Innovation Report Details Ups and Downs of San Diego Startups

San Diego’s innovation economy continues to move mostly sideways, with venture capital investments plunging and employment improving slightly among high technology and life sciences startups, according to a report today from Connect, the nonprofit group for technology and entrepreneurship. The mixed signals also showed San Diego’s merger and acquisition activity soared and federal grants to researchers strengthened during the last quarter of 2010.

A .pdf file for the full report can be downloaded here. My breakdown of the highlights and leading indicators for San Diego’s innovation economy follows:

—Eighty-four high tech and life sciences startups were formed in the region during the fourth quarter of 2010, a 13 percent increase from the same quarter of 2009, when 74 new companies were started. For the year, the report counted 277 new startup companies, which was a 13 percent decline from the 319 startups founded in 2009.

—Mergers and acquisitions jumped substantially across California in 2010 compared to the previous year. The value of reported San Diego M&A deals that closed during the fourth quarter was almost $1.7 billion. The nearly $4 billion in M&A deals reported here in 2010 was more than double the value of deals reported 2009. In Southern California, the M&A market in 2010 totaled more than $40 billion—almost seven times more than what was reported in 2009.

—Combined funding from the National Institutes of Health and the National Science Foundation for scientists in the San Diego area increased in 2010 to $42.5 million per 100,000 residents from $34.4 million per 100,000 in 2009. The report says that makes San Diego one of the state’s top innovation economies, based on federal grants received per capita. Total NIH financing for this region was almost $1.2 billion in 2010, a 28 percent gain from 2009, while NSF support amounted to almost $126 million, a slight increase from 2009.

—In the fourth quarter, San Diego got $278 million in NIH backing, and more than $31 million from the NSF.

— San Diego innovation companies received almost $32 million in Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) program grants in 2010, according to new data from the Department of Defense.

—As we reported in January, venture capital investors put

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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.