San Diego Tech News Weekly – February 17, 2023

Hello. Hey, how are you?

Good, how are you? It's been a minute, I think for our.

I know. I'm looking forward to it. Oh, we're on. We're recording. All right. Sean must have started us off. Thanks, Sean. Good as always. Well, I hear you, you hear me, so let's consider it started.

Okay, awesome. Sounds good.

There'll be no cue, it's just us recording with us. Maybe eventually we will invite others to this, which is always fun. So welcome everyone. We are back with this week in San Diego tech news. I'm Neil Bloom with freshbrood Tech and Interlock Capital and my co host, Sesha Maharaju. Hey, Sesha, thanks for being here.

Thanks for having me. It's great to be back here, but. Hey, everyone, my name is Sesha. I'm a former biotech data person currently working in cybersecurity and cloud evangelism over at Microsoft Azure. Check us out on twitterzuresupports. I'm a San Diego transplant by way of Seattle, and I am fond of all things tech, startups and data.

Well, we have a lot of those topics to talk about today. It being our first episode of the year. We're going to do a little bit of start with a little bit of year review for last year because there was a, a lot that went down, went up last year. So let's start there. Fresh Brew Tech recently put out the 2022 tech report. We traditionally done these yearly and quarterly. And so one of our favorite local journalists, Fred Greer, and I collaborated on this using a few different data sets. We pulled data from Crunchbase, which Connect also uses. And so we pulled some Connect data as well to crunch some VC funding, acquisition funding, public company performance. And actually for that we pulled data from a startup called Pebble Finance. So you can find that@freshprotect.com and look for the 2022 San Diego Tech Report. And also Fred Greer has a new substack out called SD Founder. So search Fred Greer on Substack to find his report that he. That we did kind of collaborate on this. I'm going to dive into some numbers here, Sesha, you know, jump in and add some commentary and color to this as well. The big number is total VC funding in San Diego last year, nearly 5 billion in funding, which is pretty massive on its own regard. It looks low compared to the year before which had 9.5 billion, but the year before that 2020 was 5.3 billion. So we're actually pretty flat from 2020 to 2022 with a really high point for 2021, which is pretty much a global thing that happened 2021. Just the money that got injected from COVID government stuff just flowed heavily all the way down into the private sector and then pulled back last year. And I'd say from 2013, 14, 15, 16, 17 in San Diego we were pretty much flat at a billion a year in VC funding. So to have this big increase to 5 billion I'm pretty happy with that is a lot of money that went into total companies invest in is also a metric we look at. We've seen a 10 and so we saw nearly I think 14 companies, 625 million for national Resilience. That actually wasn't even the most they've raised. They raised 750 million in a round the year before. More of. Can you hear me?

Yeah, you're cutting in and out.

Oh, interesting. Okay. Are we better now?

Yeah, I can hear you now.

Okay. Anyway, national resilience raising 600 million plus in funding. That's a big one on the biotech manufacturing and in fact you're going to bring up a story in a little bit that talks about how biomanufacturing is doing locally. But some of the tech companies that raise some big rounds, Shield AI, which is a drone defense, DoD defense company Drata cybersecurity, the Honest Kitchen, more of a CPG company raising 150 million. Got Events.com, a major tech event platform. So these are some of the tech related. Most of the other hundred million plus fundings were in the biotech side, whether it was pharmaceuticals or medical device or therapeutics. You can see the full list@freshfoodtech.com A few other highlights that happened in the year we won our second Nobel Prize in a row. Two years in a row, this one in chemistry, Barry Sharpless and he won it for groundbreaking research and click. Chemistry. Also note this is Barry's second Nobel Prize. He won one nearly 10 or 15 years ago as well too. So Barry, I think out of the Scripps Research Institute, which is where a number of Nobel prizes have come from, winning a second Nobel Prize, which is pretty incredible.

That's awesome to see. Now where do you think we're going to go into as we start heading into 2023 and like where do you think are we still going to continue and you think the tech or is it going to go into the bio space? Like where do you think we're going to see most of the funding as well as acquisitions.

