San Diego Venture Funding Remains Flat in Q1 MoneyTree Data

Venture capital activity in the San Diego region has remained flat for two consecutive quarters, with funding levels and deals for the first three months of 2013 coming in almost exactly the same as the last three months of 2012, according to data from the MoneyTree Report released today.

VCs invested $178.3 million in 26 startups in the San Diego area during the first quarter of 2013, according to MoneyTree data. In the fourth quarter of 2012, venture firms provided $178.1 million to 26 companies. As I reported in January, venture activity during the fourth quarter was off sharply from the previous quarter—and well below average for the previous 12 years.

The MoneyTree report was prepared by PricewaterhouseCoopers and the National Venture Capital Association (NVCA), using data provided by Thomson Reuters.

Data from a different source provided by Jeffrey Grabow, a partner in Ernst and Young’s office in San Jose, CA, shows a similar slowdown in San Diego venture activity during the first quarter. As director of business development for Ernst & Young in Silicon Valley, he leads the firm’s venture capital practice on the West Coast. Grabow said venture firms invested almost $164 million in 22 deals in San Diego. In the previous quarter, Grabow says his data shows VCs invested $198 million in 19 deals.

“The decrease in overall funding doesn’t really surprise me,” Grabow told me by phone yesterday. “VC funds have been investing at a greater pace than they have been fund-raising over the past few years. A lot of firms have not been able to raise new venture capital funds.”

He also attributed the downturn to a pullback in healthcare investments.

Nevertheless, Grabow said he’s hopeful that the stock market’s bullish performance in recent months will open the window for venture-backed IPOs. Despite global uncertainties that range from sequestration to the economy of Cypress, Grabow said, “I think we’ve gotten to a point where the market psychology has begun to come back.”

Based on MoneyTree data, San Diego’s top 10 venture deals during the first quarter were:

Applied Proteomics, $25 million.

Receptos, $21.2 million.

Rempex Pharmaceuticals, $15.6 million.

Sotera Wireless, $14.8 million.

Tealium, $13.5 million.

Elcelyx Therapeutics, $12 million.

Synthetic Genomics, $10 million.

Legend3D, $8 million.

Vital Therapies, $7.1 million.

Verve Wireless, $7 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.