This Week in San Diego Tech - January 2, 2025

Welcome back.

Happy new year. Happy 2025. What is up, Fred?

Hey, what's going on?

Neil, it is good to see you. Happy New Year. How are your holidays?

Happy New Year. Yeah, I'm glad to be. Glad to be back, have some time to rest and recharge and excited to be back in the. In the mix for 2025.

Yeah, feels good. I was a little sick throughout, but still was working. Pretty much took a pitch a day from a founder and Al and I were busy working on. Maybe we would have closed out one more investment before the end of the year. But now we're, we're excited to get back into it fully the full year, full of events. You and I are already working on our event schedule for the year, which I'm stoked about, so there is a lot to. A lot to dive into. Another busy year. Let's just jump right into it.

Startups get the party. Startups get the party started.

You want tech and tacos, Tacos and tech, you know we got tacos and tech is on smash for the green guacamole Keep accountants counting beans Contador Quentan frijoles Founders trying to raise some queso la vida San Diego school of rappy rapping paella tortillas round jalapenos in these modern times a craft beer and coffee My coating yoga posse fold the body origami we be surfing Coronado eating tacos el gordo the tacos standing puesto lucha libre and sombrero Got a shout out to angels by the ocean Watch the sunset La Jolla shores Entrepreneurs trying to get funded when San Diego Startup Week is popping in the summer Oceanside to Tijuana SD be full of hustlers from couch surfing to penthouses right on the beach Tech leaders who believe stars are within reach. We interviewing founders who be shooting for the Moon SD TechOS with your host, Neil Bloom. Come on.

Startups get the party. Startups get the party. Startups get the party. Startups get the party started. Startups get the party. Startups get the party started.

You want tech in tacos, tacos in tech, you know we got it.

Hey.

Startups get the party. Startups get the party started. Startups get the party. Startups get the party started. Startups get the party. Startups get the party started.

You want tech and tacos, Tacos in tech, you know we got it a.

First. I'm Neil Bloom with Fresh Brew Tech and the Tacos and Tech podcast and in Capital, a San Diego based investment fund.

This is Fred and I'M Fred Greer, startup journalist here in San Diego. I write about some of the biggest stories in San Diego tech and venture capital and excited to be back talking about the biggest headlines and news in the ecosystem.

And you ended the year on a story of all stories to talk about the full story of all venture capital that came into San Diego last year. It showed a 6 billion plus venture capital investment into San Diego, which is quite an up, I would say, over kind of our five to 10 year average. Yes, we had two big years during COVID 2020, 2021, but it looks like we're, we're still increasing year over year from the year before. Take us through a little bit about what you put out in this report that we had linked in the story. Sean Notes.

Yeah, I'm really glad that we, we do this every year. I mean, if we look at some of the top tech hubs, they always have recorded the reports on how they're doing from an ecosystem perspective pulling in venture capital dollars. And it really started, I think, when we were at the Business Journal a few years ago looking at, hey, how is San Diego doing from a venture capital perspective? And this year, if you weren't in the mix, you probably would have thought, hey, maybe it's been a really tough year for startup funding. But the numbers show that it was actually a pretty strong year. We ended the year with 6.6 billion in venture capital funding for senior companies in 2024 that included tech, life, science and consumer companies. And we saw about 20 startups raise mega rounds. Mega rounds are classified as 100 million or more. And this data was collected through Connect, which is a local nonprofit that supports early stage startups, connecting them to investors. And yeah, the report just kind of really looked at what were the biggest deals done in San Diego. So something that stood out was viewer clothing. They raised this round in Q4 this year. Now they raised the largest round on record, it was 825 million. And then we also have some mega rounds in life sciences. Mirador Therapeutics, which emerged from stealth earlier this year, they raised 400 million. And then Candid Therapeutics, founded by former Raisey bio alums, raised 370 million respectively. There's about 161 deals in 2024. So it was pretty active among both tech and life science and even consumer. And we were kind of talking before the podcast about how, you know, some people commented, I believe someone from Wildfire Systems, which local tech company here, they're like, hey, how much, how much was that biori deal was 825 million, 12% total funds. You know, is San Diego still on par with other without that deal happening? And I think, you know, you might have some perspective to this Neil, but it seems like we're pretty healthy from tech, life, science and consumer and we're seeing these mega deals get closed today.

