San Diego’s Homegrown VCs Waning, But Out-of-Town VCs Make Up the Difference

5/20/09Follow @bvbigelow

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San Diego’s venture data. His conclusion: “There are not a lot of funds that have dropped out,” perhaps just two or three. A key factor for Molloie is that the overall number of VC deals in San Diego has not declined precipitously, even though the amount of venture dollars invested has.

Molloie recently sent me a chart that shows the number of venture deals that PwC counted in the San Diego region has been climbing from 401 in 2003 to a peak of 638 in 2007. The number of deals declined to 561 in 2008, but Molloie said that’s not bad compared to 2006 (474 deals) 2005 (460 deals) and 2004 (460 deals).

Molloie’s chart also shows the number of active VCs headquartered in San Diego has not changed much. PwC’s tally shows there were 13 in 2003; 15 in 2004; 14 in 2005; 13 in 2006; 9 in 2007; and 14 in 2008. The chart also notes that four out-of-town venture capital firms have maintained offices in San Diego since 2003: Domain Associates, Sanderling Ventures, ProQuest Investments, and Sofinnova Ventures.

The big revelation for me is that the number of VCs that maintain a presence in San Diego is just a fraction of the number of out-of-town venture capital firms that are doing deals here.

In 2008, PwC found that 239 out-of-town VCs were involved in 490 deals that resulted in more than $1.24 billion in venture investments in the San Diego region. In contrast, the 14 VCs with San Diego headquarters were involved in 37 deals that resulted in almost $49.3 million in venture investments last year.

So it may be that we’re both right. Some of San Diego’s venerable homegrown VCs may no longer be investing, but the overall deal count for San Diego has remained relatively stable. Last year, 93 percent of the VCs doing business in San Diego were from out of town; they accounted for 87 percent of the 561 deals and 87 percent of the nearly $1.43 billion that was invested in San Diego technology startups.

Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow

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