San Diego Tech News Weekly – October 29, 2021

Because it's Friday, right?

It's Friday.

Thursday. Friday. What? Happy Friday, everyone. Happy end of the month Hollow weekend. Did I just steal your thunder? Sorry.

Hey, it wasn't recorded before. This is your joke now. You got it, I'll give it to you.

Well, it's Friday, which means it's this week in San Diego Tech News with myself, Neil Blum from Freshwater Tech and Interlock Capital and Jonah here.

What's up everybody? Thanks for joining live. We're excited to have you here, but I love hearing everyone's feedback when you listen to the recording as well. So really excited. Jonah Peake here. Operations, you know, line, handy, postmates, those fun things. And then just overall super fan of San Diego and the startup tech community. But why, why don't we get after it? Neil, you and Mike Kren and a few others put together a pretty awesome report. Kind of going over it looks like Q3 here. Why don't you dive in, tell us a little bit about that, give us kind of the state of San Diego.

Sure, yeah. Nothing like a month into Q4 to talk about Q3. So we finally pulled the numbers together to create the venture report of Q3. We'll have a link to it in the show notes. It's on Fresh Brew Tech and some pretty massive numbers for just one quarter. This used to be San Diego's annual numbers, but what kicked this off honestly is a yearly report by CB Insights. They put out their own Q3 Venture report and it's 175 if not 200 pages of data comparing cities and other data and they left out San Diego. And that pissed me off because they're talking cities like Miami and others who are hot in name but are not top 10, 10 for Venture Dollar Flow in their city. And we're easily most years number five, six or seven in terms of venture dollar flowing into our ecosystem. And man, it'll be hard to break out past obviously the top four, San Francisco, Louisiana, Boston, New York.

But we're right there.

We're right there and this shows it. So let's dive right into it. Myself, Fred Greer and Mike Kren together put some numbers here. So Connect has an airtable where they are publicly showcasing fundings and so from it, 2 billion plus raised between 74 private fundings in Q3 alone in San Diego.

Wow.

Pretty, pretty insane. Number 2 billion, by the way was like our number raised for the whole year in like 2018, I think 2019 we were 3 billion. Oh my gosh. So we're doing that in a quarter now I mean the world is doing that also. Like the whole, the water has raised, risen everywhere, the rising tide, right? Yeah. But there's another article out by Mike Freeman. We need his own. We need a sound for Mike Freeman, by the way, anytime we mention him. But he wrote an article last week that showed for the first time in a while that tech venture inflow was higher than life sciences. So of that 2 billion more went to tech and here's why. Six of the companies that raised in Q3 raised more than $100 million. So we're talking Shield AI who raised 200 million. Wiliot raised 200 million. Seismic only raised 170 million. Metrodyne 150 million. So those are all tech companies. By the way, we just mentioned Genomatica, 118 million. They're kind of a quasi life science tech. They're in the sustainable chemicals space. And then Lycia Therapeutics, 105 million. So that helped a lot of the 2 billion. You know, here's 200 plus 200 plus 170 plus 150. Like that's a lot of tech money that came in just from there. So pretty massive numbers to see that. And it's. And that trend of bigger, bigger rounds continuing to happen, that's been happening for years. That's not necessarily new. It's just that San Diego's companies have matured now to the point that we have enough that are raising triple digit or 9 figure million dollar rounds. But also what happened during that quarter, we had 6 IPOs in the quarter that collectively raised 912 million. Between these IPOs, Jonah and I have started a San Diego public spreadsheet to track these that actually tracks real time stock numbers, market cap and all that. And so the six that we tracked were Q Health, tyrobiosciences, Effector Therapeutics, dermatotherapeutics, Irasca and Loomis Diagnostics. In a sense, all life science Q people have claimed are quasi med device tech. But I mean honestly most of their money came from building Covid tests for the NBA and for the Department of Defense. So yeah, a lot of publics and those combined, six companies that went public have a 5 billion 5.1 billion current market cap between those six. So that's a lot of new valuation new public companies here in San Diego. Pretty amazing to see just in one quarter alone. I mean we've had years where it's six IPOs in a year. Right. So six and a quarter is a big deal.