Yeah, it was a good, it was a good call out by Sean Kanahan on, on your LinkedIn post. You know like yes, of the 6 billion, maybe a billion was by a one big consumer brand. That's not just a San Diego thing. That's happening globally right now. That's happening everywhere. All the late stage companies are staying private and raising massive rounds. Go look up and roll. Go look up data bricks. Go look up. Some of these companies are raising multibillion dollar rounds and then get counted for their city. Right for. So I would say it's not a San Diego only thing. We should treat all the private VC investments equally across every city and compare and contrast ourselves. How are we doing globally? All of our companies are staying private for a variety of reasons. There's not a good M and A environment. The stock market is not showing, you know, a ripe IPO market and therefore for all private companies to stay private they need huge gobs of private capital. But by the way this is if you actually look at VC trends over the last 10 years this has been an ongoing trend every year except the two peaks I would say of 20, 2021. There's always less deals but yet more investments into the later stage deals. So it actually gets pretty concentrated every year, year after year. I would say looking back at 160 deals actually feels really healthy comparative to years past. Feels like we actually have more volume wise deals happening which is great. Some of that is exits actually happened in the biotech world that we've been tracking and those founders are going on and starting the next company right away, the Mirador and a few of these other companies. Great sign to have an exit and in less than a year have the founders go start their next company with millions if not hundreds of millions of capital for the next company. So these are really good trends and really good signs and I'm really impressed that we're staying up there in the 5 billion plus area as an ecosystem even if it is to our late stage companies. What that means is and there was some other good comments in your LinkedIn post and we should link that post because it was a really, you know, we love the discussion that's happening around this. How many are going to early Stage, you know, pre seed seed and series A. We should be tracking that and seeing are we at least flat if not increasing the number of deals at the earlier stages because that is going to fuel our late stage big checks. Right. Like a $1,000,000 pre seed is going to never even show up on a $6 billion year. But the precede turns into C, then A, then B. So we need to keep filling the top of the funnel. So we should continue to look at that data. The same was another question was how much capital, how many VCs invested into companies. Right. Also a good data point and, and doesn't hurt for us to go and grab that data on the podcast, do a little bit deeper dive on that too. The same I'd want to look at is how many the deals in local investors participated in, you know, how many versus outside. Right, I'll share. We actually put out our numbers on interlock. We made 11 investments in 2024 into nine companies, which meant two of the companies we wrote two checks into. Of the nine companies we invested in, seven were in San Diego and all nine were in Southern California. So for us that's quite a lot within a year within all in our backyard. In past years they've been a bit all across the country. Last year, all Southern California, almost entirely San Diego. Hopefully that, you know, we start to see more local investing in local because there's good quality deals and good quality founders to invest in. So all really good, good numbers here and we'll keep dissecting it and keep sharing it week over week because that's what we love to do is not just, you know, share data, but also do the analysis and the trending that's happening with it. So thanks Fred, for putting out a great report. We've got it linked in the show notes here as well as Fred's LinkedIn post. We'll, we'll share as well, so you can keep the conversation going on that for sure. So here's to another hopefully good year starting off with more fundings. One of them we want to highlight here, Janx Therapeutics. This is actually a public biotech company that's raising additional capital. So they're raising another 350 million in a public offering. This is data that doesn't show up in the VC report, by the way. So most in my reports I've always done. I know Fred, the same, you know, when you get the data that says post IPO equity as a tag, we don't include that. And the same you'll find that the Same in other reports out there, whether It's PitchBook or EY, you know, that puts out this data. But we thought it'd be interesting to call out just that local biotech is raising that amount of capital. Maybe we, we highlight how much extra capital is being invested post ipo. I mean, you think you're done once you've gone public, but what that actually means is you have access to a lot more capital. And so you'd be surprised how much capital is flowing into public companies as well too. You know a little about Janx. You want to share anything about them?

