San Diego Tech News Weekly – April 28, 2023

Hey Fred.

Hey Neil.

Can you hear me?

Yes, I can. Okay.

Good to see you.

Yes, we're already recording.

It's, it's go time. So happy Friday.

Happy Friday.

It's, it's a week and a day after Interlock Summit, which we'll talk about in a second here. But for everyone, anyone who's tuning in later, it's April 28th when we're recording this. So happy Friday at the end of April already, which is crazy. We are. I'm Neil Bloom from Fresh Brew Tech, a tech media platform focusing on promoting the San Diego tech ecosystem and Interlock Capital where we invest in early stage tech companies. Fred is my co host today. Longtime friend, pal and news reporter, now on his own. He's got a great sub stack called sdfounders. We just lost Fred. He'll come back soon. Quick intro by you, Fred.

Yes. So hi everyone, I'm Fred. I'm an independent journalist covering Startup San Diego's, you know, venture capital scene and some of the fast growing startups here. Happy to be here.

Yeah, you've had, you've had quite a seat of seeing the scene from a student perspective when you were helping build Fresh Brewed with us from pounding the pavement at the Business Journal and now, you know, getting to write about what you want to write about on a day to day basis. So I always appreciate your feedback on all things tech in San Diego.

I appreciate that.

Well, let's do a quick, you know, kind of post event brief of Interlock Summit. Well, I don't mean to be too self gratuitous but you know, you wrote a great article about it and I appreciate that. I appreciate you just being there. The essence of INOC Summit, which was year one on April 20, was to bring together really this, the community's late stage tech CEOs both public and private, was really who we want to start convening. And I mean CEOs and I mean exclusively CEOs is the focus because I believe there's something unique about bringing together the top person at every company. You know, when you are the face of your company, both to your employees and to the community, you know, you have a different gravity and weight on your shoulders. And so while year one was, was year one, my plan and goal is to only increase the quality of, of all aspects of it going forward. Not the volume per se, just the quality in terms of quality of conversations and people, content and experiences. How'd we do? What do you think of your one?

I thought it was very successful. I mean it was the who's who in San Diego from a CEO perspective, but also kind of from an investor perspective. And there's almost like a series of fomo after the event. A bunch of people would reach out to me, say, hey, I really want to make a next year look like a great event. But for me being on the ground, I have never seen so many, you know, heavy hitters in the service faith and also from the vest standpoint. So I thought it was, it was a successful event.

Thanks, man. I really appreciate that. Yeah, I did a lot of pre interviews with CEOs of the ones that I wanted to come and I knew, you know, I'd be asking a lot of their time. Everyone who came. It's asking a lot to spend a day. Like, I do not take that lightly. But, you know, I really did some pre, almost like customer development calls with people like Afif of Sochi and Adam of Adam Harris of Cloudbeds and Shane Scaff of Bluma and Oren of Flock Freight. And I was like, you know, like, what's compelling to you? Like, who do you want to meet? How could we design an experience where you have that fomo? You're like, dang, I really wish I was there kind of thing. So, yes, we did a lot of designing into it was very fortunate to have, you know, some amazing speakers, which I mostly were largely locals. I was able to tap into the local community and say, you've done, you've gone through this. Let's tell your story so that others can learn from it as well too. I also though, you know, realize there's all these CEOs are at the top of their game and it's. I'm not here to kind of say like, we're going to teach you things, we're going to educate you, but we all have things we can learn from experiential kind of based learning as opposed to. Welcome to my, you know, my lecture on Blank. So that was the goal and it sounds like it hit home in that regard. So I appreciate that we lost Brett again, but we'll get him back soon. Anything else I can cover on it? Well, we, we are going to be releasing content from it shortly. Some of the panels have said yes, we're happy to have the footage go live on the Intel Capital site. So keep an eye on that for some of the panels. And we've got photos coming live as well too, so look for some of the content to come out around that. Any last words on Interlock Summit before I move on to Other things. Fred.

Yeah, I dropped out for a second. Can you hear me now?

Yes, we gotcha.

Yeah, I just want to just reiterate that you did a great job of bringing in a Fireside chat. We had David Friedman from the all in podcast. That was probably the highlight of the summit. Having someone who has a front row seat of what's happening in the venture landscape. I thought he offered a lot of perspective on, you know, what's to come over the next, you know, 12, 12 months. Also, you know, his perspective on AI and how the talent is flowing into that space. That was really insightful. And he shared his upbringing starting his startup and selling it to Google. I thought it was really inspirational. So kudos to you for giving someone like that to share his story.

