1
INNOVATION
REPORT / 2014
2
A letter from the
Chief Executive Officer,
Greg McKee
For ten years, since 2005, CONNECT has monitored and measured the growth of the innovation
economy in the San Diego region. I’m proud to present the San Diego community with the 2014
Innovation Report - a banner year for San Diego. With a record 446 technology & life science
start-ups created in the calendar year, it beats last year’s record high of 412 and is equivalent
to 1.2 companies created each day. These new companies are creating more and better jobs in
San Diego, 1,860 jobs to be exact, 50% more than were created by start-ups in 2012 and 2013.
San Diego’s overall innovation economy encompasses approximately 7,000 companies and
provides 147,900 jobs in the region. Furthermore, innovation economy jobs are some of the
best paying around, averaging $115,000 annually, that’s 2.4 times the average non-innovation
economy salary of $48,650.
San Diego is growing in the right direction and this report is evidence of the rapid expansion
we’re seeing in San Diego in the industry sectors of the future. CONNECT has supported the
overall growth of the innovation economy in San Diego for 30 years. Since 1985 CONNECT has
been committed to helping create and scale great technology and life science companies by
supporting them with the right people, capital, and technology resources. Today, CONNECT
continues to be committed to the success of the tech and life sciences companies for the good
of San Diego. We support and work with companies of all sizes throughout their lifecycle;
companies that contribute a great deal to making San Diego an ideal place to live and work.
The CONNECT Innovation Report demonstrates the seeds we sow today that will be the future
of a strong San Diego economy tomorrow and we’re proud to play our part in growing San
Diego’s future.
Greg McKee
Chief Executive Officer
CONNECT
33
About the
CONNECT
Innovation
Report
The CONNECT Innovation Report provides an overview of the strength and
impact of the innovation economy in San Diego. By comparing data year
over year and quarter to quarter, providing a comparison across innovation
economy clusters and selected regions, as well as monitoring the various
types of capital investment in the region, the report tracks the health of the
San Diego innovation economy. This report also helps guide policymakers
and trade organizations with their planning and advocacy work to foster the
growth and expansion of the region’s economy including, but not limited to:
availability of international visas and workforce training for talent in highgrowth clusters, building an attractive environment of capital investment,
allocation of grant funding, reform of the patent system, and zoning. The
report also underscores San Diego as a world leader in innovation with
world-class research, leadership, and management talent.
4
REPORT
HIGHLIGHTS
GROWTH
446
NEW INNOVATION
START-UPS in 2014
NEW Technology &
Life Science Start-ups
248
new
SOFTWARE
companies created
16
new
DEFENSE &
TRANSPORTATION
companies created
(412 New Innovation
Start-ups in 2013)
86
70
new
COMMUNICATIONS,
COMPUTER &
ELECTRONICS
companies created
new
LIFE
SCIENCES
companies created
16
10
new
RECREATIONAL
GOODS MFG.
companies created
new
ENVIRONMENTAL
TECHNOLOGY
companies created
NEW
Start-Up
Jobs Created
San Diego innovation start-ups created 1,860
new jobs in 2014. This was more than a 50%
increase over the number of new jobs created
by innovation start-ups in 2013 and 2012.
1,860
new jobs created
by innovation
start-ups in 2014
2014 SAW THE MOST NEW INNOVATION START-UPS CREATED IN SAN DIEGO IN A SINGLE YEAR PERIOD
5
REPORT
HIGHLIGHTS
FUNDING
$805M
in venture capital was
invested in 98 deals
in San Diego in 2014
Venture Capital Funding
Equity Capital Markets
$416M
$1.25B
$2.4B
was raised by [ 7 ]
San Diego companies
in initial public equity
offerings (IPOs) in 2014
was raised by [142]
San Diego companies
in private placement
offerings in 2014
was raised by [ 20 ]
San Diego companies in
follow-on public equity
offerings (FPOs) in 2014
$989M
$259M
$100M
$36M
in NIH grant funding to
San Diego companies and
institutions in 2014
in NSF grant funding to
San Diego
companies and
institutions in 2014
in SBIR-STTR grant
funding to San Diego
companies and
institutions in 2014
in NASA and NOAA grant
funding to San Diego
companies and institutions
in 2014
Grant Funding
REPORT
HIGHLIGHTS
INTELLECTUAL PROPERTY
Patents
No.1
Ranked county in Southern
California for patents granted and
patent applications published
7,715
Patent applications published in 2014,
No.2 Ranked county in California
6,564
Patents granted in 2014,
No.2 Ranked county in California
66
SAN DIEGO Start-Up Corner
Featured local, early-stage innovation companies
Smart Water Management
Nightlife Mobile App
Aquai Technologies
Bar World
barworldapp.com
jasneuroimaging.com
Founded in 2011
Mike Enkerlin
CEO
App launched in 2014
Henry Liner
CEO and Founder
Founded in 2014
Mark Casner
Founder and CEO
Imagine a world without water
leaks, property damage, and
wasted water. A world where the
information you get helps you
conserve water and a world where
water sensors are cost effective
and powerless. That world is
NOW. The Aquai water leak, water
damage prevention, and analytics
solutions are simple, cost effective
solutions that actively detect,
notify, and stop water leaks in
both indoors and outdoors.