Funding wise? I think we will be at Similar levels of last year, if not a little lower. I think there's still a lot of capital in VC funds who raised two to three years ago. So they have to deploy by a certain period of time. So I think the capital will still flow out. But I think this year is going to be similarly flat, if not a little bit worse than 2022, both from a public market and private market perspective. What that means though is that companies themselves are going to struggle to find funding a little bit more than their last round, most likely. And they may be looking at selling because they can't get to the growth numbers that they thought they were. So I think acquisitions will go up actually this year. I think IPOs are going to be similarly locked, like closed off like they were last year. We only had one IPO in 2022 compared to the 20 plus we had in 2021. So yeah, I think it's, it's a tentative, kind of nervous, anxious year to see if the markets open up, if the public markets open, like do. Well, that usually bodes well for everyone. Downstream of that, for whatever reason, people look at their phone or their computer and they see a red or green day and that kind of dictates their mood in the investment world for whatever reason, see a red day, you think, oh, I'm going to sit on my hands, sit on my money. So therefore I don't think we'll see a lot of new venture funds either because it's also a tougher time and environment to raise money. Now in all capital, we emerged as I think the newest VC first time VC fund in San Diego last year. There are a number of other new funds or another funds that raise like Qualcomm cordoned off a new metaverse fund raising 100 million for that. But Qualcomm Ventures has been around for many years. Avalon, which has had a general fund for a long time, also created a Bioventures fund for the first time ever. So they've been doing tech and bio, but they've decided to focus do a fund solely related to Bioventures. So new funds did happen last year and so that's a good sign locally because we've historically always been under capitalized, underfunded in San Diego. So yeah, look for some acquisitions, I don't know if they'll all be, you know, amazing home run grand slams because some of the companies are doing it a little bit out of desperation or just not finding access to new capital. But hey, if it returns money or even at least frees up some Entrepreneurs to go start the next thing. That is a great time. And so we're very excited to be investing right now where one, there's a lot of talent who either been laid off or saying I'm done with the big tech. So that's a great opportunity for new startups to come around. And like we said, there is capital. So this is a time when it's risky out there even to be at big tech. You might as well take the risk on your own ideas instead of someone else's. So if you're starting something new, come hit us up at Interlock first. We want to invest in you. Do you pay attention to the public markets at all?

Yes, I absolutely do. So it's been fun even in like big tech, just watching and waiting and seeing sort of the general mood of what people are feeling and how internally we're responding from a big company perspective. And I think we mimic very well what the average person is feeling where we're all feeling a little bit cautious, we're all a little bit not sure of what, what the future holds. And so you can kind of tell from a business perspective that we're pulling.

Back a little bit.

And I think even in terms of looking at some of our stories like it kind of bodes that there are going to be some changes and we just have to be ready for them no matter, you know, can't really do anything about it. You just have to go with it.

I think that's a good point. One last piece we'll touch on related to that and then let's jump into some other stories is the public stock markets. I personally have been tracking city comparing our public companies per city. This actually started with a host on cnbc, Brian Sullivan, who does a version of this as well comparing I think the top 12 metros in the US and the top 12 companies in each of those metros. So we recreated that, he calls it the Power Cities index. And so we compared to and three years ago San Diego was the top performing city in that index. They had a 65% year return in 2019 or 2020 last year San Diego or two years ago, 2021. The performance of our public companies was right there with the S and P and it was actually great 27% return which is what the S and P did. San Diego was flat with that. This last year not so great. San Diego fared pretty low. Our top public company is a negative 32% return on the year in 2022 while the S&P did negative 13% so not a great year for public investing in local companies here, but more to come this year. Tech's already having a little bit of an upswing in certain areas. One city that blew everything away last year, Houston. As you can imagine, Ukrainian war and other things like boosted natural resources and energy. And Houston's public companies boasted 167% for the year, which is nuts. So we're gunning for Houston this year. Let's go get that. Let's go get that big number.

Absolutely.

Well, let's dive into some other storylines that we're talking about talking through here. You want to take us through one of yours? You want to go through viasat first?

Yeah, let's do viasat. So this one is an interesting one. I know we oftentimes bring up viasat just because they're one of our biggest companies in San Diego, and so we tend to talk about them a lot, but they've actually been in the news quite a few times in the last few months. And so we first reported on viasat, or we talked about viasat last a few months ago when they were selling their tactical business unit to. Well, now they're back in the News as their $7.3 billion acquisition of a rival satellite company in Merced has caused antitrust scrutiny by European regulators. And it turns out that inmarsat and viasat, in addition to Panasonic and intellisat, are competitors in supplying a broadband in flight connectivity. Think of like WI fi on commercial airlines. And so the big concern is that viasat acquiring in MRSAT would reduce competition to the supply of these IFC services. And so the European Commission is coming together to decide whether or not they need to be regulated or not. And so that decision is set to be June 29th. And this will be interesting because I know when we last spoke on viasat, we were talking about them offloading this mids tactical radio business unit. And there was a lot of speculation as to why this happened and what their plan was. And it kind of makes sense now when you think of, hey, they're also going to be acquiring this massive satellite company. So this one was an interesting one to see hit the news because I think we were all just waiting to see what was viasat doing, like, what are its plans? And here they are.

