Formation of New Tech Start-Ups in San Diego Down Almost 40% While M&A Deals Jump Almost 60%
New Quarterly CONNECT Innovation Report Shows Tech Sector Is 6% of Employers but 25% of Wages Paid
New data also shows that San Diego's tech sector represents only six percent of employers but just over 11 percent of all jobs in the county and more than a quarter of the region's payrolls. Average pay among tech firms is 80 percent higher than the overall average industry wage.
According to Kelly Cunningham, Economist and Senior Fellow, National University Institute for Policy Research, "Average pay among tech firms is $85,800, more than 80 percent higher than San Diego's overall average of $47,400 per job. Communications and equipment manufacturers ($101,900) and computer and electronics ($98,000) have the highest averages, followed by software ($85,000), biotechnology and pharmaceuticals ($82,100), defense/transportation ($79,400), and environmental technology ($78,100)." Cunningham provides the Report's economic analysis.
- In Q1 2010, 51 new technology companies were created in San Diego, down from 74 tech start-ups in the previous quarter. These companies created over 140 new jobs in Q1.
- Technology start-ups for all of California were down 37% in Q1 2010 with 442 new companies established compared to the previous quarter's 700 start-ups.
- 16 new pharma/biotech/medical device businesses were created in San Diego in Q1 2010. This represents 16% of all California life sciences start-ups formed statewide in Q1. San Diego ranked second statewide behind Los Angeles County with 28 life science start-ups in Q1.
- The number of M&A deals increased 59% in San Diego in Q1 2010. Forty-six deals totaling over $845 million were closed in Q1 compared to 29 deals closed in Q4 2009. Over 30% of all reported M&A deals closed in Q1 2010 in Southern California involved San Diego companies.
- The life sciences sector received the majority of the San Diego VC funding in Q1 2010, 64%, with $141 million invested -- down nine percent from the $155 million raised in the sector in the previous quarter.
- Data from the PricewaterhouseCoopers/National Venture Capital Association Moneytree™ latest report shows that Q1 2010 VC investment in San Diego companies was down 27% to $222 million from $300 million raised in Q4 2009. Investment was up 242% from the first quarter of 2009 when $92 million was invested. San Diego's regional ranking dropped from 4th to 7th in the nation for total VC investment received in the first quarter.
- 42% of total VC financing in San Diego went to start-ups and early stage companies in Q1 2010. Financing of later stage companies increased to 42% of the total investment in San Diego from 26% in Q4 2009.
The top ten VC investments in San Diego companies for Q1 2010 were:
Tandem Diabetics $31.0 million Elevation $15.0 million
Pharmaceuticals
PatientSafe Solutions, $30.0 million EMN8, Inc. $14.5 million
Inc.
Tioga Pharmaceuticals, $18.0 million VentiRx $12.5 million
Inc. Pharmaceuticals, Inc.
Sotera Wireless, Inc. $17.5 million Tragara Pharmaceuticals $10.0 million
Genomatica, Inc. $15.0 million Avaak, Inc. $10.0 million
AwarePoint Corporation $10.0 million
Source: PricewaterhouseCoopers/National Venture Capital Association Moneytree™
- As a region, Southern California led the nation in National Science Foundation (NSF) funding received in Q1 2010 with over $121 million. San Diego received nearly $33 million in NSF finding in Q1 up 4% from nearly $24 million in the previous quarter.
- San Diego patent activity was up in Q1. Patents granted to San Diego in Q1 2010 were up approximately 23% compared to Q4 2009; patents published were up more than 9%. Statewide, San Diego accounted for 16% of all patents filed and 12% of patents granted in Q1 2010.
The report, including all data, is available at http://www.connect.org/programs/connect-track/docs/Q1_2010_CONNECTInnovationReport2pg.pdf
About CONNECT
CONNECT, San Diego's internationally recognized non-profit technology and life sciences accelerator, released its 2010 first quarter CONNECT Innovation Report (CIR) today. The CIR is the first to measure new business and job creation in the life science and technology-based sectors statewide and in the San Diego region as well as venture capital investment, merger & acquisition (M&A) and patent activity, federal grant funding and technology wages and employment. Results provide a valuable gauge of the economic strength and impact of the knowledge economy in San Diego and across the state for business leaders, policy makers, and researchers. The report is developed in partnership with: the National University System Institute for Policy Research; University of California, San Diego Extension; PricewaterhouseCoopers LLP; Procopio, Cory, Hargreaves & Savitch LLP; Roth Capital Partners, and the San Diego Business Journal.
CONNECT is a nonprofit organization dedicated to creating and sustaining the growth of innovative technology and life science businesses in San Diego. Since 1985, CONNECT has assisted in the formation and development of over 2,000 companies and is widely regarded as the world's most successful regional program linking inventors and entrepreneurs with the resources they need for success. CONNECT focuses on research institution support, business creation and development, entrepreneurial learning, access to capital, public policy advocacy, awards, recognition and networking. Almost 40 countries and regions have adopted the CONNECT model, including the New York City, the U.K, Sweden, Norway, Denmark, Australia. For more information, please visit www.connect.org
