© 2022 dot.LA. All rights reserved
on LA Startups & Tech
David Shultz is a freelance writer who lives in Santa Barbara, California. His writing has appeared in The Atlantic, Outside and Nautilus, among other publications.
What do we want? Money!
When do we want it? Now!
That’s the takeaway from a new study in the journal Environmental Research Letters. In a survey of 2,170 Americans, the authors asked respondents to rate how attractive they found different financial incentives for buying a new electric vehicle. Immediate rebates—cash off sticker price, in other words—were consistently and “overwhelmingly” rated as the most attractive way for the government to subsidize purchases.
Currently in The United States, new EV buyers are eligible to receive up to $7,500 back in the form of a tax rebate. This discount is actually a piece of Obama-era legislation from 2009. President Biden attempted to expand the tax credit to $12,500 in the Build Back Better legislation but was stymied by West Virginia’s Joe Manchin, a man who has taken more money the fossil fuel industry than any other Democrat in the Senate
Seven thousand, five hundred dollars is no small sum, but, on average, survey respondents said they’d be willing to accept a lower rebate if they could have it today, to the tune of $1,400. In other words, the average respondent felt that $6,100 today was as good as $7,500 back on their taxes.
In general, the current tax rebates system was viewed more favorably by wealthier respondents—people who could afford to wait for their money and who were going to owe a lot more money when April 15th rolls around. Remember, if you owe less than $7,500 at tax time, a rebate of that size is always wasted, at least in part. “It's a pretty unequitable thing and very much favors the wealthy and people who have higher tax liabilities,” says John Helveston, a researcher at George Washington University, who co-authored the study.
In addition to perhaps contributing to this sort of financial inequality, the current tax rebate system also means the government is overpaying for the effect they’re generating. If $6,100 today is considered on par with $7,500 at tax time to the average EV buyer, the government could’ve saved $2 billion between 2011 and 2019 by giving out less money more immediately. Or—even better—the program could’ve had a significantly larger effect for the same cost.
The argument—and Helveston says he gets this all the time—is that EV manufacturers would simply raise their prices to account for the immediate rebate, effectively nullifying the benefit to consumers. Helveston says it’s certainly possible that the manufacturers and the dealers would capture a bit of the value from an immediate rebate, but he doesn’t think it’s quite so simple. “These cars are more expensive to start with. They're hard to sell,” he says. “If you put this thing on the lot at a higher price, you're not going to sell that car. The consumers just going to say ‘no.’”
Helveston says that the rebate system might actually make EVs more attractive to dealers in the long run. Dealers have historically been lukewarm on EVs because they don’t require oil changes or a lot of other routine maintenance that internal combustion engines need, meaning dealers see reduced long term revenue from the sale. If some of the rebate value winds up going to the dealer and allows them to sell expensive cars a bit more easily, Helveston says it might help accelerate EV adoption even further. “The dealers have just been completely ignored, but they're actually a pretty serious gatekeeper,” he says.
If American politics shows anything, however, it’s that just because a policy makes sense, doesn’t mean it’s easy to enact. A change to the federal EV tax rebate policy would have to come from Congress, and as long as Joe Manchin continues to protect the interests of the fossil fuel industry, this remains unlikely. However, all is not lost! “That doesn't mean you can't make an impact today,” says Helveston. “At the state level, there's a lot more flexibility.”
The Nation Conference of State Legislatures has a nice roundup of the state-by-state EV incentives on offer, which gives an idea of how wildly variable this landscape is. California has 15 different programs in place that offer benefits ranging from financing for installing an EV charger on your property to an $800 rebate for residential customers purchasing an electric vehicle. West Virginia only has one. Kentucky, Kansas and North Dakota have zero. Check out what’s on offer in your state and see if it persuades you to think electric for your next purchase.
David Shultz is a freelance writer who lives in Santa Barbara, California. His writing has appeared in The Atlantic, Outside and Nautilus, among other publications.
Decerry Donato is dot.LA's Editorial Fellow. Prior to that, she was an editorial intern at the company. Decerry received her bachelor's degree in literary journalism from the University of California, Irvine. She continues to write stories to inform the community about issues or events that take place in the L.A. area. On the weekends, she can be found hiking in the Angeles National forest or sifting through racks at your local thrift store.