Yeah, I think what's also interesting is obviously what the public markets have done to ViaSat stock and all stocks, but $7.3 billion acquisition, the company ViaSat's only worth 2.6 billion right now. So a pretty massive investment that they'd be getting a lot of outside capital for from obviously some other sources who gotta imagine are watching this anxiously seeing if no, this acquisition is not going to happen or not. So I bet it's a chicken or the egg with viasat of like hey funders, are you in? And funders are saying well I don't know there'd be a union in. So yeah, this time to watch because obviously that'll massively change the size of Viasat which by the way like I think has 18 buildings in Carlsbad, like a pretty large presence in campus in Carlsbad. And any day now they're actually about to launch a next generation satellite which is a huge deal for them because they only, I think they only have three satellites up in space right now. They're also a big competitor to Starlink or Starlink is a competitor to them. So that's a whole other storyline we will talk about down the road. But that's a good one to hear and we'll keep our eye on that and continue to report.

Absolutely.

Let's talk some green tech, sustainability and EV cars. Aptera, have you heard of them?

I know they're Carlsbad based but man I haven't seen them come into the news too often.

Okay, so yeah, they're kind of a new under the radar startup, recently moved to Carlsbad within the last year. And not just headquarters but manufacturing headquarters too. So they're going to be manufacturing this three wheeled solar EV car. So actually it's a funky looking car. So you should go and look up the Aptera vehicle, a P T E R A. It has solar panels all over the roof so that it can charge itself what it claims is about 40 miles a day on solar but plug in, you know, can do the full plug in and it has a 400 mile range per day and a top speed of 101 miles per hour. So you know, cool little nifty, nimble car. I think it's a one seater, I believe maybe two, but it's a pretty small EV vehicle and they've raised over 100 million to date. Both private funding, like VC funding, but also they've done a number of successful crowdfundings as well too. And they're kind of making the news right now because of this crowdfunding in a few ways. One, they've officially launched their launch editions, the ones that people have pre order, which there's 40,000 pre orderers, they finally have said here is the final version of this. So people actually pre ordered before even knowing the full stack of what this vehicle is. And now it's finally out and they plan to begin production by end of this year, 2023. So that's exciting. They're making some progress. They are getting public about their crowdfund because they obviously need tens of millions of funding and you can look at the Tesla of how it needed to get to production around this as well too. And so they're wooing investors to invest in this by saying you'll jump the line, you'll get your orders faster if you invest in our crowdfund. So you can't hate the hustle. Yeah, I mean why not own a piece of the company when you buy your car as opposed to just buy your car and disappear into into the world. So pretty cool to see this. Another Carlsbad based company doing more sustainability and automotive tech, which I think San Diego has not done. A ton of full vehicle technology, usually more LA OC based. So it's pretty cool to see Aptera doing this. They claim by 2028 they're going to have eight different production facilities globally. So that'll be interesting to.

Do. We know when Carls will be like properly in production and all of these investors will get them.

They say end of year. So they say by end of 2023 cars will start being produced. So yeah, we will see it. Within 12 months or so we will start seeing it. Let's do one more cars conversation here since we're already talking cars, but more of a marketplace. Cars and Bids. Have you heard of Cars and Bids? I have.

So I am a longtime fan of Doug demuro who started Cars and Bids pretty much from when I was a kid, happen to be a big car person and so I was so, so happy to see that he got this massive, this massive investment. If you want to take us through it.