It kind of speaks to the hotness of the market. I mean, we can keep talking about this. I don't know the mechanics necessarily, but it would be pretty awesome to have sort of a San Diego based ETF or something to sort of really invest in the, in the city a little bit further versus kind of picking from. I mean, there's so many public companies in San Diego. Kind of be hard to say pick and choose. I mean, obviously you know, your qualcomms, dexcoms, etc. But like, you know, there's a lot of really big ones in that list that you might kind of miss or surpass that are going to continue to grow. So anyways, if anyone has expertise on that, maybe you do, Neil. We should probably do something like that.

We're working behind the scenes. I've been working with a startup called Pebble Finance. It's an index. You build your own custom index. So charted the top 10 US cities by venture capital, dollar flow. And we then mapped their public companies, their entire list. So we didn't just do s and P500, we did all publics per city in the top 10 metros for VC Capital. And San Diego was in the top three on its public company performance compared to other cities. So yeah, we're tracking that and it's a straight index. So there's no weight over one company or another. So an ETF would allow you to weight it if you wanted to.

Okay. No, that makes a ton of sense. And actually that's amazing. I mean, these are companies that have grown up here and have actually kind of built their presence in San Diego and obviously gone global. But what's really interesting is now we're starting to see companies sort of look at this area, this city, and say, hey y', all, I want to move there. It's now gotten strong enough, big enough, and sort of has enough firepower behind it to say, hey, let's move my huge company here and then go ahead and raise a huge round. So, you know, kind of the joke is, you know, and I'll tee this over to you in a second, but you might have seen, you know, click up all over the trolleys downtown. And as it turns out, you know, many of us view the tech. They're not a, they're not a transportation company. They just have a really awesome campaign on trolleys and inside the ballpark. But yeah, they moved here from San Francisco and yeah, they, they are growing like crazy. I use them. I love it. What about you, Neil?

Yeah. All right, we'll skip over to story two. Click up. Pretty massive company in terms of like seeing their growth. They moved here 2019. In 2020 raised 100. They're kind of their first big real institutional money. 100 million at a billion dollar valuation. So they're already a unicorn then. And when you're already a unicorn, why not become unicorner? And they raised 400 million at a $4 billion valuation just this week alone. So pretty, pretty incredible. I'm a customer of them. We use them at two different companies of ours. And Zeb is an outlandishly fun CEO known for his colorful shirts, if you haven't seen his weekly LinkedIn posts. But this is part of lately in October, October corn craziness. Every week we've had something new with one of our unicorns or a new unicorn minted. We had this week we had obviously we had ClickUp. Last week we had Flock Freight ringing the unicorn bell. The week before that we had Vuori. And in September we had SHIELD AI raising 200 million in the unicorn. So a whole bunch of new billion dollar private companies in San Diego, which also hopefully means eventually more public companies and that usually means liquidity which floats back down into the community. So that's what we're all excited about. A lot of good news around that. So yeah, congrats. Click up on the new funding.

Nice. Get that flywheel spinning. Keep pushing it harder. I think it's only, only going to get better for San Diego.

Absolutely. Well, speaking of brand awareness on things like trolleys, I see James Heller in the audience, which reminds me about branding on Uber cars. And we have some Uber news to talk through around how San Diego drivers can lease Teslas from Hertz and boost for electric vehicles. So San Diego is one of like the first, first little cities to try out this Tesla rental piece from Hertz. Yeah. This one. Yeah.

