An Xconomy Analysis: Five Ideas to Boost San Diego’s Software Sector

vital role in helping them get established. But there are fewer big companies left to re-seed the ecosystem, and experienced software executives are becoming a limited resource. There are drains on other regional resources as well.

For example, venture capital funding for San Diego startups has declined substantially over the past decade, especially for tech startups. A five-year average of quarterly venture investments in San Diego from 2010-14 (according to MoneyTree Data) ranges from $223 million to $247 million a quarter, with about 80 percent now going to life sciences startups. A decade ago, the five-year average (2000-04) ranged from $316 million to almost $387 million, according to MoneyTree data—and investments were divided more evenly between tech and life sciences startups.

Of course, launching a software company can cost far less today than it did a decade ago, but the total number of deals also has declined over the past decade by about 25 percent, from a yearly average of 154 from 2000-04 to roughly 114 from 2010 to 2014 (with incomplete data for this year).

UC San Diego campus and Torrey Pines Mesa
UC San Diego campus and Torrey Pines Mesa

San Diego’s freshly minted software engineers are also being lured out of town. More than 400 students graduated from UC San Diego this year with undergraduate degrees in computer science engineering and electrical and computer engineering. Hundreds more graduated with degrees in other engineering fields (and another 406 undergrad engineers graduated from San Diego State University), which means San Diego has an abundant supply of skilled candidates for IT jobs, at least at the entry-level.

But according to the alumni office at UCSD, a surprising number of recent graduates who find a job in San Diego leave the area within five years of graduation. The obvious reason is that tech companies pay substantially higher entry-level salaries in the Bay Area ($80,000-$100,000) than in San Diego ($50,000 to $70,000, with only Qualcomm in the $80,000 range).

Aside from the disparity in compensation, new computer science grads want to work for “hot” companies like Google, Facebook, and Twitter, and they don’t mind that the cost of living is substantially higher in the Bay Area. It’s hard to overcome that mindset, but they simply may not be aware of the

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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.