Searching For Signs of a Comeback in San Diego’s Innovation Economy
San Diego’s innovation economy obviously imploded last year—dragged down by general economic conditions that were hammered by the collapse in Southern California real estate, the breakdown of the capital markets, and a decline in tourism. Now there are signs that things are stabilizing, and might even be gradually improving, according to several reports released last week.
In a report on San Diego’s innovation economy, the Connect nonprofit group for technology and entrepreneurship found that 319 startups were launched in 2009—including 74 in the fourth quarter. That’s about 13 percent better than the 282 local startups that Connect counted in 2008, but still shy of the 332 startups formed in 2007. In its roundup of San Diego’s innovation economy, Connect also makes these points:
—The value of M&A deals in the San Diego area soared during the fourth quarter. Connect tallied 29 deals totaling nearly $1.3 billion that were closed, compared with 32 deals totaling $99 million in the previous quarter.
—The value of venture capital investments in the San Diego area increased to $300 million during the fourth quarter of 2009, a 52 percent increase compared to the same quarter in 2008, according to the MoneyTree Report by PricewaterhouseCoopers and the National Venture Capital Association. It was 16 percent more than the $259 million that VCs sunk into San Diego companies during the third quarter of 2009. Of 30 fourth-quarter deals, more than half (53 percent) involved early stage investments, rather than later-stage companies.
—The top 10 investments during the fourth quarter, based on the MoneyTree Report: Zogenix, ($35 million); Fate Therapeutics, ($30.5 million); Evofem, ($25.0 million); SmartDrive Systems, ($25 million); Pfenex, ($24.0 million); Receptos, ($23.6 million); Fyfe Company, ($20.0 million); Altair Therapeutics, ($17 million); Cyntellect, ($15.5 million); Celula, ($15 million).
—Connect also found that life sciences, high-tech, and other innovation companies added 1,069 new jobs in 2009, including 209 in the fourth quarter. Life sciences and software companies each accounted for roughly a third of the new jobs.
Of course, job creation in the innovation sector pales in comparison to the thousands of jobs that technology companies shed over the same period. As the San Diego Union-Tribune recently reported, revised data from the California Employment Development Department shows that 50,500 workers in the county lost their jobs last year. Officially, the jobless rate hit 11 percent in January for San Diego County—marking the highest rate of unemployment since the California Employment Development Department adopted its current statistical methodology in 1990. It was the seventh consecutive month with unemployment above 10 percent, according to data released March 9.
Nevetheless, there are still some signs that suggest employment is strengthening—perhaps along with the regional economy. In its quarterly evaluation of the 100 largest metropolitan areas, the Brookings Institute’s MetroMonitor report, issued last week, found that employment in San Diego County rose by 0.3 percent during the fourth quarter. (The report also noted a decline in foreclosures and a relatively strong housing market.) University of San Diego economist Alan Gin told the San Diego Union-Tribune he calculated a similar blip that showed a 0.2 percent increase in employment, or about 2,300 jobs.