The amount of venture capital invested in San Diego’s companies fell last year, which is not necessarily an indication the local innovation economy is showing signs of weakening.
It’s just that a heck of lot of money had been injected into promising San Diego companies in 2015 — particularly life science startups — which is a tough act to repeat. Additionally, we’re not alone in seeing a downward trend. Nationally, such investment was down in 2016 from 2015.
Local firms picked up $1.07 billion last year, according to The Dow Jones VentureSource, which was a dip from the $1.5 billion in 2015. Still, San Diego companies have hovered at around the $1 billion mark in venture capital investment for three straight years.
So analysts are not raising red flags. Most expected a drop, saying the market is normalizing.
San Diego’s life science’s companies gets the bulk of the venture capital — about two-thirds — making it one of the the region’s key industries. A number are start-ups, looking to grow or become attractive purchases for bigger national and international companies.
They also provide San Diego’s best jobs. The average salary is $170,000, tops among all industries, according to the San Diego Regional Economic Development Corporation.
According to VentureSource, 87 San Diego companies received venture capital funding last year, seven less than the year before.
A PricewaterhouseCoopers MoneyTree tally had slightly different numbers, but saw the same year-over-year downward trend.
Even though 2016 was a down year, it saw what's believed to be the biggest venture capital investment ever locally, with $220 million going to Human Longevity, the biotech started by genome pioneer J. Craig Venter. That deal amounted to more than one-fifth of the venture capital investment for the year in San Diego.
In California, San Diego trails only San Francisco in the amount of venture capital dollars flowing to life science firms.