This is awesome. And you know, it seems to be kind of a running theme. I mean, I think we're a big enough city, but I think we're sort of tourist driven. We get a lot of tech like this first and there's a lot of sort of testing that we get. So if you keep an eye out, you'll start to see, you know, we're one of four cities that are, that are getting to, to participate in this pilot. We've got San Diego, Louisiana, San Francisco and then D.C. probably show some love to the policymakers, say, hey look, we're doing some great work. But what's really interesting is this is kind of a combination of a few. So we've got Hertz, ancient company nearly died and may have actually been resurrected as sort of a meme stock. I remember people buying the stock and kind of saying, what the hell are you doing? These numbers are atrocious and they came back from the dead. Kind of fitting for Halloween. You know, Uber kind of mid. Mid and Tesla are sort of, they're newer, but they're, they're very, you know, very hot companies. But it's interesting because they all do very different things. And so Uber is partnering with Hertz. They're going to offer 50,000 Tesla looks like Model Threes, and those will be coming out over the next few years. And it's kind of a really interesting combination. I mean, Uber is now able to say, hey, look, we are going to be a little bit more green. You know, we're not driving cars around as much, kind of burning fossil fuels. Tesla obviously sells some cars and Hertz has a really interesting partnership here. But one last thing too, is, is. And what this is kind of what Uber saying is you can actually now drive for Uber if you don't have a car. I would wonder how many people are going to drive for Uber just to test out one of these Teslas. I think that'd be kind of a fun thing. Maybe I'll do that. But anyways, you know, these, they're taking 100,000. This is half of the fleet that Hertz is buying is literally going right towards this partnership. And they're coming out at maybe 3, 334 a week, $334, hopefully dropping down to 299 a week. So, you know, it just depends if the economics work for, for the, for the drivers. But Uber is kind of banking on a little bit of an upcharge. They're going to bump up by a dollar to say, hey, look, this is a green ride. And one thing that's really important, I think people kind of, people may miss this. I thought about it a lot, you know, when I was in the industry is, you know, the whole rideshare industry was sort of sold on the fact that we can pull cars off of the road. And that really didn't happen. If you think about kind of how the interaction works, you know, there's a car sort of circling or parked or it's out there and it needs to drive to your front door, pick you up and then drop you off, and then it's off driving somewhere else. And so instead of actually taking your car off the road only like you think has happened, and that has happened in your, you know, your journey, there is some driving in the Beginning and the end. So in fact there are more cars on the street and there is maybe a little bit more pollution if you have, you know, cars that are emitting smog and things of that nature. But when you start to get Teslas on the street and you get a little bit more electric cars into the fleet, you can actually sort of really improve. I had this kind of gut feeling and maybe I'm completely wrong, please don't quote me on this, but this could this be an interesting step towards Uber actually finally accomplishing, you know, a self driving fleet? I know you know, Uber or Tesla has those capabilities, but they haven't quite, you know, been implemented. There's a lot of policy behind that. But you imagine, you know, in the next three, five years, maybe sooner, where some of these Teslas are just driving to your house on their own. Could be kind of interesting, maybe future looking. But you know, we'll, we'll see what happens in the short future. But you know, I'd be excited to see that. Would love to see that for sure.

Very cool. Well, hey, you never know where partnerships go. So we look forward to seeing that for sure though. What from why here on? How crazy long the back orders are in Tesla? It might be a bit. I've heard some people placing an order January this year and still no status on where their car is. So we shall see. But still the partnership potential is juicy and we're excited about it.

Did you hear that stat where before moving on, it's actually cheaper to buy a new Tesla now and wait than it is to buy a used one. Used are actually more expensive.

I didn't hear that. That's great.

It's insane. I don't know, it's kind of mind blowing. So hopefully we can get more electric cars on the road.

Yeah. Well, let's dive into our next story, our last story, and this is about Longfellow, a real estate development company buying nine office assets in San Diego for 315 million. Planning conversion to a life science campus, which is quite the trend over the last few months as we've seen, we've seen downtown converting pretty much the Gorton Plaza is now expected to be a billion billion square or sorry, a million square feet of potentially life science lab space. The same with the Midway project or it's not actually called that. IQ hq I hear. Also million square feet of lab science space right on the water. And more and more as more capital is flowing to the community and our companies are growing fast. It's the lab Sciences, the Life Sciences that needs the space. While tech doesn't seem to be needing nearly as much, but yet there's still not enough. So we need more life science apparently. So Longfellow Real Estate Partners, they're a Boston based private life science real estate firm. They acquired these nine properties, 371,000 square feet. And they're kind of showing the expansion into Sorrento Mesa, which is kind of becoming another life science hub. Because Tori Mesa is packed, it's full, there's no room there left. We've even heard, so this is going east of the 805. Right. But we've even heard people starting that.

