Venture Group’s Krenn Sees Improving VC Deals for SD Tech Startups

Call him an optimist if you must, but San Diego Venture Group president Mike Krenn says venture financings for San Diego’s early stage tech startups are on a tear.

“I haven’t seen it this good since 2007,” he says. As head of the non-profit organization supporting local startups, Krenn says the venture group will help to bring over 150 VCs to San Diego this year, including many from Silicon Valley. “That is an insane data point.”

Venture data, however, only partly support Krenn’s exhuberance. A breakout of regional deal flow so far this year indicates that venture activity in San Diego is on pace with last year, according to PitchBook, the Seattle-based fintech and data services provider. It might be running a little ahead.

In an analysis for Xconomy, PitchBook found that venture firms have invested $1.43 billion in 137 startups in the greater San Diego area through Wednesday (September 6). If VCs maintain this pace—and invest another $400 million by the end of this year—total funding for local startups would exceed the $1.78 billion that was invested in 222 San Diego startups in 2016, according to PitchBook data. That was a recent high-water mark for the area, according to PitchBook.

San Diego VC activity through September 6 (courtesy PitchBook)Of course, Krenn concedes that the PitchBook data covers all types of investments in San Diego, including life sciences deals (which remains the strongest sector for venture activity here). So it’s hard to tease out the trend for tech deals alone. He also acknowledged the total deal count for 2017 may be lagging behind the pace of 2016.

Beyond the topline numbers, though, Krenn contends that he is seeing anecdotal signs of a surge in early stage tech deals. For one thing, he says the size of deals seem to be bigger. For example, he points to the $114 million round that Brain Corp. raised from SoftBank’s $100 billion Vision Fund and Qualcomm (NASDAQ: QCOM). He contends the overall deal quality seems better—better companies, founders, and venture firms.

Mike Krenn, San Diego Venture Group, SDVG

Mike Krenn

In an e-mail, Krenn writes, “Also—just the general feel from the VCs who are scoping out San Diego—with a sincere interest.  We didn’t get calls three years ago—asking for deal flow, and wanting to really see companies here.” Krenn said an out-of-town VC who made his first trip to San Diego to attend last week’s venture summit told him afterward, “My perception of SD changed completely from a sleepy town to one that houses a lot of hidden gems.”

Krenn noted that just last week, the social media platform Hookit raised a $16 million Series A round from Arrowroot Capital and other … Next Page »

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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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