Bar World is a nightlife mobile
application that keeps subscribers
informed of all the events and
specials in their area without being
constantly bombarded by promoters
or Facebook posts.
JAS Neuro Imaging is a start-up
healthcare services company that
will offer diagnostic services to
detect Alzheimer’s disease – in
a physician’s setting – using an
evolutionary, portable CerePETTM
scanning technology. JAS
formed a partnership with Brain
Biosciences, which developed the
first ultraportable, high performance
Positron Emission Tomography
device - CerePETTM for Alzheimer’s
disease detection. The camera relies
on using flurodeoxyglucose (FDG)
technology to image the brain. No
other device has the ability to offer
this type of diagnostic capability to
physicians.
aquai.com
Aquai is applying proprietary
technology to the microgrid market including smart
water metering and remote
management/shut-off capabilities,
as well as an associated
management and reporting
infrastructure for individual home
owners, hotels, and apartments.
Aquai’s first product will be
available through a Kickstarter
campaign in June 2015.
Bar World App is much more than
just a listing of events around
San Diego. Subscribers can take
advantage of:
•
•
•
Transportation offers such
as party bus pickups or Uber
discounts to and from the
events
Premier access and admission
into the hottest bars and clubs
Discounts or food and drink
coupons to bars around San
Diego
Bar World app offers a unique
mobile marketing avenue to various
venues to promote their events.
Venues can target audience, reach
out to travelers and even update
promotions instantly.
The market ready version was
launched in April 2014, and has
received more than 7,000 followers
on Instagram.
SPRINGBOARD
Graduate
2014
Current
SPRINGBOARD
Participant
Healthcare Services Provider
JAS Neuro Imaging
JAS Neuro Imaging will offer two
service models - fixed site and mobile
services. Currently, only 1% of the
PET imaging facilities are dedicated
to brain imaging.
The unique mobile services model
delivered by JAS Neuro Imaging
is designed to fill the gap and
complement the endeavors of
dementia specialists, geriatricians,
and neurologists.
SPRINGBOARD
Graduate
2014
7
Bioinformatics Software &
Hardware Solutions Provider
International Gift Cards
Digital Multimedia Portfolio
Mobile App
Onramp
Bioinformatics
Quippi
Roovy
onrampbioinformatics.com
Founded in 2013
Tim Wesselman
CEO and Founder
quippi.com
Founded in 2012
Michael Aleles
Founder
Onramp BioInformatics provides
converged software & hardware
platforms for genomics analysis,
storage and analytics to empower
companies, doctors and
researchers to turn genetic data
into lifesaving treatments.
Quippi sells gift cards on behalf of
major international retailers as a
way for US immigrant consumers to
support their families back home,
initially in Mexico, without paying
remittance fees. Rather, fees are
charged to the retailers.
Their complete solutions combine
streamlined genomic workflows
with Big Data analytics and
advanced computation and
storage to accelerate integrated
genomics research in health,
medicine and agriculture. Their
platforms are being deployed in
medical universities, hospitals and
pharmaceutical firms.
Quippi has nine national Mexican
retailers on board and gift cards are
sold in thousands of locations on
the US side of the border, including
7-Eleven and Family Dollar. The
company also recently signed a
national distribution deal with IDT,
the largest phone card distributor
in the US.
In 2014, Quippi raised $2.2 million
in a Series A round, which was led
by Avalon Ventures in San Diego.
Accion Venture Lab also invested in
the round. Quippi has raised about
$3 million since it was founded in
2012.
Current
SPRINGBOARD
Participant
SPRINGBOARD
Graduate
2014
roovy.com
Founded in 2015
Touradj Barman
CEO and Founder
Roovy lets creative individuals
and organizations show off their
work in digital portfolios called
“pods.” Pods showcase collections
of multimedia content like videos,
pictures, music and documents in
a visual, organized, and interactive
way to conveys a narrative. Pods
can be easily explored by public or
private audiences of any size.
Roovy was launched by a team of
experienced software designers and
developers in February 2012.
The app is currently available for
iPhone, iPad, Android, and the web.
The Company has received angel
capital from Qualcomm co-founder
Irwin Jacobs and ResMed’s Peter
Farrell.
Current
SPRINGBOARD
Participant
8
Growth
Technology & Life Science Start-ups
446
New innovation start-up companies were created in 2014 in San
Diego – the most companies created in single year since CONNECT
began tracking innovation start-ups in 2005. These start-ups drive
the future growth of San Diego’s innovation economy.
4th
San Diego county’s rank, in California, for new
innovation start-ups created in 2014.
