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LA startups: entertainment and tech collide

Nito's real-time animation app
Nito's real-time animation app
Nito

As Los Angeles increasingly becomes a force in the country’s greater startup ecosystem – last year Startup Genome ranked the city third in the world, only behind Silicon Valley and Tel Aviv – will Hollywood have to take a backseat? Step aside Brangelina and Kimye; the likes of Maker Studios, Oculus and Snapchat have arrived.

While the city’s startup scene is increasingly stealing the spotlight from the industry where Los Angels has its roots – entertainment – it’s also partnering with that industry to produce some of the hottest startups. This year, more than any other, is packed with evidence of that strengthening partnership: Disney acquired Culver City-based Maker Studios for $500 million in March, Apple bought Dr. Dre’s Santa Monica-based Beats Electronics and Beats Music for a combined $3 billion in May, and Facebook swept up Orange County-based Oculus VR, creator of virtual reality gaming devices, for $2 billion also in March. League of Legends maker Riot Games calls Los Angeles home (first Santa Monica and then Culver City), as do myriad short-form video producers and multichannel networks – a fast-growing category in Los Angeles’ startup space.

Also this year, Disney partnered with national tech accelerator TechStars to launch Disney Accelerator, a three-month mentorship and seed-stage investment program for 10 to 12 hand-selected startups that have innovative ideas focused on consumer media and entertainment. Participants receive $120,000 in investment capital to develop their ideas, along with mentor support from top Disney executives, including Chairman and CEO Robert A. Iger, and leaders from Pixar, Marvel, Lucasfilm, ABC, ESPN and Walt Disney Imagineering. Participants will have access to stories, characters, technology and other resources from across The Walt Disney Company, as well as TechStars’ extensive network.

Just last week, the Disney Accelerator announced its first class, three of which are Los Angeles startups: Cogo, a video monetization solution for content creators; Jogg, an app for gathering, editing and sharing video from mobile devices; and Twigtale, a company producing personalized books for parents to help their young children through growth transitions. Following the three-month program (October), Disney Accelerator’s 11 startups will get to participate in an Investor Demo Day where they will present their business plans and products to industry leaders and investors.

There’s been a stronger entertainment function playing a role in the startup and tech spaces, says Isaac Garcia, founder of Pasadena-based tech startup Central Desktop. “It faded awhile, but there has been a resurgence with some of these guys leaving entertainment and coming back into tech, particularly in gaming and consumer applications. The two sectors are merging and those are the startups and exits we’re seeing.”

Another startup recognizing an opportunity in tech and entertainment and leveraging that partnership is Nito, a developer of innovative animation technology for the consumer and professional spaces. The year-old company uses innovative movement and tracking techniques allowing users to create dynamic animated characters on the spot. “Real-time animation,” says co-founder and CEO Hoyt D. Morgan.

With the consumer product, it’s a “simple way to create personalized content,” he explains. “I don’t think that it’s going to ‘save the world,’ but the more tech savvy people get, the more they want to engage with the things they’re interested in in a deeper way. So our job is to have really cool technology, features and characters.”

Nito just launched its enterprise product at the end of June, as well as announced a $600,000 seed funding round. Four clients signed up even before the product went live. Similar to the consumer product, albeit from a desktop computer, the enterprise version allows users to quickly and easily create animated characters and videos, but with the idea of using them for brand mascots (think: the GEICO Gecko or Captain Morgan), social media campaigns and video responses to news or current web conversations.

“We’re building a two-sided business,” Morgan says. “Animation to entertain, educate and communicate, and animation to better promote and build brands. We’re never going to replace the animation that Dreamworks does. It’s not intended for the big blockbuster films. Our technology doesn’t work for that, but it works for Facebook, for example. We’d love to work with Dreamworks, though, to have them use Nito to create little animated videos to promote and merchandise. It’s a new class of content for all the ways it’s being consumed. It opens up a lot of new opportunities.”

Adds Jim Andelman, co-founder and managing partner of Los Angeles tech startup investor Rincon Venture Partners, “The way people are consuming media has fundamentally changed.” And he attributes this shift to the very foundation Los Angeles’ startup ecosystem is built on: the conversion of entertainment and technology.

“There are a lot of industries that lag behind tech,” Morgan says, “but the reason entertainment pushes the envelope is because there are a lot of creative people behind it.” Entertainment folks, entrepreneurs and techies are cut from the same cloth. Says Morgan, “They’re dreamers rather than naysayers.”