San Diego Report on Innovation Economy Still Shows Mixed Picture of Economic Recovery

The Connect Innovation Report is not exactly timely—the report on San Diego’s innovation economy for the second quarter that ended June 30th was released just yesterday. But the almost 40-page report offers a more comprehensive overview than the more immediate picture we get from venture capital investments in San Diego startups during the quarter.

The report also includes data on such economic indicators as the number of technology companies started (down more than a third from Q2 of 2009); M&A deals (roughly twice the deals of Q2 2009); and granted patents (up 22 percent). What’s more, it incorporates analysis from San Diego economist Kelly Cunningham of the National University System Institute for Policy Research.

The entire Connect Innovation Report can be found online here. My roundup of the highlights follows, but many of the local economic indicators remain at odds. Mergers & acquisitions activity during the quarter was encouraging, but we saw more deals with a bigger overall valuation during the first quarter of 2010. While federal funding for research has been soaring—especially in the health sciences—anemic venture capital investing continues to sap the life from San Diego’s innovation community. With so many contrary indicators, just about any mechanic would conclude that this economic engine still needs a tune-up.

—The Innovation Report shows 64 technology startups were founded in San Diego during the second quarter of 2010. This was an 83 percent increase from the first quarter, but a nearly 37 percent decline from the 101 startups formed during the second quarter of 2009.

—The report shows there were 40 mergers & acquisitions deals for a total reported value of $317 million in San Diego during the second quarter—approximately twice the 24 deals with a total reported value of $139 million during the same quarter in 2009. The total value was down by about 62 percent, though, from the first quarter of this year, when San Diego saw 46 M&A deals valued at $845 million. In addition, 10 San Diego companies closed

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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.