What's Happening in SoCal's Innovation Economy: A Perspective from Silicon Valley Bank
Rob Freelen, Los Angeles Market Manager, Silicon Valley Bank
With 2017 now in the rear view mirror, we are looking ahead to 2018. Personally, I couldn't be more excited about the SoCal tech scene and burgeoning local capital market. SVB banks most of Southern California's newly minted unicorns and many of the region's most exciting companies, including Ring, ZipRecruiter, Fair Financial, Appetize, Wag and many more.
Startups are confident: According to Silicon Valley Bank's 2018 Startup Outlook, two-thirds of SoCal-based startup executives and founders we surveyed say they expect business conditions to improve in 2018.
SoCal is seeing a dramatic increase in new capital sources. SVB President Mike Descheneaux recently wrote in PitchBook-NVCA Venture Monitor that new domestic capital sources such as family offices and high-net worth individuals and new foreign capital sources, mostly from Asia, are fueling venture growth.
In our latest State of the Markets report, SVB predicts that while the deal count in 2018 will remain flat, investment will remain strong with an uptick in capital committed per deal.
With an abundance of capital searching for growth and new workarounds to satisfy liquidity, late-stage valuations will climb higher with steady capital investment.
Market conditions and early filings signal that the environment for IPOs may be improving. We do expect new listings and acquisitions, but many will still opt for private capital.
SoCal startups expect M&A to remain strong in 2018: 49% tell us they expect activity to increase and 43% predict activity will be level with 2017.
In 2017, cryptocurrency fortunes favored the bold, but in 2018 we are off to a rocky start. The openness of ICOs have accelerated development capital raised for anything blockchain. But are these investments rare greenfield opportunities or just blue-sky thinking?
SVB's Life Science and Healthcare team is anticipating more investments in the diagnostics/tools sector as companies develop AI-assisted technologies to advance medicine and healthcare. In SVB's annual Trends in Healthcare Investments and Exits 2018, we predict that increasingly these companies will receive backing by tech-focused investors.
Cars, bikes…so why not electric scooters? I often get asked: What innovations, gadgets or devices are catching my eye? Santa Monica-based Bird is an electric scooter-share company that works like Uber/Lyft, but instead of getting into a car, you use an app to find an electric scooter that propels you to your destination while enjoying the LA sunshine. Every time I ride a Bird, the experience plasters a smile on my face. Look for more transportation startups.
Rob Freelen is Los Angeles Market Manager for Silicon Valley Bank.