At a Private Xconomy Dinner, Luminaries Debate the Future of Innovation in San Diego

12/22/10

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that big venture firms in technology hubs like San Francisco, Boston, or Seattle don’t see geography as a barrier, and that good ideas win funding wherever they’re born. “I’m pretty agnostic as to where a company is,” Rastetter said. “I’m looking for ideas, and for a strategy that is going to survive in an environment of extreme capital scarcity. I’m looking for people, I’m looking for IP, and I’m looking for a plausible value inflection [that opens] access to more capital. That has nothing to do with where I am.”

Titus rejected that argument. “I’d love to get a look at the last three years of Series A deals in San Diego and see what percentage do not have a local investor in them,” he said. “I’m willing to bet that it’s less than 30 percent.”

—San Diego needs more angel investors with more money. Individual investors in the Bay Area, in particular, seem to work more assiduously and make many more investments. Titus said he’d recently read about a young individual investor in the Bay Area who had decided to stop investing after putting money into 45 companies. “I’d be shocked by anyone in San Diego who’s made even 20″ investments, Titus exclaimed.

—San Diego needs more technology incubators like EvoNexus, operated by the nonprofit industry group CommNexus as a pro-bono, no-strings attached incubator for entrepreneurs who have promising technologies and solid business plans, dinner participants agreed. While profit-minded technology incubators like IdeaEdge (a San Diego incubator based on the model of Waltham, MA-based CMGI) have mostly imploded, incubators are still a powerful platform for launching new companies. Titus predicted that over the next five years, the EvoNexus incubator would produce “several modestly growing, successful companies, and one or two really big stars… I’m not sure who they are going to be yet, but the quality is there.”

“Take a look at Plug and Play Tech Centers in Silicon Valley,” said Waring. “It’s 150,000 square feet of phenomenally dynamic space; it’s just alive. There is a potential to have a Plug and Play in San Diego. It’s not going to be 150,000 square feet, but that raises questions of deal flow. I think we desperately need that.”

—Increased federal funding over the past two years has buoyed San Diego’s research and development community, especially grants from the National Institutes of Health for biomedical research at the Salk Institute, the Sanford-Burnham Medical Research Institute, The Scripps Research Institute, and UC San Diego. But funding is unlikely to continue at such levels, posing a tough problem for the region in terms of finding … Next Page »

Bruce Bigelow is San Diego Editor of Xconomy. Wade Roush is Chief Correspondent and San Francisco Editor. Follow @

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  • June

    Maybe its time San Diego grows up and starts playing in the big game. The build and sell, begging for money cycle is no longer functioning effectively. Time for a more sustainable company economy, so talent does start to feel good about coming to and staying in San Diego. Otherwise, what’s the point of moving to a region, buying an expensive home etc., losing your job and having to leave because there’s no great senior level roles to replace it?

  • http://www.ascertain-ment.com Lou Volpano

    I live and operate in OC and come to SD frequently to explore, and network. Start up capitals never a problem, but the start up attitude is. With all the academics, and ‘institutes’ ready to pontificate, are there any that produce productivity? Coming up with a great idea can be done by a high school drop out. In short – “TALENT” is organic, not manufactured…. and most have not learned – in their hallowed MBA programs – how to even WORK in company, much less form one.

  • http://www.techcoastangels.com Steve Flaim

    Regarding the comment about individual angel investors, I think the critical issue is how many deals are actually done by angels in Southern California, not how many deals an individual angel actually invests in. Tech Coast Angels, located in Southern California, is the largest organized angel investor group in the country. We started operations in 1997 and are now nearly 300 members strong organized into 5 networks (Orange County, Las Angeles, Westlake/Santa Barbara, Inland Empire, and San Diego). We have funded over 150 startup companies with over $150M of our own funds. These companies have gone on to raise over $1B in follow-on funding. We believe that we have made a significant difference in Southern California and it is the aggregate effect that counts rather than any one individual’s investment performance.

  • Cliff

    Great comments and I think talent is one of the biggest issues at hand. Funding aside, the team needs to be able to execute and finding a proven team is now (IMHO) the biggest challenge in SD. The ambitious and passionate leave for greener pastures where they team up with thought leaders.