Snap Earns $20m Grant to Back California Tech Industry

The state has awarded the AR company funding to stave off an ongoing exodus from Silicon Valley

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Published: December 5, 2023

Demond Cureton

California has awarded Snap Inc a massive fund worth $20 million USD. Comprised of grants and tax credit incentives, lawmakers have awarded Snap funding to help the company expand its offices globally and boost its augmented reality (AR) smart glasses manufacturing capacity.

Additionally over 12,000 entities have earned or been awarded the programme’s incentives, leading to the creation of nearly 165,000 jobs since the initiative’s inception in 2013, the Los Angeles Business Journal reported on Monday.

Hailing from Santa Monica and with offices in Paolo Alto, Snap has long been associated with Silicon Valley’s tech hub in California.

Based near some of the world’s top businesses like Google, Qualcomm, Meta Platforms, and others, Snap’s role in driving innovation in the United States and beyond has led to significant growth in extended reality (XR).

The state has launched its “California Competes Grant” and “California Competes Tax Credit” for businesses operating in its borders to help the firms “locate or stay and grow in California.”

For many within the industry, recipients are forecast to attract $1.3 billion in private funds and roughly 6,000 jobs, according to reports.

In the agreement, Snap will allocate the funds for building its AR devices. Previously, the social media giant unveiled its Spectacles solution, which was a pair of smart glasses with cameras attached that recorded video and uploaded footage to its platform. The firm is expected to receive the funds in 2025.

This is similar to Meta’s first-ever Ray-Ban Stories device, which is in its second iteration to date, with plans for more AR-focused technologies in the near future.

Currently, only developers have access to the latest release of Spectacles, which offers more AR features.

Snap and the Corporate Flight from California

California’s latest initiative aims to attract investors and jobs amid a massive migration of companies to other states like Texas, Alabama, North Carolina, and others.

Major organisations like the Los Angeles Area Chamber of Commerce are investigating the causes of the capital and innovation flight from California.

Multiple tech giants like Tesla, Oracle, HP Enterprise, Palantir, and others have relocated to states with more favourable incentives and business conditions.

For example, Snap recently shuttered its San Francisco office in October citing ‘light use’ of the facilities. However, after a year from its departure, the company leased a new office in California’s Bay Area.

In response to the exodus of Californian companies, firms receiving grants must pledge to boost the state’s economy. The grant money Snap has received requires it to create 508 positions by the end of the 2027 fiscal year.

Additionally, it must invest more than $10 million USD in infrastructure for “facility construction” or “renovation.” Conversely, it can build its project in places with high unemployment or poverty rates.

Comments on California Competitiveness Survey

Maria S Salina, President and CEO, Los Angeles Area Chamber of Commerce, explained that her organisation “wanted to look at why California-based businesses continue to leave” and whether or not the “state was doing enough to stem the flow of business outbound migration.”

She continued,

“This report is unique because it examines the issue from a Southern California perspective and finds that to stay competitive, California’s economy and its evolution over time are best analyzed and understood by looking at its regions”

The report also contributed several recommendations to “strengthen California’s competitiveness among other states.” Doing so would offer “suggestions to develop regional strategies to help businesses prosper.”

Raul A Anaya, President of Business Banking, Bank of America, added,

“The state’s diverse regions are distinctively successful and impactful when we learn from each other and work in collaboration, We know this study will shed more light on the reasons why California should be optimistic about the future – while also calling us to be more alert and prepared for the changes in population and business dynamics which will challenge our economic competitiveness.”

Snap’s AR Smart Glasses Venture with AI

Previously, Snap opened its AR Enterprises department but later shuttered it due to a lack of capital for investing in the nascent division.

However, Evan Spiegel, Chief Executive, Snap noted the value of using artificial intelligence (AI) for creatives using future versions of the device.

Specifically, he told audiences at a recent keynote speech at Snap’s APAC AR Day: “AI is reducing the barriers to creativity.”

Despite some difficult periods in the company’s operations, it continues to innovate its platform with new solutions that can renew its revenue streams.

In the recent past, Snap’s Spectacles smart glasses and its XR drone technologies have failed to become profitable in the XR market.

Snap has since pivoted from its hardware development cycle and moved towards marketing, where it can leverage its massive user base for income streams.

‘Snapping Up’ Partnerships in the XR Community

Over the last few years, Snap has remained committed to developing its AR enterprise use cases to expand its solutions across industry verticals.

For example, the company has struck a massive partnership with Amazon to pilot online shopping integrations. This allowed Snapchatters to directly access items for sale through influencer profiles, leading to AR virtual try-ons (VTOs) and try-in-home digital solutions for purchases.

The deal would allow Amazon to access Snapchat’s more than 360 million daily active users (DAUs).

A spokesperson said at the time that the first-ever initiative would allow customers to “shop Amazon’s Snapchat ads and check out with Amazon without leaving the social media app.”

He continued: “Customers in the United States will see real-time pricing, Prime eligibility, delivery estimates, and product details on select Amazon product ads in Snapchat as part of the new experience”

Furthermore, the Santa Monica-based firm struck partnerships with Music Television (MTV) and the National Football League (NFL) to create insightful immersive experiences for audiences. The AR enterprise plans to expand its reach by leveraging collaborations with other XR firms and telecoms.


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