Insight

Local startups surge in 2013

September 29, 2014

By DEAN CALBREATH

More than 400 tech-related startups were launched in San Diego County in 2013, the most since the beginning of the recession in 2007, according to a report released Monday by Connect.

The startups, with specialties ranging from 3-D printing to wireless medical apps, generated more than 1,200 local jobs, helping bring total employment in the technology sector to 141,000 workers, or 11 percent of the county's total payroll.

San Diego Mayor Kevin Faulconer, who unveiled the report at a news conference with Connect CEO Greg McKee, said it showed that "people are starting amazing companies that will bring incredible opportunities to San Diego and extraordinary advancements to the world.”

McKee said the technology sector experienced across-the-board growth throughout the county last year, adding that he expects that trend to grow.

On the other hand, venture capital funding dropped off sharply last year, with startups attracting only $765 million from VC groups, compared to $1.2 billion in 2012 and $1.8 billion in 2007 on the eve of the recession, but that was partially offset by a rise in government grants and other funds.

Steve Hoey, senior developer of business creation and development at Connect, said one reason for the drop-off is that the startups that receive the heaviest funding are typically in the biotech field. Last year, more than half of the local startups were in software, which required less startup funding.

Last year's startups included 3Dagogo, aimed at making 3-D printing easier for consumers; Boost Academy, to provide better student-teacher communications in online education; Edico Genomes, which hopes to resolve bottlenecks in genetic sequencing; and Nephosity, aimed at improving medical communications.

In addition, eight San Diego firms launched initial public offerings on Wall Street last year, raising nearly $390 million, reducing the need for late-stage VC funding. Hoey said the pace for IPOs has been picking up in 2014.

Among the other items cited in the report:

• San Diego County was the No. 1 spot in California to gain funding through the National Institutes of Health, with grants totaling $960 million, compared to $867 million in 2012.

• San Diego generated 6,370 patents in 2013, in third place among California counties, after Santa Clara with 19,298 patents and Alameda with 6,504.

• San Diego launched the third-highest number of startups among California counties last year, with a total of 412, compared to 892 in Los Angeles and 627 in Santa Clara.

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