December 14, 2009 09:00 ET

San Diego Early Stage Companies Attract Almost 70% of VC Funding and Federal Grant Funding Jumps Dramatically

CONNECT Third Quarter Innovation Report Released.

SAN DIEGO, CA--(Marketwire - December 14, 2009) - CONNECT, the San Diego region's non-profit technology and life sciences accelerator, released its 2009 third quarter CONNECT Innovation Report (CIR) on December 14th. The report, 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; and the San Diego Business Journal, is the first to provide an economic indicator of the innovation economy in San Diego. The CIR measures new business creation in the life science and technology-based sectors both statewide and in the San Diego region. 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.

Report Highlights:

--  78 new technology companies were created in San Diego in Q3 2009 --
    down 24% from the previous quarter, and up 18% from the 66 start-ups in Q1
--  Technology start-ups for all of California were down 15% in Q3 2009
    with 617 new companies established compared to the previous quarter's 729
--  29 new pharma/biotech/medical device businesses were created in San
    Diego in Q3 2009.  This represents over 20% of all California life sciences
    start-ups, the most of any county across the state.
--  New data from PricewaterhouseCoopers/National Venture Capital
    Association Moneytree™ latest report shows that Q2 2009 VC funding to
    San Diego companies jumped over 170% to $252 million from $92 million in Q1
    2009 -- much higher than the 90% previously reported.
--  In Q3 2009, 32 local companies received a total of $236 million in
    venture funding -- an increase of 18% from Q3 2008. The life sciences
    sector received the majority of the VC funding in Q3 2009, nearly 70%, with
    $155 million in funds invested.
--  San Diego led nation in the proportion (67%) of total VC financing
    going to start-ups and early stage companies. This represents an increase
    from Q2 2009 when 57% of invested funds went to seed and early stage

The top ten investments in San Diego companies for Q3 2009 were:

Roka Bioscience, Inc.                   $37.2 million
Zogenix, Inc.                           $36.0 million
Intellikine, Inc.                       $25.5 million
DriveCam, Inc.                          $19.0 million
Liquid Environmental Solutions Corp.    $15.0 million
BeneChill, Inc.                         $13.5 million
Rayspan Corp.                           $12.5 million
Achates Power, Inc.                     $12.1 million
MedSphere Systems Corp.                 $12.0 million
Altair Therapeutics, Inc.               $11.0 million

Source:  PricewaterhouseCoopers/National Venture Capital
         Association Moneytree™

--  While VC funding in San Diego totaled $580 million for the first three
    quarters of 2009, venture investment in 2009 is likely to fall well below
    the $1.2 billion invested in 2008 and $2 billion invested in 2007.
--  National Institute of Health (NIH) grant awards in San Diego jumped
    44% compared to last quarter to a new high of over $383 million.  National
    Science Foundation (NSF) grant funding doubled in Q3 2009 to $114.5 million
    from $56 million in Q2 2009.
--  Mergers and acquisitions were up in San Diego in Q3 2009 with 32 deals
    closed compared to 24 deals closed in the Q2 2009.  Nearly 25% of all the
    M&A deals closed in Southern California involved San Diego companies in the
    third quarter.
--  San Diego patent applications and patents granted were up
    approximately 14% compared to Q2 2009.  San Diego accounted for 17% of all
    patents filed and 12% of patents granted in California in Q3 2009.
--  Latest available data showed employment and average weekly wages paid
    by private research institutions in San Diego continued to fall from Q4
    2008 to Q1 2009.

The full report, including all data, is available at CONNECT Innovation Report. To interview a sample of the companies included in the start-ups data, please contact CONNECT.


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 U.K, Sweden, Norway, Denmark, Australia, and China. For more information, please visit

Contact Information

  • Contact:


    Steve Hoey
    Senior Program Manager
    CONNECT Innovation Report
    Email Contact