Number of Innovation Start-ups
New Innovation Start-Ups by County 2014
New Innovation Companies in San Diego County
Number of Innovation Start-ups
Largest number of new tech and life sciences start-ups
established in a year since 2005
Source: Dun and Bradstreet Hoovers; InfoUSA; CONNECT; National University System Institute for Policy Research, commissioned by CONNECT
872
new
start-ups in
2013-2014
9
Growth
Innovation Economy - Company Creation
Software start-ups made up more than half of San Diego’s innovation start-up companies in 2014. Software app development
companies are driving the growth of innovation start-ups in San Diego and across the state. San Diego ranked 2nd in California
in the number of life sciences start-ups and 4th in software start-ups established in 2014.
San Diego Innovation
Start-ups by Industry
Sector
2014
No. 4 in California
2014 Software Start-ups by County
Los Angeles
Santa Clara
San Francisco
SAN DIEGO
Orange
San Mateo
Alameda
702
595
568
248
232
210
209
No. 2 in California
2014 Life Sciences Start-ups by County
Los Angeles
SAN DIEGO
Orange
Santa Clara
San Francisco
Alameda
90
70
54
41
39
26
San Diego Innovation
Start-up Jobs Created
by Industry Sector
2014
Source: Dun and Bradstreet
Hoovers; InfoUSA; CONNECT;
National University System
Institute for Policy Research,
commissioned by CONNECT
Jobs Created by Start-ups in 2014
1,860 new innovation economy jobs were created by 446 San Diego innovation start-ups in 2014
10
Growth
Geography: Where the Start-ups are Located
Technology and life sciences start-up creation is widely spread throughout San Diego County.
A number of location clusters
of start-up activity are
emerging:
•
•
•
•
•
•
Downtown
Pacific Beach
Carmel Valley
La Jolla/UTC
Mira Mesa
Carlsbad
NEW
San Diego Innovation
Companies by
Industry - 2014
Industry Key
Pharma/Bio/Medical
Communications
Computer & Electronics
Defense and Transportation
Environmental Technology
Recreational Goods
Software
Engineering Services
Commercial Physical
11
Growth
Where the Start-ups are Located
NEW
San Diego Innovation
Companies by
Industry - 2014
Number of Innovation Start-ups in 2014
Top 15 Hotspots in San Diego for Innovation Start-up
Creation in 2014
Source:Dun and Bradstreet Hoovers; InfoUSA; CONNECT; National University System Institute for Policy Research, commissioned by CONNECT
San Diego Start-up Trend:
A Growing Downtown
Software Start-up
Cluster
2011 | 1 Software Company
2012 | 8 Software Companies
2013 | 24 Software Companies
2014 | 23 Software Companies
Note: each marker represents a single software
start-up company.
Source: Dun and Bradstreet Hoovers; InfoUSA;
CONNECT; National University System Institute for
Policy Research, commissioned by CONNECT
12
Growth
San Diego Innovation Economy - Cluster Breakdown
In 2014 San Diego’s innovation economy included approximately 7,000 companies and provided 147,900 jobs. San Diego’s
innovation economy is comprised of knowledge-based sectors* on the leading-edge of research, innovation, and development of
the technologies. These sectors are defined by businesses involved in the development and production of technical equipment,
communications, and/or advanced technology services. The specific technology sectors encompass:
• Research and development in physical, engineering, and life sciences
• Biomedical products
• Biotechnology and pharmaceuticals
• Communications (telecommunications)
• Computers and electronics
• Defense and transportation
• Environmental technology
• Recreational goods manufacturing
• Software
*Innovation sectors are defined by the San Diego Association of Governments (SANDAG) “cluster” definitions in conjunction with CONNECT, and further refined in collaboration with the National University System
Institute for Policy Research.
In 2014 San Diego’s
innovation economy
represented:
7%
of total number of companies
in San Diego county
11%
of total employment in San
Diego county
23%
of total payroll in San
Diego county
In 2014 the total number of innovation companies in San Diego County was up 7% from 2013
San Diego
Innovation Economy
Companies in 2014:
7,000 Companies
Source: National University System
Institute for Policy Research, based upon
California Employment Development
Department, Quarterly Census of
Employment and Wages (QCEW)
13
Growth
San Diego Innovation Economy - Cluster Breakdown
The average innovation sector job paid
2.4x MORE THAN the average job in San Diego in 2014
Average Annual
Salary
Innovation
Economy Job
$115,010
Rest of
Economy Job
$48,650
AV
G
.R
ES
TO
FE
CO
N
OM
Y
WA
GE
Annualized Wage
San Diego Innovation Economy Annualized Wages - 2014
Source: National University System Institute for Policy Research, based upon California Employment Development Department, Quarterly Census
of Employment and Wages (QCEW). Technology sectors based upon NAICS codes defined, in part, by SANDAG Cluster Analysis and CONNECT
innovation sector definitions adjusted by National University System Institute for Policy Research.
14
Growth
San Diego Innovation Economy - Employment Breakdown
San Diego’s innovation economy provide nearly 148,000 high-paying jobs. San Diego’s innovation economy showed strong growth
in 2014 adding almost 4,500 jobs on average since 2013. The number of innovation economy jobs grew three percent in 2014 as
compared to 2013 and has now surpassed 2008 job numbers.
