MAPLE INTERVIEWS ERIC EIDE - MANAGING DIRECTOR AT THE ALLIANCE FOR SOUTHERN CALIFORNIA INNOVATION

Eric Eide of Alliance for SoCal Innovation

This month we sat down with Eric Eide, the newly appointed Managing Director of the Alliance for Southern California Innovation to discuss the work of his organization and the Southern California innovation landscape.

1. Eric, congratulations on your recent appointment as Managing Director of the Alliance for SoCal Innovation. For our readers who are not familiar with your organization, would you share an overview of your mission and the work or your organization?

Thanks so much Stephen. I really appreciate being part of the MAPLE Business Council and for the opportunity to share a bit about our organization and the impact we are making.

The Alliance for Southern California Innovation (the “Alliance”) is a not for profit formed in 2017 that has successfully brought together Southern California’s top research institutions, local business leaders, and world-class advisors to focus on bridging critical gaps in the SoCal innovation ecosystem. We believe we have the greatest impact by acting as a strategic convener and matchmaker; putting players together who have complementary capabilities and share common objectives. The Alliance cannot do this alone. That is why we engage and align strategic partners to advance and accelerate their innovation agendas by better capitalizing on what the SoCal ecosystem has to offer. We aren’t just a connector but also look to spark powerful new collaborations that produce game-changing innovation initiatives. It is through this highly leveraged approach that we believe a small not-for-profit like the Alliance can indeed move mountains.

2. With your focus on the innovation landscape in Southern California, who are the stakeholders that are defining it and shaping its future contours?

We often say that the Alliance helps weave the rich innovation fabric that defines this amazing region: aligning the vertical threads within key stakeholder groups (academia, corporate, VC and community organizations) and then interconnecting them across these groups in hopes of instigating important collaborations.

This strategy only works once you have assembled critical mass in each stakeholder group; I believe the Alliance is reaching that critical tipping point with more than 75 partnerships/formal collaborators, including MAPLE, where our impact can be felt across a significant population of the innovation ecosystem. Below are the key stakeholder groups and some organizational names that exemplify each stakeholder group:

  • 20+ leading corporations including Amgen, Cubic, Disney, Edison, Edwards, Illumnia, Lilly, Petco, Pimco, Mitsubishi Electric, Verizon, Yahoo, etc.

  • 30+ not for profit & community organizations with 15 in our SoCal Leadership Council including CLA-OC, BioSciencesLA, Biocom, Octane, Connect, LAEDC, CoMotion, etc.

  • 10+ Top Academic Research institutions: all the UC’s, USC, Caltech, Claremont Colleges, ASU & USD.

  • 23 VCs/CVC including Upfront, March, M13, Acme, TCG, TenOneTen, Town Hall Ventures, Bonfire, Calibrate, Smash, and others.


3. How do you view the current state of our innovation landscape in Southern California and what have been some noteworthy developments in the past year?

The current state of the SoCal innovation economy is strong! I would have to say that the most noteworthy development this past year was the continued resilience of the SoCal innovation economy through a global pandemic. Rather than slowing down, the innovation economy surged, with a raft of new companies formed and overall startup investment up.

For the Los Angeles Metropolitan area, which also includes northern Orange County, investment more than doubled between 2017 and 2021, rising from $10.3B to $34.3B during that period according to Pitchbook-NVCA’s Venture Monitor Q1 2022 Report. In San Diego, investment rose by nearly 5x from $1.2B in 2017 to a record breaking $5.2B in 2020 based on San Diego-based Connect’s reporting. These investor trends have been buoyed by the dramatic increase of SoCal based investors, which have risen from a couple dozen just ten years ago to over 120 funds today as well as more non-resident capital finding and investing in local SoCal startups.

4. What do you see as some of the key challenges for nurturing and scaling innovation in Southern California?

Despite our progress, capital access continues to be one of the key challenges facing our region. There are simply many more good companies than funding available to fund them. The actual number of SoCal startups that receive investment has been relatively stable over time and most of the dollars that have increased in recent years are channeled into a small number of growth stage companies.

A related challenge is how unevenly capital is deployed across geography, industries, and across demographic groups of founders. For example, startups in Santa Monica have better access to the local capital that clusters there than startups just 70 miles east in Riverside.

Some industry specialties are more attractive to investors, such as Business-to-Business Software as a Service (SaaS), which tends to reach profitability faster and with less investment, than say sustainable technologies, which SoCal is a top producer of, but the important industry tends to suffer from higher capital requirements and longer sales cycles, which may dampen investor interest.

Finally, one of the most important challenges is the systematic exclusion of women and minorities from access to capital. While this is not a problem that is unique to SoCal, it is acutely felt here, especially given the diversity of our population.

5. How competitive is our Southern California innovation ecosystem when we look beyond our state and national borders?

SoCal consistently ranks as a top national and global innovation hub across multiple national and global innovation reports. Our strategic partner, The Boston Consulting Group, ranked SoCal as a top 3 tech innovation ecosystem in their 2018 Stars Aligning: How Southern California Could Be the Next Great Tech Ecosystem ahead of Boston and just behind the San Francisco Bay Area and New York City.

SoCal (or its leading innovation hub cities) are ranked highly in the following reports as well:

6. How well represented are women and minorities in the Southern California innovation ecosystem today and what examples can you point to of outreach to increase their participation?

