tech, UC Irvine, and USC churning out high-quality tech talent and developing tech communities in Venice Beach and Santa Monica, startup formation continues to rise in the area. Accelerators and co-working spaces have also become ubiquitous, and companies such as Google and IBM have set up nearby campuses, a direct byproduct of the area’s talent pool. Throw in the desirability of living in the area and it’s easy to see why we’ve witnessed so much recent positive momentum. Of course, the items above don’t completely answer the question of whether LA has drawn a short straw in public perception relative to regions like New York City. A key metric for any legitimate start-up ecosystem is the quality of companies that originate in the area and by extension, the number of successful exits. To measure this, we pulled LA-based startup exit data from 2011 to 2016 using CB Insights. For comparison purposes, we juxtaposed this against exit data for companies that originated in NYC during that same time period. As seen in the chart, New York City consistently demonstrated more (disclosed) startup exits over the last five years. Given the amount of venture funding and company formation in NYC relative to Los Angeles during the identified period, it’s not...
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