San Diego Innovation Economy Employment
San Diego Innovation Economy Employment: 2014 - 147,900 jobs
Avg. Annualized Employment
Quarterly Employment
San Diego Innovation Economy Employment by Industry: 2014
Average Annualized Employment
Life sciences companies make up the largest sector of San Diego’s innovation economy with an annual average of almost 34,000 jobs
in 2014. The software, communications, and defense & transportation sectors represented an additional 80,000 jobs.
Source: National University System
Institute for Policy Research, based upon
California Employment Development
Department, Quarterly Census of
Employment and Wages (QCEW).
Technology sectors based upon NAICS
codes defined, in part, by SANDAG Cluster
Analysis and CONNECT innovation sector
definitions adjusted by National University
System Institute for Policy Research.
15
Growth
San Diego Innovation Economy - Employment Breakdown
San Diego Employment Index by Quarter
Employment Index
The innovation sector showed substantial growth in 2014. The index tracks employment from the start of the “Great Recession” in 2008
(Q1 2008=1.0 Index). Employment in the innovation sector of San Diego’s economy was less impacted overall by the recession than
the rest of the San Diego economy. Job growth in the innovation economy was strong in 2014 driven by the life sciences, software, and
communications sectors.
San Diego Innovation Economy Employment by Industry
Number Employed
Although the life sciences sector continued to drive job growth in San Diego’s innovation economy, the software and communications
sectors both contributed to overall job growth in 2014.
16
Growth
San Diego Innovation Economy - Employment Breakdown
San Diego is One of the Most Technologically
Diverse Metro Areas in the U.S.
Technology Sectors
San Diego tied Boston and San Francisco for highest relative strengths
in seven major categories for technology industries, among a number of
metro areas.
•
•
•
•
•
•
•
•
One way of measuring the strength of an industry within a regional
economy is location quotient (LQ). When San Diego has higher
concentration of production or employment than the national average
in a particular industry sector, the region’s location quotient (LQ) is
greater than 1.0. San Diego outperforms in each technology sector by
this measure.
San Diego is
one of the most
technologically
diverse metros in
the U.S.
Transportation equipment
Computer and electronic product manufacturing
Telecommunications
Pharmaceutical and medicine mfg.
Medical equipment and supplies mfg.
Computer systems design and related services
Environmental consulting services
Physical, engineering, and biological research
San Diego’s employment and wages were above national averages for seven of the eight major technology
sectors, confirming San Diego’s relative diversity and strength in technology development.
Number of Technology Sectors
Employment Technology Diversity by Metropolitan Area
Source: National University System Institute for Policy Research, based upon Quarterly Census of Employment and Wages (QCEW) data
17
Growth
San Diego Innovation Economy - Employment Breakdown
San Diego Leads the U.S. in the Concentration of Research Employment
Cities that have location quotients above 2.0 (two times the national average) for both employment and payroll reveal
considerably greater concentration in these specific technology industries.
Comparisons of technology sector strengths for metropolitan areas shown to employ the most physical engineering and
biological research workers reveals San Diego among those having the highest relative concentration of these jobs. San
Diego’s location quotient (LQ) of 5.18 – more than five times the national average - was by far the highest of the nation’s top 11
metro areas. San Jose, Boston, and San Francisco also show high concentrations of these research jobs.
San Jose metro shows its strengths in the computer & electronics sector (LQ=13.2) and computer systems and design
(LQ=4.35) employment in which it far exceeds any other U.S. metro region.
This chart shows cities with industries having location quotients of 2x or more than the national average.
Technology Sector Employment Concentration by Metropolitan Area
Employment Concentration Multiple of National Average (LQ=1.0)
Employment Concentration Multiple of National Average (LQ=1.0)
Source: National University System Institute for Policy Research, based upon Quarterly Census of Employment
and Wages (QCEW) U.S. Bureau of Labor Statistics
(For more on San Diego’s innovation economy, see http://www.nusinstitute.org/assets/resources/pageResources/Economic_Ledger_Technology2014.pdf)
18
Growth
San Diego Innovation Economy - Employment Breakdown
San Diego Unemployment Rate Fell as Labor Force Grew in 2014
San Diego’s unemployment rate (U3)* declined throughout 2014 with the exception of an uptick in the third quarter, closely
tracking the national average. The unemployment rate fell from 7.0 percent at the start of the year to 5.8 percent in December
2014 as the labor force grew and there were enough jobs added to absorb those workers, as well as a number of those who
were previously jobless.
The U6 unemployment rate, which includes part-time, marginal and discouraged** workers, and gives a more accurate overall
picture as to actual unemployment, which fell from 15 percent to 13 percent over the career of 2014.
Seasonally Adjusted Unemployment Rate
U6 Unemployment
U3 Unemployment
Source: San Diego Workforce Partnership; U.S. Bureau of Labor Statistics
* This chart tracks the unemployment rate (U3) developed by
the Bureau of Labor Statistics for San Diego County. U3 is the
commonly reported unemployment rate and is calculated by
dividing the number of unemployed individuals by all individuals
currently in the labor force (defined as the population between
the ages of 18-64 that are either currently employed or actively
seeking employment).