While diversity is high across SoCal, with 67% of the SoCal population categorized as non-white, diverse founders and innovators do not receive equal access, opportunity, or compensation. Region wide data is difficult to find and aggregate, but our partner, PledgeLA, administers an annual survey to over 200 LA-based companies and investors and reported the following findings:

GENDER AND PAY EQUITY

  • Gender pay equity remains a persistent concern for LA tech. Regardless of role or experience, women at Pledge LA companies earn $20,000 less than men.

  • Women with 20+ years of experience make an alarming $90k less than men of similar tenure.

RACE AND PAY EQUITY

  • White employees out-earn Black and Latinx staff considerably, making an average of $90k net of experience and role.

  • This compares to just $75k for Black employees, and a paltry $60k for Latinx employees .

VENTURE CAPITAL PORTFOLIO DIVERSITY

  • Compared to the national average, PledgeLA venture capital firms have invested in almost twice as many female founders .

  • Investments in Black founders are six times the national average.

  • Funding to Latinx founders is eight times the national average.

  • At the same time, these numbers track well below each identity’s share of the local population.

At the Alliance we value and seek to promote and support an inclusive innovation economy. We formed a DEI committee in April 2021 that meets quarterly and is responsible for ensuring the Alliance is proactively reflecting the rich diversity of our region in our programming, engagement and leadership.

Our intentional focus on external outreach has yielded some modest results. In our SoCal Venture Pipeline Program, for example, the proportion of non-white founders applying to the program has risen to 60% from an average of 53% from our first full year of operation. We’ve seen a similar uptick for female founders.

7. Are there any myths or misperceptions about Southern California as a center of innovation that are standing in our way for future growth and success?

SoCal is best known for Hollywood, but we have so much more to offer than just entertainment. And herein lies the challenge. We excel at many things that others don’t recognize about SoCal. We lead in software and technology, finance, consumer, health, media, real estate, and aerospace. SoCal is less specialized in a single innovation category, while other hubs tend to be more concentrated, such as the Bay Area in software and tech and Boston in health. While tricky to communicate, our diversity is our superpower and creates more opportunities to drive innovation.

Our people and our sectors are more diverse than anywhere else in the world, enabling us to spark collisions and collaborations that no other ecosystem can. As an example, our obsession with healthy living has sparked convergence between bioscience and fitness wearables to create sustainable and fashion-forward products. We’ve brought together tunes and tech and merged agriculture with medical imaging science like no other region has. We have all of the essential ecosystem components and so much more.

8. Why should our members, partners and readers in Canada pay attention to the Southern California innovation scene?

We are BIG. SoCal has over 20 million people, spread over 40,000 square miles, and is a $1.4 trillion dollar economy that would make it the 13th largest economy in the world if it were a country. And we think and dream BIG. From Santa Barbara to San Diego to Orange County and the Inland Empire, we have the most progressive consumers in the country, demanding sustainable and environmentally friendly products, meat alternatives, pet health monitoring, petroleum-free plastics and alternatives to textiles made from animal products. We listen to them, and we act because we care.

The culture—one of a kind. The climate—perfect. The standard of living—high.

Our research, education and incubatory establishments are setting the course for national tech innovation. We’re the gateway to Asia and Latin America, and our two primary seaports (the largest in the Western Hemisphere) are ground zero for energy-efficient logistics. Our trailblazing leaders are setting the most progressive agenda in the nation because, in living in SoCal, they acutely feel the impact of the challenges around them. From the impact of climate change to mobility challenges to health crises and homelessness, they see these problems first hand and are fully motivated to drive the region to find solutions. Also, our unique personality and lust for life enables us to capture the attention of the world.

9. In what ways do you see Southern California’s ties with Canada, as the second largest market for California and one of its top sources of foreign investment, as an opportunity in the future?

SoCal-based investors are increasingly aware of the innovation potential of Canada and I’ve recently learned about angel and institutional investors investing in Canada-based companies. I believe this trend of cross-border investments will continue and accelerate.

At the same time, Canada is a compelling market for SoCal-based companies to expand to given its strong talent, complimentary industries, and our intertwined and coordinated supply chains. SoCal also boasts one of the largest Canadian diaspora populations in the world and with that familiarity and with those cross-border relationships business becomes much easier to initiate and sustain.

10. Lastly, Eric. As a leader at the Alliance for several years, and now its Managing Director, what are some of your priorities for the organization?

The Alliance will continue to focus on connecting and coordinating stakeholders to drive impact. This year, I am very excited to develop our internal capacity to report on innovation trends and metrics for our region and we are in the process of securing the resources to make that reporting a reality.

My primary focus, however, will continue to be on supporting and growing access to capital through leadership of our VC Advisory Council and the SoCal Venture Pipeline program, both launched in 2021. I am particularly proud of our early success through the SoCal Venture Pipeline to create more capital access opportunity across the region.

In February, we expanded the program to startups seeking Seed stage funding ($1M+), we’re seeing remarkable momentum that will enable us to help more founders, especially women and people of color who face added barriers for capital access.

Next year, we expect to help more companies and access funding. We grateful to our lead underwriting partner, Silicon Valley Bank, and the additional support Wilson Sonsoni and KPPB provide to make this program possible.

For more information on the Alliance for Southern California Innovation, please visit www.alliancesocal.org.