San Diego First-Quarter VC Funding Hits $270M & Top 10 Deals

Venture funding for software staged a comeback in San Diego during the first quarter, with investments classified as software deals accounting for nearly $110 million, or 40 percent of the $270 million that venture firms invested in the San Diego area, according to the latest MoneyTree Report.

Of 19 venture deals in San Diego counted during the first three months of 2015, the MoneyTree survey classified eight as software deals. Venture funding for eight biotechnology companies accounted for $149.3 million, or 55 percent of total dollars in the quarter, and our list of San Diego’s top 10 deals is below.

Two Internet-related deals might have helped to boost the software deal count. But MoneyTree classified an $8.3 million investment in Dealstruck, the Web-based alternative lending company, as “financial services.” Likewise, MoneyTree counted $700,000 in venture funding for StockTwits as a “media and entertainment” deal.

The MoneyTree Report is prepared by PricewaterhouseCoopers and the National Venture Capital Association (NVCA), based on data provided by Thomson Reuters.

In recent years, life sciences deals typically account for most of the venture dollars flowing into San Diego. In contrast, most venture funding nationwide is invested in the software industry.

As we reported last week, MoneyTree data for the first quarter shows that VCs invested about $5.6 billion in 434 software companies throughout the United States. That accounted for almost 42 percent of the $13.4 billion that VCs invested across 17 U.S. industries, and over 42 percent of the 1,020 deals during the first three months of 2015.

In San Diego, the $270 million in first-quarter funding was the highest level of VC investment since the second quarter of 2012, when VCs invested almost $344 in 32 companies.

The biggest software deal of the quarter was a late-stage, $50 million expansion round for SmartDrive Systems, which uses dashboard-mounted video cameras and predictive analytics to provide driver training other services for trucking and delivery fleet operators. The company says its technology and personalized performance program helps fleets improve driving skills and lower their operating costs. Oak Investment Partners, New Enterprise Associates, and WABCO, a global transportation technology company based in Brussels, Belgium, funded the round.

The biggest life sciences deal of the quarter was a $76 million late-stage round for aTyr Pharma, a San Diego biopharmaceutical that specializes in physiocrine-based drugs for treating rare immune diseases.

According to the MoneyTree Report, the top 10 deals of the quarter were:

aTyr Pharma Biotechnology Late Stage $76.3 million
SmartDrive Systems Software Late Stage $50 million
Cidara Therapeutics Biotechnolgoy Early Stage $42 million
Tealium Software Expansion $30.7 million
Seismic Software Expansion $20 million
Thesan Pharmaceutical Biotechnology Early Stage $16 million
Dealstruck Financial Services Early Stage $8.3 million
Elcelyx Therapeutics Biotechnology Early Stage $4.6 million
Obalon Therapeutics Biotechnology Early Stage $4.1 million
Metacrine Biotechnology Early Stage $3.3 million

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.