** Also captured in the U6 measure (but not in U3) are
discouraged workers or persons who are not in the labor
force, want and are available for work, and had looked for a
job sometime in the prior 12 months. They are not counted as
unemployed because they had not searched for work in the prior
4 weeks, for the specific reason that they believed no jobs were
available for them (Source: U.S. Bureau of Labor Statistics).
However, a more accurate portrayal of unemployment can be
seen with the U6 unemployment rate. U6 counts not only people
without work seeking full-time employment (U3 rate), but also
counts those working part-time for economic reasons and
marginally attached workers.
While the U6 data for California and the nation are available, San
Diego’s U6 data is not. The graph currently estimates the U6 in
San Diego based on trends from the state and nation.
Source: San Diego Workforce Partnership; U.S. Bureau of Labor Statistics; http://lmi.workforce.org/
19
Capital
Venture Capital Funding in San Diego
Venture capital funding to San Diego companies
totaled more than $805 million in 2014 - up 10 percent
from 2013. The first three quarters of 2014 were solid
with more than $225 million invested each quarter.
Investment dipped sharply to $107 million in the fourth
quarter of 2014 - the lowest overall quarter seen since
the first quarter of 2009 and the lowest fourth quarter
since 1995.
Biotechnology companies accounted for more than 60
percent of the VC funding with 42 deals totaling $495
million. The software sector saw $108 million raised
in 23 deals. Semiconductor and medical devices deals
rounded out the top four sectors with $48 million and
$42 million raised, respectively, in six deals each.
San Diego VC Investment by Industry
2014 - $805 Million
$805M
Raised in 98
Venture Capital
Deals
Top 16 San Diego Companies
Receiving Venture Capital
Funding 2014
BioNano Genomics
$53 million, Biotechnology
Otonomy
$49 million, Biotechnology
Verdezyne $48 million, Biotechnology
Luxtera
$37 million, Photonics
Cidara Therapeutics
$32 million, Biotechnology
Epic Sciences
$30 million, Cancer Diagnostics
Tracon Pharmaceuticals
$27 million, Biopharmaceutical
Abide Therapeutics
$25 million, Biotechnology
Suja Life LLC
$21 million, Consumer Prods. & Svcs.
Sotera Wireless
$21 million, Medical Devices
Acutus Medical
$21 million, Medical Device
Astute Medical
$20 million, Biomarker Diagnostics
Suneva Medical
$20 million, Medical Devices
Tealium
$20 million, Software
Thesan Pharmaceuticals
$17 million, Biopharmaceutical
DB Networks Inc.
$17 million, Software
Source: PricewaterhouseCoopers MoneyTree™
Report; National Venture Capital Association; data
provided by Thomson Reuters
20
Capital
Venture Capital Funding in San Diego by Stage of Development
San Diego early stage companies received almost $395 million in VC investment in 2014, up 14 percent from 2013. Later stage
deals received almost $270 million, up slightly from 2013. Expansion stage deals were also up slightly in 2014 with $125 million
invested in 23 deals. The number of deals in 2014 was similar to previous years with the exception of seed stage deals.
VC investment in San Diego seed stage companies has dropped sharply over the past several years. In 2014 there were eight seed
stage deals totaling $18 million, down from 16 deals and $65 million invested in 2011.
Source: PricewaterhouseCoopers MoneyTree™
Report; National Venture Capital Association;
data provided by Thomson Reuters
Amountof VC Investment in Millions of Dollars
San Diego VC Investment by Stage of Company Development
The stage of development classifications used in the
MoneyTree™ Report are as follows:
1 | Seed Stage
The initial stage. The company has a concept or product under
development, but is probably not fully operational. Usually in
existence less than 18 months.
2 | Early Stage
The company has a product or service in testing or pilot
production. In some cases, the product may be commercially
available. May or may not be generating revenues. Usually in
business less than three years.
Source: PricewaterhouseCoopers MoneyTree™ Report; National Venture Capital Association; data
provided by Thomson Reuters
3 | Expansion Stage
Product or service is in production and commercially available.
The company demonstrates significant revenue growth, but
may or may not be showing a profit. Usually in business more
than three years.
4 | Later Stage
Product or service is widely available. Company is generating
on-going revenue; probably positive cash flow. More likely
to be, but not necessarily, profitable. May include spin-offs
of operating divisions of existing private companies and
established private companies.
21
Capital
Venture Capital Investment by Region
VC investment in the San Diego region totaled $805 million in 2014 - up 10 percent from $733 million in 2013. Investment in San Diego
companies has been stable for the past five years at an average total investment of $890 million a year. Several regions showed markedly
increased VC investment in 2014: Silicon Valley up 86 percent, New York Metro up 59 percent, New England up percent and LA/Orange
County up 61 percent.
Venture capital investment in the New York Metro region has more than doubled since the Great Recession. The New England Metro and
LA/OC regions have also shown robust growth in VC investment over the past five years. Investment to LA/OC companies hit $2.8 Billion in
2014, the highest since the crest of the bubble in 2000.
