San Diego’s Startup Pace Strong Despite Economic Chills

A survey of technology startups in San Diego County shows 76 new companies were launched here during the second quarter of 2008, suggesting entrepreneurs kept busy despite broader economic declines locally and nationwide.

The study released by Connect, a local non-profit that supports innovative technology and life science businesses, found that San Diego County ranked second in startup activity statewide from April through June.

The 159 new companies launched in Los Angeles County during the second quarter eclipsed San Diego’s strong showing, however. Santa Clara County, in the heart of Silicon Valley, ranked third with 71 startups during the same period.

Of San Diego’s 76 startups, the two biggest categories were in the biomedical sciences and software. Each accounted for almost 28 percent of the total.

Connect’s data show a 36 percent increase in new tech businesses throughout California: from 430 started in the first quarter of 2008 to 585 such businesses in the second quarter.

A statewide trend in last year’s startup figures showed a huge surge in new companies formed during the second half of the year. The first and second quarters of 2007 saw 428 and 510 companies formed, respectively, while 922 companies launched during the third quarter and 1,367 businesses started in the fourth quarter. “Given the pattern established in 2007, the creation of tech businesses may still significantly increase in the 3rd and 4th quarters of 2008,” said Kelly Cunningham, Senior Fellow & Economist at the San Diego Institute for Policy Research.

On the other hand, Cunningham noted that venture capital was flowing near record levels in the second half of 2007. “With the nation’s credit and housing markets in turmoil, consumers are drastically cutting back spending,” Cunningham said. “Business investment had been one factor supporting economic growth for the nation, but with liquidity also drying up, investment dollars are likely to be tight as well.”

Author: Bruce V. Bigelow

In Memoriam: Our dear friend Bruce V. Bigelow passed away on June 29, 2018. He was the editor of Xconomy San Diego from 2008 to 2018. Read more about his life and work here. Bruce Bigelow joined Xconomy from the business desk of the San Diego Union-Tribune. He was a member of the team of reporters who were awarded the 2006 Pulitzer Prize in National Reporting for uncovering bribes paid to San Diego Republican Rep. Randy “Duke” Cunningham in exchange for special legislation earmarks. He also shared a 2006 award for enterprise reporting from the Society of Business Editors and Writers for “In Harm’s Way,” an article about the extraordinary casualty rate among employees working in Iraq for San Diego’s Titan Corp. He has written extensively about the 2002 corporate accounting scandal at software goliath Peregrine Systems. He also was a Gerald Loeb Award finalist and National Headline Award winner for “The Toymaker,” a 14-part chronicle of a San Diego start-up company. He takes special satisfaction, though, that the series was included in the library for nonfiction narrative journalism at the Nieman Foundation for Journalism at Harvard University. Bigelow graduated from U.C. Berkeley in 1977 with a degree in English Literature and from the Columbia University Graduate School of Journalism in 1979. Before joining the Union-Tribune in 1990, he worked for the Associated Press in Los Angeles and The Kansas City Times.