Thanks. Yeah, it was great to have him down. It was a cool local connection of bringing him here. So Urchin analytics, which became Google Analytics, started in San Diego and Freeberg is the one who found them. At an analytics event in 2003, he met Brett Crosby, the CEO of Urchin at the time. And Freeberg was corp dev for Google and brought that and pretty much made the acquisition happen. So it's kind of cool to tell that story and show the local connection from that. So yes, that was a cool conversation to kick off that Fireside chat with. It was fun also to listen to that week's all in podcast and hear him reiterate things that he had said on stage with me. You know, he literally used the same words like right now it's like a dust storm. And he even said, you know, a few times, this is something I just said at an event I'm at. So, you know, knew he was recording from his. His hotel room actually, which was kind of fun. And he really hung out and without the night before at the LP dinner, really gave himself, gave himself to everyone who wanted to chat and take selfies and so really giving guy and really appreciate that for. For sure. Who do you want to see next year? Who should we go get?

You know, man, you. You had a lot of great people but I mean we'd love to see the Qualcomm CEO there and just kind of some of the more later stage, you know, companies that are running publicly traded companies or, you know, it'd be great to see some of those leaders come out because I think they can benefit from learning, brushing shoulders some of these early stage start.

We may have lost Fred again. That's okay. Yes, I hear you on that. Want to go get top 10 publicly traded company CEOs at this event and we had a few lined up to speak. Schedule always changes for people like that, but yes, that's what we're working on. Having some connectivity issues here, but all good. So we will when Fred comes back we will talk through some other news stories. In the meantime, I'm going to mention a few events that are coming up that you could check out next week is or whenever you listen to this May 2nd we are doing our quarterly Ag Tech Gathering event bringing together farmers, scientists and technologists to talk all things, not just actually agriculture, but it's kind of the whole supply chain and food production area which is kind of interesting and unique in San Diego. San Diego has the most farms total per county in the state, which is not what you'd expect. There's 7,000 farms in San Diego, many small but you know, it's a uniquely interesting area where tech is finding its way into. And we actually had a conversation on stage with Friedberg again as well who had a big edtech exit around what's interesting in ag, you know, for the small farmer and for the farmer who's aging out and transitioning from maybe the farms move into the next generation who might be more tech forward. So we're having a really cool conversation with one of the execs from Veritas Substrates Carlsbad based company. But the event is happening in Escondido which is a bit of the Brett Basket of San Diego, especially for Avocados. I've been told it's the Napa of Avocados area so these are areas that I'm learning about too. And putting on these events enables us to bring communities together that wouldn't normally meet. So come join us at the AgTech event May 2, 3 to 6pm in Escondido. You can find a link to that on freshbrutetech.com we'll be I think filming the content as well and putting it out. Other events coming up. We've got the Summer Social for Connect happening in June which should be great. Also actually happening in North County. Things are shifting north you see. So look at Connects event for the Connect Summer Social in mid June. What else is happening coming up? There's the Connect Cool companies. It is a private event but it's a bunch of VCs, investors and early stage startups who are ready for Series A. It will be at the Padres Ballpark in mid May. So I'm looking forward to that event. So yeah, so those are some of the events. You can find more@freshpertech.com and actually we just put out our newsletter I think yesterday with a bunch of the upcoming events and other news that is coming up. So you can subscribe to Freshper Tech there and we're happy to keep you informed of what's happening. Some other news items that's been on my radar. Thermo Fisher is a big biotech company, Boston based, but has a really big center in San Diego and they just announced some layoffs unfortunately reading into it. You know one of the areas that they focus on obviously during COVID was on diagnostics and stuff. They bought a company called Mesa Biotech and it was entirely focused on the consumer diagnostic side for Covid. So they looks like demand has dropped significantly for Covid tests. So they are doing some shedding of talent around the diagnostic space. But their big area of focus in Carlsbad is bit more on I think on more like the genomics and the genomics diagnostic side. So I believe that area has not changed focus wise, just more of the COVID 19 diagnostics which obviously scaled up and now has to scale back down. So not too, not too unheard of in that regard. A few other areas of interesting business or tech news that's on our radar, at least locally is how did fundings go over the last this, this year there was a early article out and I think like late March from Mike freeman at the UT that talked about, you know, funding was down 50% year over year from investment capital into private companies and that was pretty much within reason of global as well too.

So.