VC Investment
by Region
(excluding
Silicon Valley)
VC Investment in
Millions of Dollars
VC Investment
by Region
(including
Silicon Valley)
Venture capital investment
in Silicon Valley doubles in
2014 compared to previous
years
VC Investment in
Millions of Dollars
Source: PricewaterhouseCoopers MoneyTree™ Report; National Venture Capital Association; data provided by Thomson Reuters
MORE THAN
22
22
Capital
Equity Capital Markets
$4BILLION
raised by San Diego companies in equity
capital markets in 2014
The San Diego biotech IPO market remained hot in 2014 with seven companies going public. A similar number of San Diego
companies went public in 2013. Follow on financing rounds by publicly traded companies were down slightly from 2013 when 32
companies raised $2.7 billion.
IPOs
$416 M
raised by 7 San Diego
companies through Initial Public
Offerings (IPOs)
FPOs
$2.4 B
raised by 20 San Diego
companies through Follow-on
Public Offerings (FPOs)
Otonomy, Inc.
Auspex Pharmaceuticals, Inc.
Neothetics, Inc.
Vital Therapies, Inc.
Pfenex Inc.
Celladon Corporation
Biocept, Inc.
$100M
$84M
$65M
$54M
$50M
$44M
$19M
Receptos, Inc. [3 offerings]
Realty Income Corporation
Retail Opportunity Investments Corp.
ACADIA Pharmaceuticals Inc.
Excel Trust, Inc.
Neurocrine Biosciences Inc.
Halozyme Therapeutics, Inc.
Regulus Therapeutics Inc.
Auspex Pharmaceuticals, Inc.
La Jolla Pharmaceutical Co.
BofI Holding, Inc.
Ignyta, Inc.
MEI Pharma, Inc.
Celladon Corporation
Vital Therapies, Inc.
Sorrento Therapeutics, Inc.
Lpath Inc. [2 offerings]
Apricus Biosciences, Inc.
OncoSec Medical Incorporated
NTN Buzztime Inc.
$641M
$480M
$187M
$182M
$146M
$142M
$100M
$90M
$61M
$50M
$50M
$48M
$40M
$38M
$35M
$25M
$21M
$17M
$16M
$6M
Private
Placements
$1.25 B
raised by 142 San Diego
companies through Private
Placements*
* A number of private placement deals
included here from the Capital IQ data
were also reported in the PwC MoneyTree™
venture capital investment funding data
for San Diego
Source: S&P Capital IQ; Roth Capital
Partners; CONNECT
23
Capital
Angel Investment
San Diego Tech Coast Angels Set Record Investment Year in 2014
$8.3
16 Deals
M
San Diego TCA, the largest chapter of Tech Coast Angels, accounted for half of all investments made by the five-chapter network in 2014
with $8.3 million invested in 16 deals. TCA is the second largest angel investing organization in the United States and invested a total
of $16.4 million in 61 deals in 2014. Investments by San Diego TCA were up almost 14% from $7.3 million invested in 21 deals in 2013.
Average investment per company was $518,000 up 27 percent from 2013.
Up 27 Percent
$518,000 average investment
raised per company in 2014
Record number of successful
company exits in 2014:
Companies supported in
2014 included:
•
•
•
•
•
•
•
•
•
•
AIRSIS
Allylix
BlueBeam Software
Hookit
Mindbody Software
Vital Therapies
GroundMetrics
Pediatric Bioscience
Portfolium
Rock My World
Source: Tech Coast Angels
Other angel funding:
$29.4
M
raised by CONNECT Springboard
graduates in angel funding in 2014
Source: 2014 CONNECT Springboard Impact Assessment Report
$14.6
M
reported and raised by 23
companies in the 1st half of 2014
$14.8
M
reported and raised by 32
companies in the 2nd half of 2014
MORE THAN
24
Mergers & Aquisitions
Tech & Life Sciences Mergers & Acquisitions
Company Acquired
$27BILLION
in M&A deals in 2014 where the target or
buyer was a San Diego company – up 40
percent from 2013
Deal Amount
(Millions of $)
Buyers/Acquirer
San Diego based companies are shown in BOLD
Life Technologies Corporation
Leap Wireless International Inc.
Seragon Pharmaceuticals Inc.
Cadence Pharmaceuticals Inc.
Accelrys, Inc.
Lumena Pharmaceuticals Inc.
Peregrine Semiconductor Corporation
Ambit Biosciences Corporation
Topera, Inc.
Volcano AtheroMed, Inc.
$16,018.5
$4,913.9
$1,725.0
$1,373.9
$746.4
$600.8
$468.8
$351.0
$250.0
$170.9
Thermo Fisher Scientific, Inc.
AT&T, Inc.
Genentech, Inc.
Mallinckrodt plc
Dassault Systemes SA.
Shire plc
Murata Electronics North America, Inc.
Daiichi Sankyo Company, Limited
Abbott Laboratories
Volcano Corporation
AnaptysBio, Inc., Worldwide Rights to TIM-3,
LAG-3 and PD-1 Targeting Products
$125.0
TESARO Development, Ltd.
DTECH LABS, Inc.