Yeah. Doug started his YouTube back in 2013 so 10 year old YouTube following now got 4.5 million followers on YouTube alone. So really big presence. And you actually do see him out in San Diego at a lot of the car shows because he lives local. I don't know if it's public where he lives. Okay than he is maybe. But yeah, he comes out to a lot of the different car shows. There's the weekly Rancho Santa Fe one on Saturday mornings that he is often seen at. And so he teamed up with a really under the radar startup studio called IDO Studios started by the founders of Suite Labs, which. Which their legacy actually were a lot of DivX founders. So you got this really interesting legacy company that's been building tech and decided to take all the technical expertise that they have and spin up a bunch of companies internally in a studio model. So that's what IDO Studios is. So of that core founding team, Blake Machado of IDO teamed up with Doug demuro and formed this car auction marketplace with Doug. And really honestly, they're using his great influence level to monetize his following. When he launched the website, they had 900 cars listed the first day. I think that he launched cars and bids on it. So a lot of transactions happening and he's the face of the platform, but also really the new face ofCar on YouTube as well. So that's pretty cool. In comes the Chernin Group, or TCG as they're known, who almost exclusively like to invest in creator led and creator founded companies like Barstool Sports they invested in or Meat Eater. These are companies that the founding team have created an influencer level as creators itself. So this is right in line with, with cars and bids, obviously. Right. The Doug DeMuro Marketplace. And so they put the first outside funding in to help scale this. Now Doug was, was pretty humble in this and said, you know, I don't, I've never built a marketplace before, never done tech. And so he stepped aside the CEO role to Roy Rochoe, who previously was the CEO of BitTorrent, led eBay Motors and was the chief business officer at Lux. So a lot of tech leadership and Doug's still involved still. You know, obviously I don't know if his role is president or something else, but you know, with this funding from the Chernin Group, it allows them to scale the marketplace to a whole new level and allows Doug to stay focused on what he's good on, which is influencing the car talk. So pretty cool. And not many note, I don't think they even in the Forbes article they didn't even mention there was a San Diego company. So good little inside scoop here from us.

Yes. And he's one of those good content creators with always a different car, a different opinion about a lot of different cars. And it's great to see. So I'm gonna give a massive plug to go and check him out on YouTube because he's awesome.

Sweet. Well, we alluded to this before. Biotech manufacturing has its place. San Diego. In fact, in Oshed there's like eight plus biotech engineering companies. You want to take us through what they're doing?

Yes. Yeah. So Genentech has begun its $450 million expansion in Oceanside to create a new facility focused in personalized medication and really build out that facility to sort of grow their campus. So this is already in addition to seven existing buildings over on that 60 acre site finally on the street that it's on antibody weight, which made me laugh. That is awesome. But it will be operational in early 2025 and will support 150 new positions. So definitely interesting to see what personalized medication brings, what kind of positions they're looking for and I guess what kind of expansion they're really trying to do in terms of like what are they bringing to San Diego. So that'll be great to see.

Yeah. And Genentech is actually owned by the even bigger massive company. Roche acquired them over 10 years ago. So you know, having one of the largest drug makers in the world doing manufacturing actually in San Diego county is a really big deal. Especially as we also alluded to this kind of de globalization or the movement of manufacturing back to, you know, North America or at least out of countries that are potential enemies of ours. So already having a foothold here and now expanding. It's a great sign. It's great for jobs. It's great for especially like high tech jobs. These are biotech manufacturing is pretty unique so it's great to see especially in North County. So excited to see that. And like we said there's many other companies like Gilead has biotech manufacturing in Oceanside as well. We'll see what that does to the rest of the community too. So stay tuned. We're happy to report on that. Those are our stories for the week. Kind of broad. I love it. I love we touched a little bit of everything but there's a bunch of events coming up where you can come and meet these companies or build your own. And so let's go through some of these events that I hope we will see you all at. Cool companies. This is a yearly application that if you have raised a pre seeder seed kind of Series A ready this is your time to apply. And throughout the year Connect puts you in front of VCs for that series A level kind of funding. So apps are due February 20th. Hopefully we're getting this episode out before then because it is the 17th right now. So get your cool company's application in and we'll see at a future event. I think I'm going to an event in May just kind of VCs and cool companies only Tech coffee meetup. Have you been on one of these yet?

So this is on my list of meetups to go to. Because I think this is entirely right up my alley.

Yeah, check them out. I used to go pre Covid. They've been going for almost 10 years. So if you go on their meetup page, they actually have three different locations around the county. They meet weekly. And this on February 21st, they're doing a nighttime one. So just trying a different time of day, more of a beer meetup, just to see if maybe the nighttime is. You get a different group in compared to the morning meetups that they do. CTO talks. This is a new series brought to us by the Arcus Nexus crew down south of the border in Tijuana. They're doing it in multiple cities. Orange County, Denver, Austin, San Diego. On February 28th, they're doing the next CTO talks in San Diego. It's going to be blockchain focused. So I'm hoping to make it out and kind of hear what future career paths there are in the blockchain space. And then a few days later, we as a group are going down to Tijuana to Arcus Nexus campus, which is called Mindhub for Startup San Diego's first Mondays on March 6th. Sesha, you going you in?

