Wed. Aug 10th, 2022

Startups in Los Angeles made more trades last quarter than they have ever done before, even though on average they had fewer dollars than last year and last quarter.

Area starters closed a record 261 financing agreements during the third quarter of 2021, according to a venture report from CB Insights.

Following this metric, the city ranked third among U.S. startup hubs in the 3rd quarter, only behind New York (with 504 deals closed) and Silicon Valley (with 771). Q3 also marked the second quarter in a row, with LA shooting Boston out of a spot among the top three.

While the number of deals registered in LA increased, the total funding raised by startups in the area dropped to $ 3.3 billion in Q3. That’s a remarkable drop from the same time last year, when startups in LA raised $ 4.2 billion, as well as from last quarter, when as much as $ 6.1 billion was raised.

“The biggest trades at the top were much larger last quarter, but I did not want to paint this story in a negative way,” senior CB Insights analyst Chris Bendtsen told dot.LA. “The total number of VC appointments rose to an all-time high in Q3. I feel it’s a big story and the story is growth.”

Data from CB Insights

“Yes, in LA the funding dollars were down, but I don’t think that points to any kind of correction,” Bendtsen said. “Things will keep going up.”

The report also noted that 61% of trades registered in LA so far this year involved start-up at an early stage, up from 55% in 2020.

Data from CB Insights

Asked if he has noticed indicators of a technical bubble as trades and valuations rise, Bendtsen said no.

“We do not think we are in any kind of bubble. A large part of the funding we see goes to enterprise tech and saas companies, unlike several consumer-driven companies where there is more speculation involved. We think it is promising, ”he added.

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