A San Diego EV company raised new funding to develop a high energy density battery cell for electric vehicles, while a new Los Angeles web3 platform lands funding and attracts investments from Kevin Durant’s Thirty Five Ventures, and Mr. Beast’s Night Ventures.
Wildcat Discovery Technologies, a San Diego-based EV battery developer, raised a $90 million Series D funding round led by Koch Strategic Platforms.
Hang, a Santa Monica-based web3 platform, raised a $16 million Series A funding round led by Paradigm to launch its NFT-powered loyalty program.
Arkive, a Santa Monica-based startup that aims to build a decentralized physical museum, raised $9.7 million in new funding co-led by Offline Ventures and TCG Crypto.
San Diego-based fitness studio management software Walla, raised an $8 million Series A funding round led by Industry Ventures.
Blockchain identity startup Quadrata, based in Marina Del Rey, raised $7.5 million in seed funding led by Dragonfly Capital.
Last Crumb, a Los Angeles-based cookie company that releases weekly online hype “drops” of its flavors, has raised a $3 million seed funding round led by Electric Feel Ventures.
Raises is dot.LA’s weekly feature highlighting venture capital funding news across Southern California’s tech and startup ecosystem. Please send fundraising news to Decerry Donato (decerrydonato@dot.la).
Decerry Donato is dot.LA's Editorial Fellow. Prior to that, she was an editorial intern at the company. Decerry received her bachelor's degree in literary journalism from the University of California, Irvine. She continues to write stories to inform the community about issues or events that take place in the L.A. area. On the weekends, she can be found hiking in the Angeles National forest or sifting through racks at your local thrift store.
Decerry Donato is dot.LA's Editorial Fellow. Prior to that, she was an editorial intern at the company. Decerry received her bachelor's degree in literary journalism from the University of California, Irvine. She continues to write stories to inform the community about issues or events that take place in the L.A. area. On the weekends, she can be found hiking in the Angeles National forest or sifting through racks at your local thrift store.
“Moves,” our roundup of job changes in L.A. tech, is presented by Interchange.LA, dot.LA's recruiting and career platform connecting Southern California's most exciting companies with top tech talent. Create a free Interchange.LA profile here—and if you're looking for ways to supercharge your recruiting efforts, find out more about Interchange.LA's white-glove recruiting service by emailing Sharmineh O’Farrill Lewis (sharmineh@dot.la). Please send job changes and personnel moves to moves@dot.la.
ACELYRIN, INC., a biopharmaceutical startup, welcomed Gil M. Labrucherie as chief financial officer. Labrucherie previously served as COO and CFO at Nektar Therapeutics.
Multimedia company 3Pas Studios, tapped the co-founder and chief executive officer of Encantos Steven Wolfe Pereira to the new role of chief business officer.
Will Kelly joined engineering firm TheoremOne as chief growth officer. Prior to joining, Kelly served as senior managing director at Cognizant Softvision.
EV manufacturer Fisker Inc., named Alpay Uguz as senior vice president of global manufacturing. Uguz previously worked at BMW's production facility as the general manager of the brand's SUVs.
Warner Records, a record label and entertainment company, added Dionnee Harper as executive vice president of marketing and artist development. Harper served as the senior vice president of marketing at Atlantic Records.
Smosh, a comedy entertainment company, appointed Joel Rubin as the company’s first executive vice president of programming and content; and promoted current team members Lisa Van Lenner to senior vice president of production and operations; and Kiana Parker to director of Smosh Pit. Prior to joining Smosh, Rubin served as the vice president of programming at the SpringHill Company.
Trusted Media Brands (TMB), an entertainment company, tapped former Warner Bros. and Paramount executive Chris Rantamaki as senior vice president of programming who will be working out of the Los Angeles office.
Distributor of independent entertainment Vision Films hired Garrett Thierry as the new director of global digital distribution and marketing. Thierry currently serves as a Partner at Savant Artists.
Terray Therapeutics, a biotechnology company using AI-driven drug discovery, welcomed Fiona Black, PhD to its scientific advisory board. Black previously served as the senior vice president of chief of staff to the chief product officer at Illumina.
Decerry Donato is dot.LA's Editorial Fellow. Prior to that, she was an editorial intern at the company. Decerry received her bachelor's degree in literary journalism from the University of California, Irvine. She continues to write stories to inform the community about issues or events that take place in the L.A. area. On the weekends, she can be found hiking in the Angeles National forest or sifting through racks at your local thrift store.
