- Courtney Reum, cofounder of M13, used to consider it integral to fly regularly to San Francisco.
- But he has not set foot in the Bay Area — except to attend a wedding — for over two years.
- “Silicon Valley is a big pond, but it can be a big pond of sameness,” Reum told Insider.
Courtney Reum, the cofounder of M13, a consumer-focused venture firm in Santa Monica, California, with nearly a billion dollars in assets under management, used to consider trips to San Francisco to scout Silicon Valley startups and meet with prospective founders an integral part of his job.
But no longer. In fact, he has not set foot in the Bay Area — except to attend a wedding — for over two years because he sees much more attractive investment opportunities in Southern California, a shift he says was already underway before the COVID-19 pandemic but has significantly accelerated since.
“Silicon Valley is a big pond, but it can be a big pond of sameness,” Reum said. “Coming to LA allows VCs to fish in a new pond that they are finding yields a lot of fish.”
Reum cofounded M13 with his brother, Carter Reum, in 2016 after they sold their spirits business, Veev, to a St. Louis beverage conglomerate. Sir Richard Branson and Arianna Huffington are both limited partners in the firm.
M13’s $175 million second fund is tracking to have good returns, and the firm is in the process of raising a new fund of about $300 million, according to a person familiar with the matter.
Reum stresses that he is by no means giving up on the Bay Area. The firm was an early investor in marquee Silicon Valley names like Lyft and Pinterest, and M13 is in the process of hiring a San Francisco-based partner.
But only about a fifth of the firm’s portfolio companies are now in the Bay Area, half as many as LA, which he said is still underrated.
“People are still sleeping on LA unless they have spent real time here to see what’s going on,” Reum said.
Whether attracted by sunshine or startups or both, more big-name VCs — including the
angel investor
Peter Thiel, Union Square Ventures’ Fred Wilson, and Andreessen Horowitz’s Andrew Chen — are now spending at least part of the year in LA. Marc Andreessen recently bought a compound in Malibu for $177 million.
Reum said the Los Angeles tech scene has become much more well-rounded than it was just a few years ago.
“Before we were graduating a lot of engineers but not keeping them,” Reum said. “Celebrities and media were here but not being fully utilized. A few unicorns started here, but they were outliers. Now it’s all come together in a cohesive way in that there is depth of talent and a great market to support new companies.”
Reum cites Clash, a monetization platform built for creators and fans, as an example of the kind of startup that only LA could produce. M13 invested in the company’s March seed round alongside Alexis Ohanian’s Seven Seven Six and the NBA stars Seth Curry and Austin Rivers.
While Miami has gotten a lot of the buzz lately, Reum pointed out it has had much slower year-over-year growth than Los Angeles despite having a considerably smaller startup scene. VCs poured $6.3 billion into LA startups in the second quarter of this year, representing 370% growth from the same period in 2020, according to PitchBook. Miami startups received $831 million, a 142% year-over-year increase.
But Los Angeles still trails New York and the Bay Area in total invested capital, a trend PitchBook projects will continue next year.
PitchBook
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