A lot of founders and investors from the LA startup scene are in Austin, Texas this week for South by Southwest. A few years ago, the only startups people really knew about in southern California were Snapchat and Tinder.
But in the last five years, a lot has changed. We chatted with Michael Schneider, who recently founded an up and coming startup there called Service, about what it's like to build a company there, and which startups should be on your radar.
Service is an outsourced customer service center that works to find a resolution between complaining customers and businesses. For example, if your flight is delayed and you reach out to Service about it, Schneider's company will hear you out, then contact the airline on your behalf to negotiate a possible solution. The startup has raised $3 million so far.
According to Schneider, here's what's happening in the LA startup scene:
- It's not just about Snapchat anymore. And not every startup involves ecommerce or Hollywood's entertainment scene. Schneider says real tech companies are being built in LA.
- Some cool up-and-coming startups in LA to watch include Gum Gum, Ring and Clutter, according to Schneider.
- Gum Gum puts ads on top of images, and it recently raised $30 million with meaningful revenue being generated.
- Ring is a smart doorbell that lets you see who's at your door on your smartphone (kind of like FaceTime). It got its start on Shark Tank and now it's generating significant revenue. Schneider recently visited Ring's office and said it's like a giant warehouse. "There’s an army of people boxing and shipping [Rings]; you can really get a sense of how quickly they’re growing," he said.
- Clutter is an on-demand storage company that lets you stash away items you don't need for the time being.
- While the startup scene is great in LA, the investor scene is still lacking. If you want to raise a big round of capital, you better head to Silicon Valley. Schneider says he was able to raise a pre-seed round of financing in Los Angeles, but for his actual seed round, he needed to head to Silicon Valley which he admits he feels a little "guilty" about. "I think if you’re going to raise a sizable A round [your LA option is] Upfront Ventures — and I can’t think of another firm. Everyone goes up north."
- Peter Pham, who runs startup incubator Science Inc, says that while Snapchat is still "everything" in LA and will continue to be massive, there are other revenue-generating businesses like Honest and Dollar Shave Club (a company he helped incubate) that are making LA a real tech hub. "If you took Snapchat away, there’s still a billion dollars of venture capital still in LA all from [investors] up north [in Silicon Valley]," Pham said.
SEE ALSO: The 25 hot LA startups you need to watch