Hey Fred, we're just talking VC capital and trends. I know you and I are working on a report out that we should have out soon for about Q1, but the early data showed that globally I think it was down 50% year over year and so is San Diego data. I believe as well too there were some massive fundings globally that kind of changed. Those numbers like Stripe, you know, raised I think a billion and OpenAI raised 10 billion. So those are kind of numbers that really tipped the scale. Like kind of had a high watermark point but still was 50% down quarter over quarter from the year before. I think we'll see the same in San Diego, but I think over a 3, 5 or 10 year average our numbers are still up, we're still trending up and to the right in terms of total capital. What I believe prediction wise should be interesting to watch is that over the last 10 years what's actually happened is less deals year over year but bigger rounds into later stage companies kind of been a consistent trend based on things. And actually Freebrook's mentioned in Summit he thinks VCs are going to move earlier. The ones who had been writing late stage deals. Late stage checks are kind of abandoning that for right now because they don't know what the market valuation is for late stage companies. So you might have a lot of people rushing in to just write a bunch of more earlier checks because you're not worried about exits right now. You're going to write a bunch of early stage seed checks and you know, they just need to survive over the next two years of craziness and then continue building a good business. So I'm interested to do kind of that analysis with that lens over it and expect Fred and I to have some quarterly data out of our own soon too.

Yeah, totally. I would just add that, you know, we might see a little uptick in M and A activity. Obviously had a big, big deal with the Merck acquisition for I think 11 billion. We talked about it last on the last podcast. But I expect to see some biotech companies get acquired and while there is, you know, slow inventory funding, there is an opportunity for early stage. AI is like hot right now, so I'm looking for that in the next quarter. But yeah, I look forward to kind of compiling and seeing which companies were able to raise in this challenging fundraising market.

Yeah, you make a good point on the M and A for biotech who purely go public just to get more capital. Right. Just stay alive long enough for the next milestone. If public capital isn't available them, yes, they probably are going to need to get acquired. So yes, we'll see if those are fire sales or opportunistic. Those are always interesting to watch. We do know the one thing about biotech and tech like the entrepreneurs and people, they don't leave here. So whatever happens to them post acquisition or even post shutdown, you know, we still have the opportunity for them to work on the next thing, which I think is always the San Diego opportunity. Look, we don't want to see employees get fired or let go. That sucks for that. But you know, we no one wants to leave so they're just going to look for that next thing. So it's on us to promote the opportunities that are available for people to work on that next thing, whether it's next hot startup or just people hiring. So we should keep an eye on that part too. Fred over the next year is just highlighting who really is growing and hiring so that we can get people placed in new roles for when Companies shut down or get acquired, which, like you said, probably will happen more and more.

Yeah, totally.

What else is on your radar for, like, in the news or you're just keeping an eye on right now?

Well, I like to talk about positive news, but unfortunately I did read something about Thermo Fisher. They are laying off, you know, I think a third of their San Diego facilities laying off 218 folks. They're just having challenges as they found a lot of demand with the COVID 19, you know, products that they were selling. They've kind of had some headwinds. And then also, yes, the Merck deal was huge. And then also the FTC has kind of blocked Illumina for the acquisition of Grail. Did you see that, Neil?

I did, yeah. You know, the Grail news has been up and down for a while. Grail being a aluminum spin out from years ago. So it came from an Illumina, then was funded by Illumina, and then Illumina is reacquiring it back was the plan for like 7 or 8 billion dollars. So pretty, pretty large investment from them. And what the market has said is that, hey, with Illumina, like, everyone's got to use your machine already to do the basic genomic data with Grail. Now what you're saying is to do the diagnostic, you have to also use Illumina for the diagnostic, for every cancer diagnostic, or at least that's what Grail's promising, is 50 plus different cancer diagnostics that. So, you know, they're saying, whoa, whoa, monopoly here from doing basic genomic to now the more diagnostic piece there. So, yeah, it's unfortunate to see. Is this the final straw or is aluminum. I'm guessing they're appealing or what's.

Yeah, I mean, like you said, it's been going back and forth and I want to say it's the final, the final straw. However, these things, it can always be an appeal or, you know, it's never said and done. But yeah, that was one of the negative news. But on the positive side, you were emceeing the San Angel Conference. I would love to hear your thoughts on how that went. I know there was three winners and a total, I think, you know, over $300,000 was distributed across the three winners. I would love to kind of get your perspective on how that that went last Saturday.

