How Does LA Rank Among the World's Best Startup Ecosystems?

The 2024 Global Startup Ecosystem Report (GSER), a joint effort by Startup Genome and the Global Entrepreneurship Network, was unveiled on Monday at London Tech Week. Los Angeles solidified its position as a global startup powerhouse, maintaining its impressive #4 (#3 in the US) ranking in the 2024 GSER, tied with Tel Aviv. The city's thriving ecosystem continues to attract top talent and investment across diverse sectors like crypto, gaming, and cleantech.

While large exits above $50 million declined in LA during 2023, the drop was less severe compared to Silicon Valley, London, or Tel Aviv. Notably, LA was the only ecosystem to see an increase in active unicorns from 41 to 42 between mid-2021 and end of 2023. New unicorns include advanced auto manufacturing startup Divergent 3D, cleantech company Newlight Technologies, and cloud platform Restaurant365.

With over 500 VC firms, a top talent pipeline from universities like UCLA, Caltech and USC, and recent major funding rounds like $1.05 billion for parking tech startup Metropolis, $150 million for VideoAmp, and $70 million for Chaos Industries, LA's startup scene shows no signs of slowing down. The city's diverse population provides a rich global talent pool, further fueling its entrepreneurial growth across hot tech sectors.

However, LA still lags behind the top three startup ecosystems - Silicon Valley, New York City, and London - in certain key metrics:

• Funding and Exits: While LA's drop in large exits was less severe than other top ecosystems in 2023, it had only one exit valued over $1 billion (gaming startup Scopely at nearly $5B), compared to multiple billion-dollar exits in Silicon Valley, New York, and London. Silicon Valley also continues to dominate late-stage funding, increasing its global share to 26% in 2023 despite an overall funding crunch.

• Startup Success Factors: The report suggests that Los Angeles trails the top ecosystems in the following metrics: early-stage success (ratio of Series B to Series A companies) and late-stage success (ratio of Series C to A companies, and speed to exits (both to IPO and other exits). New York was the only top 5 ecosystem to see an increase in average Series A deal size in 2023.

Despite these challenges, Los Angeles' diverse and vibrant startup ecosystem, bolstered by significant investments and a rich talent pool, is strongly positioned for continued growth. The city's strengths in emerging sectors like cleantech and gaming, combined with an increasing number of active unicorns, should not be underestimated. With strategic efforts to enhance funding and success metrics, LA is well on its way to joining the more elite global ranks of startup ecosystems.

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