Spencer Rascoff serves as executive chairman of dot.LA. He is an entrepreneur and company leader who co-founded Zillow, Hotwire, dot.LA, Pacaso and Supernova, and who served as Zillow's CEO for a decade. During Spencer's time as CEO, Zillow won dozens of "best places to work" awards as it grew to over 4,500 employees, $3 billion in revenue, and $10 billion in market capitalization. Prior to Zillow, Spencer co-founded and was VP Corporate Development of Hotwire, which was sold to Expedia for $685 million in 2003. Through his startup studio and venture capital firm, 75 & Sunny, Spencer is an active angel investor in over 100 companies and is incubating several more.
On this episode of Office Hours, Spencer speaks with entrepreneur and venture investor David Beatty. Beatty is the managing partner and co-founder of Gaingels, an LGBTQIA+ investment syndicate aimed at fostering social change through their investment portfolios by creating a more diverse, inclusive and accessible venture capital ecosystem.
Their conversation was recorded at the Milken Institute Global Conference on May 2, 2022.
Beatty moved to the United States in 1990, where he started several successful businesses, including one involved in now-ancient fax and Telex technology. He retired in 2006, became an angel investor and eight years later, he decided to focus his investing efforts.
“In 2014, I started Gaingels with my co-founder, Paul [Grossinger], because there was nowhere for us as gay men to be able to invest in our own community,” he said.
The syndicate started out as “a group of mostly gay men, investing in mostly gay men,” Beatty said, adding that it has since expanded to include investors from a number of backgrounds, with the aim of promoting greater diversity to the startup and venture capital worlds.
Beatty argues that Gaingels' commitment to diversity, equity and inclusion goes beyond the obvious moral considerations — it’s sound business.
“It's not that it matters because it's the right thing to do,” he said. “It matters because companies like McKinsey and organizations like Harvard University have done so many studies that say that companies with diverse management teams and diverse boards fiscally outperform companies that don't.”
The organization’s structure — it’s a syndicate, not a fund — is crucial, he added. For every potential deal, Gaingels receives an allocation from the prospective company’s CEO, which can depend on the stage of the deal.
“And then we bring it to our members, and our members choose which deal that they wish to invest in,” he said. “And we put together a special purpose LLC for that. And then we do the work to enable that LLC to make that investment.”
Gaingels' membership has since expanded to 2,700, and the organization has invested in thousands of companies, according to its website. Pitchbook and CrunchBase have both recognized it as the among the most active venture capital firms in 2021, Beatty said.
“What it's doing is it's opening up this whole world of previously unavailable investment opportunities to individuals," he added. "And our focus is expanding the number of members we have to minorities from right across the board, not just the LGBTQ-plus community.”
Prospective portfolio company CEOs are asked to sign Gaingels letter, of commitment to do certain things in their hiring and HR practices—for instance, considering a non-discrimination policy and pledging to seek out qualified minority candidates for every executive job opportunity—that put them on a good footing for hiring and supporting an inclusive staff.
“—which you may think is a very simple thing,” Beatty said. “But when you know that you can get evicted from your house in 28 states in the United States just for being gay. These kinds of things actually matter when they come from companies.”
Aside from access to capital, Gaingels portfolio companies get access to a more diverse set of investors and get to the syndicate’s network of expertise and tools for hiring, including its jobs portal.
“We're now expanding that to use technologies with the partners who can bring in recruiters who can actually specialize in recruiting from minorities, so that we can actually provide more resources,” Beatty added.
The goal, he said, is to make it as easy as possible for executives of their portfolio companies to hire qualified candidates from traditionally underrepresented groups.
“It's amazing to me how pretty much all of the top venture capital firms want us to be co investors on their cap tables, because of what we can help them focus on,“ he said.
Spencer Rascoff serves as executive chairman of dot.LA. He is an entrepreneur and company leader who co-founded Zillow, Hotwire, dot.LA, Pacaso and Supernova, and who served as Zillow's CEO for a decade. During Spencer's time as CEO, Zillow won dozens of "best places to work" awards as it grew to over 4,500 employees, $3 billion in revenue, and $10 billion in market capitalization. Prior to Zillow, Spencer co-founded and was VP Corporate Development of Hotwire, which was sold to Expedia for $685 million in 2003. Through his startup studio and venture capital firm, 75 & Sunny, Spencer is an active angel investor in over 100 companies and is incubating several more.
© dot.LA All rights reserved