Is even getting packed.

And now along the. What's the next freeway up the. Not 52, the 56 is kind of the next place that we've seen other stories of life science campus conversion. So to all two story properties there is owned already for office like industrial life sciences. And they're going to make this a life science redeveloped space which I got imagining like on the exterior. You don't have to do too much to make it a campus, but you do have to put in a lot of internal work for, for labs. Right. You got to put in hoods and all these other safety precautions especially I'm guessing like chemical and other kind of waste kind of stuff that your normal tech space probably wouldn't have, right? Totally.

And you made an important point. I mean, I think, you know, like you said, it might be easier for folks maybe in sales or in other tech jobs to grab their laptop and go compost up a couch or working space or you'd be a little bit more flexible. I can't imagine it's that easy to set up a lab in the house or start cooking. Cooking for your company on the stove, right, Walter White action. Probably not the idea. So yeah, the RV salesmen are going crazy right now. Man, that's hilarious. So I think it's interesting one thing kind of to add to that which I think is really fascinating is we're on the list of life science companies or regions rather we're slightly behind Boston. And so if a Boston company is saying, hey, let's look outside of this region, we see opportunity in San Diego. I mean it's fairly obvious, but to us maybe since we're here, but you know, that's a really interesting sign about the expansion potential for this region. And you know, maybe we have some Boston based companies expanding to San Diego. Come on out, guys. Love it. But it does show you the sort of the power and the traction that this Region does have and I think a Boston based company, real estate firm looking for acquiring space out here is a pretty, pretty great sign.

Yeah, it's funny actually that one of the other properties I mentioned, IQ hq, they're a San Diego Solana beach based real estate development firm and their two properties they did first was in Boston and in San Francisco. They hadn't done a local redevelopment of a lab space yet and now they are. So it's funny to see, you know, it's just all incestuous that wherever you see growth, go after it. And I think it's not going to be only about geoscience. So as long as San Diego stays in the top three for attracting companies here, that's one area where, you know, because of the need for physical space, the companies will be pretty rooted to that city as well too. So yeah, great to see one.

One quick day. I wanted to make sure it was there. Anything else that you wanted to call out from the quarterly report? Anything that you wanted to highlight or is it better to kind of send that link out? But I know we have a few extra minutes so if there's something you want to dive into, I think that'd be a great time.

Sure, yeah. There's a few other extra points that were kind of cool to pull out. We didn't talk acquisitions. There was 12 pretty large acquisitions that happened in Q3. One a biotech bio legend was acquired for five and a half billion dollars. So pretty massive one in its own regard. But a few other things that happened if you remember. Takelessons acquired by Microsoft. Eucora Women's health company acquired, New Rocket acquired. Lon Love was acquired. Suja Juice, major acquisition there. Encinitas based e commerce platform Ecwid acquired for $500 million. And that deal just closed I think October 1st. And then lastly Omnium, a genetics hardware maker acquired for 800 million. So some pretty big, big acquisitions that happened throughout the month. A few other things that happened. We got three new venture funds, hot new funds in San Diego, Seaside Equity, $160 million fund. Harpoon raised their fund 3 of 120 million. Recently talked to them Quick Edit, quick thing on them. They invest in mostly SaaS but they and they want to see commercialization of SaaS. But what they can help it is get government contracts. So they like to see companies that they can take and apply to the government world and then more Venture Partners, MVP raising fund four of a $15 million fund. So this is all some fresh new capital that is looking to find its way into our companies. So you love to see it. You also mentioned companies moving hopefully from Boston. Great. We'd love to track that. That we saw this quarter. Ibio, a Texas based company, expanded to San Diego and Mainstay Medical, an Ireland based company actually expanded to Little Italy, which is cool. I think they took down the CO working space over in Little Little and forgetting the name all of a sudden. Of course I knew them well, but yeah, love to see expansion to the region. Like I mentioned before, some of, some of the stuff it just feels like we're on steroids. Like this is quarterly data, but it felt like this is yearly data in years past. But you know, the whole world is, is on steroids right now in certain good ways and in other ways it's still rough. So you know, here's, here's to those who have pushed forward and to those struggling. Here's hoping that we can continue to help you and keep you involved in the game. But pretty good news from this quarterly VC report about San Diego. Look in the show notes or look on freshbrewedtech.com for that full report. We will do this quarterly. We'll probably do like a whole year wrap up at the end of this quarter as well too.

