San Diego Venture Funding Remains Flat in Q1 MoneyTree Data

4/19/13Follow @bvbigelow

Venture capital activity in the San Diego region has remained flat for two consecutive quarters, with funding levels and deals for the first three months of 2013 coming in almost exactly the same as the last three months of 2012, according to data from the MoneyTree Report released today.

VCs invested $178.3 million in 26 startups in the San Diego area during the first quarter of 2013, according to MoneyTree data. In the fourth quarter of 2012, venture firms provided $178.1 million to 26 companies. As I reported in January, venture activity during the fourth quarter was off sharply from the previous quarter—and well below average for the previous 12 years.

The MoneyTree report was prepared by PricewaterhouseCoopers and the National Venture Capital Association (NVCA), using data provided by Thomson Reuters.

Data from a different source provided by Jeffrey Grabow, a partner in Ernst and Young’s office in San Jose, CA, shows a similar slowdown in San Diego venture activity during the first quarter. As director of business development for Ernst & Young in Silicon Valley, he leads the firm’s venture capital practice on the West Coast. Grabow said venture firms invested almost $164 million in 22 deals in San Diego. In the previous quarter, Grabow says his data shows VCs invested $198 million in 19 deals.

“The decrease in overall funding doesn’t really surprise me,” Grabow told me by phone yesterday. “VC funds have been investing at a greater pace than they have been fund-raising over the past few years. A lot of firms have not been able to raise new venture capital funds.”

He also attributed the downturn to a pullback in healthcare investments.

Nevertheless, Grabow said he’s hopeful that the stock market’s bullish performance in recent months will open the window for venture-backed IPOs. Despite global uncertainties that range from sequestration to the economy of Cypress, Grabow said, “I think we’ve gotten to a point where the market psychology has begun to come back.”

Based on MoneyTree data, San Diego’s top 10 venture deals during the first quarter were:

Applied Proteomics, $25 million.

Receptos, $21.2 million.

Rempex Pharmaceuticals, $15.6 million.

Sotera Wireless, $14.8 million.

Tealium, $13.5 million.

Elcelyx Therapeutics, $12 million.

Synthetic Genomics, $10 million.

Legend3D, $8 million.

Vital Therapies, $7.1 million.

Verve Wireless, $7 million.

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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