Los Angeles has always been renowned for media, entertainment & fashion, and the presence of Hollywood has to get the credit for most of the limelight. But today, the city is seen spreading its root into various other sectors as well. The start-up ecosystem in Los Angeles is booming and the city today has come up to be one of the big names in funding new set-ups across the country.
In the last 5 years, billions of dollars have been invested in organizations built by new age entrepreneurs and a notable amount of growth in these organizations have also been delivered. The number game of investments has crossed the mark of $6 billion, just in the last year. The top growing sectors of the city include film & media, sports, beauty, aerospace & defence, and technology.
The start-up ecosystem has brought in diversity by nurturing into modern fields like robotics, virtual reality, gaming, etc. Such diversifications have also helped the movement of talent across the city. The new age thinking and the rapid growth of app development companies in Los Angeles, has entitled LA as the third best environment in the world of start-ups, after Silicon Valley and New York by the Global Startup Ecosystem Report. Today the city holds 23 of the 57 California companies in the most recent Fortune 500 list, with big names including The Walt Disney Co., Northrop Grumman Corp., Ingram Micro, etc.
The rise of start-ups in the last decade:
The last 10 years have resulted to be very fruitful for the city, considering the startup ecosystem. Thousands of startups have been developed, wherein billions of dollars have been invested. The unemployment rate has been dropped to less than 5% and record growth of more than 156,000 new jobs has been seen in the last 5 years.
The venture capital investments in startups based in Los Angeles have seen a compound annual growth rate of 38%.
The less taxation policy has also played a significant role in boosting the start-up ecosystem. The city has delivered $90 million in tax relief to Los Angeles businesses since 2013. This has helped to achieve such a rapid growth of start-ups with more than 212,000 new businesses being licensed in the period of last 5 years.
Low Cost of Living
One of the major influencing factors of Los Angeles is its low cost of living. When compared to other startup hubs of the country like New York or San Francisco, the overall cost of building a company in Los Angeles is extremely low. Concordantly other day to day expenses are also much less, from buying food to renting a place to live, everything is cheaper. Thus you can do much more with the same amount of capital in Los Angeles than in other parts of the country.
The low cost of living not only attracts new entrepreneurs but also young app development talents that face difficulty in surviving in other parts of the country where the overall expenditure circle in much higher than that of the city of Los Angeles.
Closeness to Silicon Valley
Silicon Valley today has become massive in each & every way, thus the level of survival there for the new set-ups has become extremely difficult. All kinds of businesses present in Silicon Valley are held up against a very high bar and it is very difficult for a newcomer to mark its significance as the pressure is always high. On the other hand in LA the entrepreneurs can focus on their businesses with relatively less pressure. Also in the city, the level of competition is way less than that in the valley.
But Silicon Valley has its own advantages with a vivid presence acknowledged by the whole world. Los Angeles is just 45 minutes away from the Valley, brings in a very interesting businesses opportunity while settling on the edge of the frontier. The Valley of Tech on one side and the Dreamy Hollywood on another make Los Angeles a remarkable place to work at.
A Large Number of Women-led Startups
Los Angeles is amongst the top 20 cities with the highest number of female-owned businesses, with a gross average of $1 billion to $5 billion annually.
The important factors behind this large number of women-led startups are the overall low cost of the living, supportive ecosystem, presence of higher education, fast-moving talent and ease access to funding.
The presence of a large number of women entrepreneurs brings in more diversity and creativity in the environment. Such an environment produces a very supportive ecosystem with a high level of tolerance and acceptance. It is thus the most relevant environment for a startup to commence & prosper.
Presence of Experienced Mentorship
Mentorship plays a very significant role in the initial life span of a startup. The presence of an experienced and knowledgeable mentor will not only provide valuable guidance but will also help in establishing connections and building a noteworthy network. A powerful mentor is one of the biggest accelerators of a startups success.
Los Angeles is home to a large number of investors & mentors. There are also many incubators and accelerators centres present to boost the startup ecosystem and help convert the idea into digital products. Some of the big names included Amplify LA, Idealab, Startup UCLA, Launchpad LA, etc. The presence of Silicon Valley next to the city also brings in powerful businessmen as mentors to the new age entrepreneur.
The inclusion of all these factors, helps Los Angeles to excel in the game of startups. The favourable environment, supportive ecosystem, availability of app developers, low cost of living, presence of mentors and easy access to funds have resulted into naming the city as one of the best places to establish a startup in the country.