Yeah, I was going to say it's going to be really interesting to see kind of how we go, where we go from here. Does everyone kind of go into holiday mode or do these deals just keep happening and we won't know until we know, but it doesn't feel like it's cooling down just yet, so we'll just have to wait and see.

No, it does not. I mean, I think in previous years there was a cooling season for VC funding in August and December. But the last two years, December's been hot. You've seen a lot of deals that close right at the end of the year or announced like January, 2, 3, 4. That's all happening in December. So I think, yeah, I think it will not cool down, especially as long as companies, tech companies are finding liquidity and exits, you know, so if there is fresh capital being created from liquidity, it's going to go right back into investing. So. Nope, I see.

I love it. What's your hot take? Are VCs cranky that they have to cancel their vacations or are they stoked that there's all these deals?

They're stoked. I think they're stoked for sure. We've already figured out we can work and play from anywhere in the world now at some point we'll maybe we'll try to say there's a separation, but I don't see it happening right now. Yeah, the capital, especially the piece we didn't really mention, I guess, and this is a whole other conversation, is how much new venture fund money has been raised that's got to get deployed. Like, you can't just sit there. So the more VCs raised, the more that checks they got to write. And if there's an exit strategy for these companies, which there is now, the hot market, then it's going to keep pushing ahead. So hopefully we have even more news for you at the end of this quarter. But hey, we do this every Friday on Clubhouse 1230, myself and Jonah from Fresh Brewed Tech. And you can also grab this on the Tacos and Tech Podcast Network. But today is the last day of San Diego Startup Month. We've been a blur, man. There's been content like every day. And I got to watch the demo night last night. I was just so impressed by the 10 companies to see how they've progressed over just four short weeks. Get a chance to meet them today. This afternoon, Friday the 29th. San DiegoStartup Month.com. that's the last event and it's in person and you can get a discount, 50% off if you use Bloom50 for your discount code. So hopefully we will see some of you there. I know we'll see Al there, we'll see Sasha, Mike, you're gonna be there.

James, Cam, definitely, definitely, definitely grab a ticket if you can use use Neil's code. Give him some credit. But we're at the Founders Institute, meet up last night with a bunch of the mentors in the group and it is just so awesome to be back in person. It's great, great to see you, Mike, but it's just good to kind of have that interaction and I'm kind of itching for it. So we'll see. You know, I look forward to see.

Tonight they're announcing the Startup Awards. We've got some nominees in the room. Al is up for Investor of the Year. Love to see it. Up against a few others, but there's Startup of the Year Impact Player of the Year. There's I think a legacy award for startup impact in the community over a period of time. So come out and see and support your startup community at San Diego Startup Month. We will see you there. Jonah.

Yeah, Vote for us for San Diego Podcast of the Year.

Best taco related tech podcast of the Year. That's right. Carve it out. Be specific. You always win.

Oh, that's awesome. Well, hey, happy Friday. Happy Hollow weekend. I'm stealing the joke back and hope to see everyone this afternoon. If you're listening live today.

Cheers, everyone. Take care.

See ya.