Fabrus, LLC
$114.5
$111.8
Cubic Corporation
Sevion Therapeutics, Inc.
Zogenix, Inc., Worldwide Rights to
Sumavel® DosePro®
$105.0
Endo Ventures Limited
QUALCOMM Panel Manufacturing Ltd.
$85.0
Taiwan Semiconductor EDF Renewable Energy, Inc., CID Solar Project
Allylix, Inc.
NetNearU Corp.
$70.0
$61.4
$59.9
Dominion Resources, Inc.
Evolva Holding SA.
ViaSat Inc.
CSR plc, Imaging Intellectual Property
and Related Assets
$44.0
QUALCOMM Incorporated
Sequenom Inc., Bioscience Business
SKS Ocular, LLC
Avantas, LLC
Medistem, Inc.
Reaction Design, Inc.
Brink Software, Inc.
The Oceanscience Group Ltd.
Intific, Inc.
REMEC Broadband Wireless International, Inc.
Physpeed Corporation
Keragis Corporation
CohuHD Costar, LLC
KannaLife Sciences, Inc.
Aires Pharmaceuticals, Inc.
Telerhythmics, LLC.
$35.8
$33.4
$25.0
$20.3
$19.1
$17.0
$15.0
$12.6
$12.0
$11.8
$11.0
$10.0
$7.2
$4.5
$4.1
Agena Bioscience, Inc.
Ohr Pharmaceutical, Inc.
AMN Healthcare Services Inc.
Intrexon Corporation
Ansys, Inc.
ParTech, Inc.
Teledyne Technologies Inc.
Cubic Defense Applications, Inc.
Cirtek Electronics International Corp.
MaxLinear, Inc.
Hittite Microwave Corporation
Costar Technologies, Inc.
Phytosphere Systems, LLC
Mast Therapeutics, Inc.
Digirad Imaging Solutions, Inc.
Benitec Australia Ltd., License To Develop Cancer
Vaccines Using ddRNAi Gene Silencing Technology
$3.7
Regen BioPharma Inc.
Pharmacy Creations, LLC
Flexcomm Limited
Valuation Vision, LLC
$2.3
$1.7
$1.6
Imprimis Pharmaceuticals, Inc.
Axesstel Inc.
Zaio Corporation
MORE THAN
Research Funding
Federal Grants - Highlights
$1.35BILLION
in NIH, NSF and SBIR/STTR grant funding
awarded to San Diego research institutions and
companies in 2014
Federal Grant Funding Awarded to
San Diego in Millions of Dollars
Federal grant funding awarded to San Diego institutions and companies by the NIH and NSF totaled more than $1.2 billion in
2014, up slightly from $1.1 billion in 2013. NIH grant awards in 2014 were up 10 percent over 2013 totaling almost $990 million.
NSF grant awards totaled almost $260 million and were up almost 11 percent over 2013. NSF funding to San Diego has more
than doubled over the past six years.
NIH and NSF
Grant Funding
to San Diego
Institutions
and Companies:
$1.25B in 2014
SBIR/STTR Grant Funding
to San Diego Companies
and Institutions by
Government Agency:
Almost $100M awarded in 2014
The Department of Health & Human Service
and the Department of Defense awarded $84
million in grants. That accounts for 85% of
the total SBIR/STTR funding to San Diego
companies and institutions.
•
The SBIR program encourages small
businesses to engage in Federal Research/
Research and Development (R/R&D) that
has the potential for commercialization.
•
The STTR program encourages joint
venture opportunities for small businesses
and nonprofit research institutions.
Source: https://www.sbir.gov/sbirsearch/technology
25
26
Research Funding
Federal Grants – NIH and NSF Awards
San Diego county ranked first in the state for NIH grant funding received in 2014 and second in NSF grant funding
received.
NIH Grant Funding to San Diego Institutions
and Companies: $989M in 2014
NIH Grant Funding Awarded in Millions of Dollars
No. 1
County in California for NIH
research awards
Source: National Institutes of Health
NSF Grant Funding to San Diego
Institutions and Companies:
No. 2
NSF Granting Funding Awarded in Millions of Dollars
$258M in 2014
County in California for NSF
research awards
Source: National Science Foundation
bara
San
ar
ta B
isco
S
ranc
an F
27
Research Grant Funding
Federal Grants – Top NIH Awards
The UC San Diego ranked second in the state for NIH funding in fiscal year 2014 with more than $455 million awarded
to researchers. The Scripps Research Institute in La Jolla was also among the top five. Six of the top 25 California
institutions ranked by NIH funding awarded in FY 2014 were located in San Diego County. La Jolla was the number one
ranked city in California for NIH funding awarded in FY 2014.