Yeah, great call out. So Santa Angel Conference is in year five already, which is cool. So Santa Angel Conference was started by Misty Rusk at University of San Diego five years ago. And the premise was what if we reverse engineer how to create more angel investors in town by training them, training new angel investors during like a pitch competition. But you know, one time pitch and picking someone is really hard to make an investment decision. So what if we run full diligence through the process and teach people how to do diligence and commit to writing a certain amount of money and then as a group deciding who the checks are going to for equity. So it's incredible opportunity to one train up a whole new class of investors in town. So I love that. I'm all about finding more capital locally. And so yeah, we're on year five of training up a whole new class of investors. This year 4, $400,000 were committed, but it actually is not closed. So they actually can take Money up through May 12th if people still want to get in on, especially now that the company's been picked. If there's companies that you like, you might as well jump in on. You can put as little as I think $5,000 as a unit entry into this fund angel conference fund. And so what happens is, you know this like I mentioned, the conference itself is the culmination of months worth of weeding down companies, mentoring them, helping them and doing diligence on them. So at the, at last weekend's event at USD you had six finalists, I believe. And after each finalist you actually had a Diligence member come up and say, hey, here's why we like them, here's the diligence that we've done to date and here's what made them a finalist. So it's kind of cool to hear immediately the other side of that. And then after all six pitches that all the angel diligence members, which is I think over 60 this year, went into a room and deliberated how they were going to invest the total money. Like it wasn't a set amount up front. They could have decided all into one company or a little bit into all six. And they came back and said, three companies are getting funded through us. Here's the amounts and it will increase, it could increase if anyone else joins. So it was pretty cool to do that all in real time. I emceed the day where I got to bring up sponsors and community leaders and really just watch the pitches. So I was just honored to be a part of that and meet so many startups and other new angel investors here in town. The company that won was Limber, which is a 3D printing prosthetics company that are UCSD PhD spin outs who have deep, deep experience on both the 3D printing side and like the material science piece. So they've got kind of the software meets hardware component. They have done some amazing things to date, including being able to drop ship prosthetics to soldiers in Ukraine who, you know, get injured immediately lose a limb. They've already been able to, you know, get people new limbs just off of their process. So pretty cool to see Josh and team win the big prize. And you know, there's a number of good teams there. There was a USD team, current student company called Athletiverse, which is a sports marketing, kind of a sports marketplace, so enabling university athletes to access sponsors from big brands. So this opportunity, kind of like a talent agency meets marketplace where connecting in current, you know, college sports stars to get promoted or get sponsored. So that was cool to see that one. So, yeah, really impressive. All the pitches for sure. I think one of the other files was pump spotting, which was a marketplace for recently, you know, breastfeeding women aren't mothers per se, who kind of not just have a community, but also a marketplace and an education program too. So kind of why I like marketplaces. You have so many different revenue models where you can offer content and membership and communities and services as well too. So that was another cool company that stuck out in my mind.

Yeah. One of the things I would just add is it's just been awesome to see, you know, some of these, these entrepreneurs, they come from, you know, woman entrepreneurs, mom entrepreneurs, student entrepreneurs, veteran entrepreneurs. There's a lot of different targets, different target entrepreneurs. They, they are helping get funding who historically have trouble raising funds. And so they're connecting, you know, great founders with also these upcoming angel investors and matching them. So, yeah, kudos to Misty who's heading that. So it's been awesome to see that going for five years and watching all entrepreneurs start here and take their business to the next level.

Totally. And speaking of pitch competitions, another one that just happened last night, Thursday night, April 27, was natural San Diego's Pitch Slam. Another really great new community that has just spun up during COVID helping promote natural product entrepreneurs. Not just food, natural goods, natural, all things that are kind of consumer focused. And so Nacho San Diego, I think is just three years old now, maybe four max, and already have five to 600 members paying members who are all pretty much entrepreneurs or brands or investors in these kinds of products. So they hosted their pitch Slam last night at in Point Loma at Liberty Station. And I'm trying to pull up the winner in, in time, but I know it was a beverage drink that won the Pitch Slam. Yes, it was Root and Splendor and the CEOs Kristen Fracasi, who won a batch of goods and services from other Natural San Diego members. So yeah, another great organization helping a lot of companies, especially non tech who traditionally don't have this big community of capital. Right. Like you don't have VCs who are just natural products and CPG. So to have this community there of other experienced entrepreneurs helping each other is pretty empowering to see. So congrats to the Naturally San Diego team and to Root and Splendor for winning the Pitch Slim last night.

Yeah. So that's all the news I had. Neil. Is there anything else that you want to cover off on?

No, that's our show for now. It's been a little quiet on tech fundings per se, but we'll keep an eye on them and keep promoting what we see. We mentioned fresh brewtech.com it's for your newsletter. For our newsletter. But Fred, what's your substack newsletter so that people can can sign up to.

Yeah. Thanks for the seamless plug. Sdfounders.substack.com I write our weekly newsletter highlighting, you know, founder case studies to also interesting events happening in San Diego. So yeah, thanks for having me Neil and look forward to doing this next week.

Awesome. Well, thanks Fred and thank you all for tuning in. Have a great day and great weekend. Cheers. Cheers.