Under the Radar: Five San Diego Deals That Are Signs of Things to Come

11/24/09Follow @bvbigelow

With help from New York-based ChubbyBrain, we’re introducing a new feature for Xconomy San Diego today that we call our “under-the-radar” deals.

Here at Xconomy, our news coverage about technology innovation and startups includes the big venture financing deals that are the lifeblood of the early stage companies working to commercialize advances in the life sciences, cleantech, wireless, and other high-tech industries.

Sometimes these deals offer the first glimpse at companies that are operating in stealth mode, such as San Diego-based Achates Power, which raised $12.1 million in October toward a targeted $20 million venture round. What we call under-the-radar deals, however, are not necessarily stealthy companies. Rather these are the smaller deals that fall between $100,000 and $1 million, which are often left out of the region’s regular VC reports.

In fact, our current list of under-the-radar deals includes $514,061 in equity funding for Tour Engine, a San Diego cleantech startup that hopes to significantly improve fuel economy and reduce emissions with its “split-cycle” engine design. In contrast to stealthy Acates Power, which is also developing a novel engine design with substantial venture backing, Tour Engines’ founder Oded Tour wants to generate interest in his startup and he is eager to talk about the technology. A profile of his company is on my Xconomy list of things to do.

While each of these smaller, early stage companies has a unique entrepreneurial vision, we think it’s important to note the smaller financings for a variety of other reasons: Innovators often need these stakes to prove the viability of their technology, or to show there will be a market for their innovation. Following the collapse of the capital markets, there also seems to be a newfound appreciation for bootstrapping, and as Xconomy founder Bob Buderi points out, it doesn’t take a lot of capital these days to start a Web 2.0 company and many other types of virtual companies. As a result, these small deals also serve as indicators of new technology trends and companies in the making.

The smallest deal on our list, a $107,100 equity round for San Diego-based Great Call (the parent company of Jitterbug wireless), was previously reported as part of Great Call’s acquisition of Waltham, MA-based MobiWatch.

Among the more interesting companies to get funding is Chimeros, which moved to San Diego from Santa Barbara, CA, in mid-2008—despite a concerted effort to establish a biotechnology cluster near UC Santa Barbara and Amgen, the biotech giant based in nearby Thousand Oaks, CA. The founding CEO, Miguel de los Rios, told the Pacific Coast Business Times the move was prompted primarily by two factors. One was a shortage of scientists in the area with the kind of specialized skills the company needed; the other involved difficulties in working with local landlords to develop laboratory facilities the company needed to expand. Using nanotechnology spun out of UC Santa Barbara, Chimeros has developed methods for encapsulating strands of DNA, small molecule drugs, and other compounds with “nanocages” that help ensure the drug is delivered to the right type of cells. The company has venture backing from DFJ Frontier, the Santa Barbara-based Gideon Hixon Fund, New York-based New Science Ventures, and Prospect Venture Partners of Palo Alto, CA.

As I mentioned, the list of under-the-radar deals for startups in the San Diego area came from ChubbyBrain, an information services firm that uses regulatory filings, user submissions, and other sources to track angel, VC, and other investments in private companies. Their full list of under-the-radar deals for October includes five San Diego-based startups:

Proximetry Network Optimization Software

(Debt) $983,000

Chimeros Nanotechnology Drug Delivery (Equity) $611,246
Tour Engine Split-Cycle Engine (Equity) $514,061
ImThera Medical Medical Device for Sleep Apnea (Equity) $250,000
Great Call Easy-to-Use Cell Phone (Equity) $107,100

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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