Q3 Venture Investing Waxed in Software, Internet, IT—Waned in Life Sciences

a combined total of less than $14.8 million during the quarter.

In contrast, none of the venture capital for San Diego’s three biggest deals went to life sciences startups, according to the VentureSource data. The cash that went to the top three companies—OneRoof Energy ($50 million); Mellmo ($30 million); and AwarePoint ($27 million)—amounted to $107 million, or 52 percent of San Diego’s total venture funding for the quarter.

Doug Regnier, a partner in the San Diego office of the Ernst and Young accounting firm, also points out that almost 60 percent of all venture funding in San Diego went to later stage companies during the quarter. “The middle rounds are the tough rounds, where money seems to be scarce,” Regnier says. “VCs are willing to invest in early stage companies, so the middle-stage companies with more mature businesses really have to manage their businesses much tighter.”

The MoneyTree Report shows a similar picture for San Diego’s third quarter, with $201.8 million invested in 21 local deals, according to data released by PricewaterhouseCoopers, the National Venture Capital Association, and Thomson Reuters. The amount of capital was unchanged from the same quarter last year, when $201.8 million was invested in 32 deals (a 34 percent decline in deals). A more telling trend might be the cumulative total of venture capital invested in San Diego so far this year, which amounts to $567.7 million in 82 deals. It’s running 13 to 14 percent behind 2010, when $652.5 million was invested in 95 deals through the first three quarters.

Software also scored big in the breakout of San Diego data from the MoneyTree Report, with six deals capturing $98 million—or 29 percent of all venture dollars invested here during the third quarter. The total for San Diego’s life sciences sector was $26 million—or 13 percent of all third-quarter investments—invested in nine deals. It’s a sharp contrast to the preceding quarter when $186 million—or 87 percent—went invested in San Diego’s life sciences sector.

The MoneyTree Report also includes San Diego’s 10 biggest venture deals during the third quarter:

San Diego’s Top 10 Q3 Venture Deals
OneRoof Energy $50 million
Mellmo $30 million
AwarePoint $27.4 million
Zeebo $17 million
Daylight Solutions $15 million
SweetLabs $13 million
SmartDrive Systems $10 million
Elevation Pharmaceuticals $9.66 million
TakeLessons.com $6 million
Astute Medical $6 million
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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.