investors to expand its Web-based platform for action sports sponsors, athletes, and enthusiasts. The social media marketing startup Soci raised $8.5 million in April, and the e-mail marketing company Cordial raised $6 million from Upfront Ventures and others in February. “There’s also a healthtech company, that’s staying stealth, where Google is an investor,” Krenn writes. “Another one, staying stealth, is sitting on a $12M Series A term sheet.”
Krenn also is marveling at the turnout for last week’s venture summit. Nearly 700 people attended—including some 120 VCs. Among them was Peter Lee of Embark Ventures, a new venture firm in Los Angeles that has raised $45 million for its first fund.
“We feel that San Diego’s startup ecosystem is thriving despite there being very limited local venture capital available,” Lee wrote in an e-mail to Xconomy. “Feels like there are likely many over-looked-but-promising startups. Also, because of Embark’s focus on ‘deep’ tech companies, San Diego has real depth in technical talent from [local] universities and larger tech companies such as Qualcomm.”
At Morpheus, another relatively new venture firm in Los Angeles, principal Howard Ko said, “There are not many Series A funds down there any more—at least not in tech.” Ko, who worked previously at San Diego-based Mission Ventures, said he’s now meeting with San Diego tech startups every four to six weeks.
“We see promise there,” he explained. “What we’re looking to do is actually nurture that.” Ko said many of the companies he meets are not yet ready for Series A rounds, but the nonprofit incubator EvoNexus has been particularly effective in helping many startups get up to speed.
“It was just kind of unfortunate that the true local tech funds like Mission and Enterprise Partners didn’t raise successive funds,” Ko said. “The reason we’re doing this is because of the lack of on-the-ground capital there.”
Brian Mesic, who spent years in San Diego as a general partner for Los Angeles-based Anthem Venture Partners, is now working to establish a new venture firm in San Diego called Ankona Capital. But Mesic says a general lack of local capital has been holding the tech sector back here. “When I moved to San Diego three years ago, I was very bullish on working here to get things going,” he said. “The entrepreneurs have done a good job of getting themselves organized.”
But during a recent scouting trip in Salt Lake City, Mesic said he was “blown away” by the depth and breadth of software startups in Utah. In comparison to San Diego, Mesic said the software community in Salt Lake City has built stronger teams that are going after bigger opportunities—and Silicon Valley VCs are flocking to the region.
“They’re all unicorn-hunting,” Mesic said. “There are people in Silicon Valley whose job is just Utah. Very few focus on San Diego.”
Call him an optimist, but Krenn contends that’s changing.
“Five years ago, you had to move your company to Silicon Valley to get funded,” Krenn says. “Three years ago, they were ‘meh’ on San Diego. Now they’re open to [funding] a company in San Diego. Attitudes have changed big time.”
