Disparities in First Quarter VC Activity, the San Diego Subsidence, and Top 10 Local Deals

4/15/11Follow @bvbigelow

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preceding quarter, when VCs put $218 million into 27 companies, according to the MoneyTree data. Over time, the numbers also reflect a gradual decline of deployed venture capital and deals in this area.

So what’s going on?

“It’s a good question,” says Ivor Royston of San Diego-based Forward Ventures. “There’s obviously a contraction going on. There is so much activity now in consumer Internet and social media, and most of that activity takes place in the Bay Area and back East.”

Royston also sees a broader contraction among venture investors in the life sciences, where he specializes. “There’s less capital available, and people are being very careful,” Royston says. “I do think the innovation is still here to be done.”

David Titus, who was recently hired to serve as the first official president of the San Diego Venture Group, says the statistics for a single quarter tend to be misleading because long-term trends are often obscured by the lumpiness of quarterly results. “So much of our dollar totals here can get swung by two or three late-stage biotech deals,” Titus says. Perhaps others will offer their perspectives below.

The top 10 San Diego deals, according to the MoneyTree Report:

Conatus Pharmaceuticals $25.3M

Genomatica, $23.8M

ecoATM, $14.4M

Elcelyx Therapeutics, $6.1M

Mpex Pharmaceuticals, $5.1M

Ophthonix, $4.7M

Verdezyne, $3.1M

Next Therapeutics, $3M

Grid2Home, $2.6M

Axikin Pharmaceuticals, $2.5M

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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  • David Titus

    We are three weeks into the new quarter and already San Diego VC financings
    are equal to 90 percent of Q1 financings!

    Conatus $7.5M
    Sangart $50M
    Tracon $14M
    CoDa Therapeutics $19M

    This speaks to the point I was making to Bruce in the above story of the quarterly variations due to big biotech deals.

  • Tom Tierney

    > are equal to 90 percent of Q1 financings!

    It’ll be interesting to see how Q2 turns out. Here’s Q2 from the last two years for San Diego VC investment:

    2010 Q2 $170.6M in 24 companies.
    2009 Q2 $256.7M in 26 companies.

    The trend line for VC investment has been poor the last few years for San Diego and this is when the economy is supposedly “kind of” recovering.

    It may well be that VC funds winding down and no big follow on funds (both in number and size) are beginning to show in the numbers?

    Angels continue to be active but deals (number and size) are also down.

    The good news: we’re long overdue for a *big* cyclic recovery (optimism = “ON”) – the question is how long will the trough continue?

  • BrettInLJ

    I have some friends in the Bay Area that were going to start their company in San Diego. They abandoned the idea and stayed up north due to lack of funding in SD. I had already moved down for a similar reason. The plans now are to head back up to the Valley as the networking and chances of getting funded as we gain traction are higher. Enough to outweigh the 2.5x cost of living.

    San Diego investors need to start focusing on lower barrier to entry internet/mobile startups rather than just biotech and life sciences. I worry about prospects for an economic recovery in San Diego.. it is the city I love and grew up in and wish it well even as I leave it behind.