Searching For Signs of a Comeback in San Diego’s Innovation Economy

San Diego’s innovation economy obviously imploded last year—dragged down by general economic conditions that were hammered by the collapse in Southern California real estate, the breakdown of the capital markets, and a decline in tourism. Now there are signs that things are stabilizing, and might even be gradually improving, according to several reports released last week.

In a report on San Diego’s innovation economy, the Connect nonprofit group for technology and entrepreneurship found that 319 startups were launched in 2009—including 74 in the fourth quarter. That’s about 13 percent better than the 282 local startups that Connect counted in 2008, but still shy of the 332 startups formed in 2007. In its roundup of San Diego’s innovation economy, Connect also makes these points:

—The value of M&A deals in the San Diego area soared during the fourth quarter. Connect tallied 29 deals totaling nearly $1.3 billion that were closed, compared with 32 deals totaling $99 million in the previous quarter.

—The value of venture capital investments in the San Diego area increased to $300 million during the fourth quarter of 2009, a 52 percent increase compared to the same quarter in 2008, according to the MoneyTree Report by PricewaterhouseCoopers and the National Venture Capital Association. It was 16 percent more than the $259 million that VCs sunk into San Diego companies during the third quarter of 2009. Of 30 fourth-quarter deals, more than half (53 percent) involved early stage investments, rather than later-stage companies.

—The top 10 investments during the fourth quarter, based on the MoneyTree Report: Zogenix, ($35 million); Fate Therapeutics, ($30.5 million); Evofem, ($25.0 million); SmartDrive Systems, ($25 million); Pfenex, ($24.0 million); Receptos, ($23.6 million); Fyfe Company, ($20.0 million); Altair Therapeutics, ($17 million); Cyntellect, ($15.5 million); Celula, ($15 million).

—Connect also found that life sciences, high-tech, and other innovation companies added 1,069 new jobs in 2009, including 209 in the fourth quarter. Life sciences and software companies each accounted for roughly a third of the new jobs.

Of course, job creation in the innovation sector pales in comparison to

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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.