I sure am. That's going to be quite the adventure. And I mean for a Monday, I'll take that any day.

Yeah. They've been so gracious in coming up to most of our events and truly before COVID we actually used to do a multitude of Startup Week and other events in Tijuana at minehub space. So I'm really excited to get us back going there. Logistically, we're gonna all on the American side meet at the border at the same time, cross together and then be shuttled across. So don't worry about getting there. Now coming back, there's really two different groups. There's the ones who have Global Entry and Sentry Pass you'll fly through and those who don't. And that will take hours to cross. And we'll hopefully stay as a group either way to get you back over the border. But come join us. You can take the trolley down to the border, which is really nice. And let's go down and meet the scene. I went about a month ago, the Arcus Nexus team hosted me for the day down in Tijuana and it was incredible to see how for 20 years they've been really building the startup and tech scene in Tijuana. So I'm just excited for more people to come across and see that as well. Too. Absolutely, we'll see. Y' All. Yeah. And tacos. Oh my God, I had so much tacos then. And I'm excited to see more now. And the craft brew scene is really strong, so they're gonna have a number of brewers there representing the local scene there as well too. UCSD and First Republic bank are doing their next in a series called Meet the Money. This one focus on life science investors. I actually spoke at the November tech investors one. And so now on March 9, they're doing a Meet the Money Meet the early stage investors in Life science. It'll be on campus at UCSD at their Design and Innovation building. I'm hoping to attend and meet some of my peers. Devin Data Night March 16th. I know you have come to this event before SESHA.

Yeah, it's a fun time and so I definitely come out to Devin Day to Night because you will meet lots of amazing people. There will be delicious drinks and delicious food. So come out.

Yeah. We're trying to bridge the gap between senior talent and junior talent. So make sure that senior talent meets senior first, then build quasi mentor mentee relationships so that people who are just kind of up and coming find a pathway on the technical side of the world. It's in downtown at UCSD's new park and Market building in downtown East Village. So come on out March 16th. Connect has recently started a focus on helping diverse CEOs or CXOs. They're calling it the XEO program to help up and coming leaders find, you know, pathways forward ahead. And it's a focus on diversity and inclusion. So if you are kind of up and coming leader, mid or senior already, you should check out Connect's XTO program. Their March cohort starts in March, so get your application in soon. And lastly, it's a few days away, but in May we're going to bring together our agtech community for our next quarterly event. We started with the AgTech hackathon in October. We've already met in January and we're getting this together in May. So another event by Fresh Brew Tech that we hope to bring farmers, scientists, technologists and kind of everything in between to just see what's going on in the ag space here in San Diego. Because it really brings together the bio world, obviously the agriculture, the food supply and packaged foods area. Seeing that all come together has been really interesting. So hope you can join us on May 2nd. Anything else top of mind for you?

I'm sure there's a few, a few crypto meetups, but so check look out for those. There's usually something Going on over at the Edge campus down and down in downtown. So come on down.

You're right. Yes. The bitcoin meetup at Edge and the Ethereum meetup SD ETH meetup, who by the way, we should be highlighting. Let's talk about on the next show. They've got a weekly boot camp going on to teach people how to develop programs and apps in the Ethereum space. So they've been going live every Saturday showing the Ethereum boot camp. So we'll make sure to highlight them in the next one. Thanks for that. The crypto scene has been consistently strong in San Diego, whether it's boom or bust markets. I think Bitcoin meetup started here in 2012, so, you know, 11 years strong of almost every month, some sort of bitcoin meetup. So good call. And that's our show. We will be back hopefully within the week, but definitely sooner than it took from the last one. We really appreciate you tuning in here. If you enjoy this, send us a note, give us a like on Twitter, give us stories that you think we should be covering. We'd love to take your feedback. And thanks to Sean here in the audience for providing our support here on Weight Room, which is where we recorded this. Give us what you give us. Hopefully we have us. Join us on Weight Room soon and tune in as well. This is the same platform we do our monthly get connected to San Diego video chat, so hope you'll join us there as well. I'll give one more event shout out San Diego Founders Hike, which we do first Monday, first Wednesday of each month. So I think that coincides with March 1, which is also our next get connected to San Diego video conference day too. So a lot coming up. We'll see you out there. Thanks again.

Thanks everyone. Happy Friday.

Thanks, Aisha. Bye.