Report: San Diego’s Innovation Economy Shows Q2 Uptick in Startups, Patents, and Investments

9/15/09Follow @bvbigelow

A just-released report on San Diego’s innovation economy shows 102 new technology companies were created during the three months that ended on June 30—a 53 percent increase over the 66 startups launched during the first three months of 2009, and 34 percent more than the 76 companies started during the second quarter of 2008.

A key factor in the startup surge was a 90 percent increase in venture capital investments in the region over the three-month period, according to the report, which was released by Connect, a San Diego nonprofit group that promotes technology innovation and entrepreneurship. The report found that venture firms invested a total of $172 million in 22 San Diego area companies, based on regional data from the National Venture Capital Association, PricewaterhouseCoopers, and Thomson Reuters.

Of the 102 startups counted in the area, 37 were focused on biotech, pharmaceutical, and biomedical technologies, 22 were software companies, and 14 specialized in communications, according to the report. Connect also counted 12 cleantech startups during the quarter, more than any other region in California.

Connect started the quarterly report to provide an indicator of the relative health of the innovation economy in San Diego. The indicators suggest things are getting better, but the startup climate remains cautious compared to past years.

We’ve seen much of this information before, notably the second-quarter VC investment data. Still, Connect offers some additional data, and its list of the top 10 investments varies from the one I put together in July, which included Intellikine ($28.5 million), ParAccel ($22 million), SkinMedica ($9.4 million), Medsphere Systems ($6 million), Afraxis ($3.3 million), and Loop’d Networks ($800,000). The Connect list of top 10 investments shows:

PhotoThera             $50.0 million

Ophthonix               $25.9 million

Tandem Diabetes Care   $13.0 million

Anaphore                 $13.0 million

aTyr Pharma           $10.8 million

Lithera                      $10.0 million

Aragon Pharmaceuticals   $ 8.0 million

Traversa Therapeutics  $5.0 million

Nirvanix                    $5.0 million

MojoPages.com  $5.0 million

Some other data points from the Connect report:

—Grants from the National Institutes of Health to researchers in the San Diego region totaled $265.3 million, a 56 percent increase compared to the first quarter. Grants from the National Science Foundation to San Diego recipients rose 14 percent to $56.3 million.

—Patent applications submitted during the second quarter by inventors from the San Diego region increased 15 percent over the first three months, to 1,559. Patents granted by the U.S. Patent and Trademark Office increased by 16 percent to 728. The San Diego area accounted for about 14 percent of the total number of patents filed and granted by inventors throughout California.

—Mergers and acquisitions involving companies in the San Diego area declined during the second quarter, with 24 deals closed compared to 42 deals closed during the first quarter of 2009. Despite that falloff, San Diego companies still accounted for a third of all the M&A deals that closed in Southern California.

The Connect Innovation Report, which is available here, is a joint effort by Connect, the National University System Institute for Policy Research, University of California, San Diego Extension, PricewaterhouseCoopers, Procopio, Cory, Hargreaves & Savitch, and the San Diego Business Journal.

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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