UC San Diego ranked fifth in the state and 22nd in the nation for NSF funding in FY 2014 with $71 million awarded
NIH Grant Funding to Top California Institutions in FY 2014
California
Ranking*
1
2
3
4
5
6
7
8
9
10
11
12
15
21
24
Institutions
City
Award
Granted
University of California, San Francisco University of California, San Diego Stanford University University Of California, Los Angeles The Scripps Research Institute University of California, Davis University of Southern California California Department Of Public Health University of California, Berkeley University of California, Irvine California Institute of Technology Sanford-Burnham Medical Research Institute
Salk Institute For Biological Studies La Jolla Institute For Allergy & Immunology San Diego State University San Francisco
La Jolla
Palo Alto
Los Angeles
La Jolla
Davis
Los Angeles
Sacramento
Berkeley
Irvine
Pasadena
La Jolla La Jolla La Jolla San Diego
$671M
$456M
$451M
$422M
$247M
$218M
$211M
$149M
$134M
$118M
$77M
$76M
$46M
$33M
$26M
* Institutions ranked by total dollars of awards
Source: National Institutes of Health
NSF Grant Funding to Top California Institutions in FY 2014
California
Ranking*
7
9
14
16
22
35
39
40
41
Institutions
City
Award
Granted
University of California, Berkeley
California Institute of Technology
Stanford University
University of California, Los Angeles
University of California, San Diego
University of California, Davis
University of California, Irvine
University of Southern California
University of California, Santa Barbara
Berkeley
Pasadena
Palo Alto
Los Angeles
La Jolla
Davis
Irvine
Los Angeles
Santa Barbara
$114M
$93M
$86M
$79M
$71M
$54M
$47M
$46M
$45M
Source: National Science Foundation
28
Research Funding
Federal Grants – SBIR/STTR Awards
SBIR-STTR grant awards to San Diego companies and institutions recovered in 2014 after the sequestration dip in 2013. The
majority of the awards were SBIRs to smaller innovation companies.
SBIR-STTR funding from
NASA more than doubled
from $3 million in 2012 to
more than $7 million in
2014.
SBIR-STTR Grant Funding Awarded
in Millions of Dollars
San Diego SBIR-STTR
Grant Funding from DOD
fell dramatically from
$55 million in 2012 to $28
million in 2014. Increased
SBIR-STTR funding from
HHS provided an offset for
the region in 2014.
SBIR-STTR Grant Funding Awarded
in Millions of Dollars
SBIR-STTR Grant Funding Awarded
in Millions of Dollars
San Diego SBIR-STTR Grant Funding
$102M
23
212
$106M
$99M
17
206
$78M
# of awards shown
inside columns
28
185
17
170
Source:https://www.sbir.gov/
sbirsearch/technology
29
Research Funding
Federal Grants – SBIR/STTR Awards by Region
The source of SBIR and STTR program awards varies from region to region. Funding from Health & Human Services (NIH)
made up about half of the $100 million in SBIR-STTR funding in San Diego in 2014, with Department of Defense (DOD)
funding supporting an additional 35 percent.
Los Angeles, Orange County, and Santa Barbara show 50 percent or more of their SBIR funding supported by the DOD in
2014. The mix of agency support was more diverse in Northern California. San Francisco, Berkeley, and Palo Alto had a
substantial amount of life sciences SBIR funding in 2014. Los Gatos, San Jose, and San Mateo had a high percentage of
DOD SBIR funding.
Northern CA
Southern CA
Federal Funding Agency
HHS
DOD
DOE
NSF
NASA
DOC
DHS
EPA
USDA
Other Research Grant Funding
Federal Grants – NOAA/NASA Awards
San Diego companies and institutions received an additional $22.7 million from the National Oceanic and Atmospheric
Administration (NOAA) and $13.4 million from NASA in 2014.
Source: National Aeronautics and Space Administration (NASA), National Oceanic and Atmospheric Administration (NOAA)
30
Patents
Applications Granted and Published
San Diego Trend of Successive Historic Highs
in Patent Activity Continued in 2014
Patent activity in the San Diego region reflects
innovation activity. In 2014, more than 7,715
patent applications were published and 6,560
patents were granted. The number of patents
granted to San Diego inventors has grown
substantially since 2009 – almost 130 percent.
The number of patents granted in 2014 was up
three percent over 2013 and 20 percent over
2012. Patent applications published were up
almost 14 percent over 2013 and 25 percent over
2009.
San Diego is the:
No.1
No.2
No.2
County in Southern California for patents
granted and applications published
County in California for patents granted
County in California for new patent
applications published
Number of Patent Applications Published
Number of Patent Applications Published
2014
2013
2012
2011
2010
2009
Number of Patents Granted
Patents Granted by County 2014
Source: United States Patent and Trade Office
San Diego County
Patent Applications
Published
7,715
6,788
6,871
6,484
6,627
6,139
25%
San Diego County
Patents Granted
2014
2013
2012
2011
2010
2009
6,564
6,370
5,490
4,528
4,189
2,862
130%
31
Thank you to our Sponsors and Partners
Sponsored by
In Partnership with
CONNECT Innovation Report Contacts
Greg McKee
Chief Executive Officer
P (858) 964-1300
E gmckee@connect.org
Ginny Merrifield
Vice President, Business Development & Strategic Partnership
P (858) 964-1302
E gmerrifield@connect.org
Steve Hoey
Senior Director, Business Creation and Development
P (858) 964-1308
E shoey@connect.org
32
INNOVATION
REPORT / 2014
connect.org