Yeah. So the business owner did a great piece on them or highly recommend checking them out. We'll hyperlink it, but Gen X nets 35050 million in their stock sale, their share price spikes following new clinical data. I actually covered them a few years ago when they did a $1 billion deal with Merck. Fun fact. They were started in Avalon Bio Ventures, which is a local biotech incubator. They've been around for 40 years. They spun out that accelerator program. They have about 70 employees. And yeah, they've been growing ever since they were founded in 2017. And it's great to see them continue to find success, not only privately being started by local investors, but now graduating and being able to raise additional capital in the public markets. And we also had another startup deal, plano, they raised 25 million. I think it was a growth round founded by a former Illumina executive. So we will link that in the show notes as well. So yeah, we're seeing some, some life science, you know, activity, whether it's public investing and also private investing. Pick up a little bit here in, you know, early Q1, 2025.

Yeah, you know, the, the funding end of year into new year is always a little mercury of how you, how, where you classify it. But as long as it's consistent every year, you know, we can look year over year, but a lot of deals get done in 2024, announced in 2025. So you'll probably see a glut of deals get announced January, February, especially on the bio side with JP Morgan happening in the next few weeks. People are going to wait to announce during J.P. morgan, but that happens every year, like I said. So that will kick off the 2025 kind of funding year in that regard, which is great. We'd love to be able to show, you know, a really strong Q1 and we'll continue to share those news as well too. Some other fundings that came in holler hero this is a vertical SaaS on the industrial tech side. They are specifically in the in the trash truck business and industry building software to help track pretty much the whole aspect that that trash truck businesses go through here. I remember the founder moved from LA to San Diego during COVID I believe and so I got to know him pretty quickly once he had moved here. And his co founder's here as well too and they you know, raised this new seed round here. What do you know about Hollow Hero, Fred?

Yeah, I talked to one of the co founders actually we'll have a piece on it later this month. But yeah, I think you hit it on the nail. They moved from la, moved to San Diego and one of the co founders was early to Service Titan. Service Titan had one of the first tech IPOs in the last two years. Made a lot of headlines. Service Titan was a leader in actually a similar space waste management and other trade sectors. And so Holler Hero is focused specifically on waste management as he saw there was a growing opportunity in this space. He told me that he looked at I think about 10 different solutions and while they were all providing value to these trade waste management industries, none of them had a great user experience. And so they're capitalizing on it, they're growing fast. I was told that he races around actually in early 2024 roughly around in May or Q2 time frame and they announced it later in 2024 and I've heard that they've already have some funding for interest for another follow on financing round. So that signals that they're doing well and it's great to see some tech deals finally go through the pipeline. Keep an eye on them Holler Hero. We will link them in the show notes.

Yeah, that's great. Especially here in the Service Titan connection. There's a bunch of other Service Titan employees here in San Diego too and working for San Diego company since there's a lot of of San Diego related, you know, building tech for SMB or industrial tech in that regard. And speaking of funny enough, another CEO in town, Luke Sofinos, CEO of Corski, he and I on Twitter bet each other one share of Service Titan on what we think how many IPOs will happen in 2025. So we'll link that in the show notes. My bet was I think it was 375 and he was over 400. I think the number in 2024 was 200. Some odds. So we both are really, we both felt it's gonna be a lot more than 2024. I didn't think it was gonna be double, but he did so count. We'll check on us a year later. How many IPOs happen? I'll link that in the show notes so that you can keep and hold us accountable. So shout out to Luke on that bet, which I've already purchased the share of service site and I'm already sitting on it. So it also is an investment. Let's see. Hopefully that the share is higher or lower a year from now as well too. When I hand that, when he hands his share over to me. I hope he's right. By the way, I hope we do have hundreds of IPOs this year. It'll be great for everyone to have that kind of liquidity. One last funny news here. More of a grant win for UCSD incubator called Start Our Blue Start or Start Blue I think as it's now known. It was originally started within the Rady School Start our program and they brought it to the Scripps School of Oceanography. I was actually a mentor in the program the first year in Covid in 2021 and they have won a $13.5 million grant award from the US federal government from NOAA no Pay. The national oceanic and Atmospheric Administration gave them an Ocean Enterprise Initiative Phase two grant to grow their accelerator programs focusing on small businesses and entrepreneurs seeking to commercialize ocean coastal and lake based observation technologies. So this is great to see for them because the program really does have a big impact. It's kind of anyone loosely related to the blue economy, which is a huge aspect of San Diego from science, defense and everything in between. So congrats to Vanessa Scott who is the director of Start Blue, the Ocean Enterprise Accelerator, and looking forward to seeing the expansion of this and more startups in this space. And let's jump to another story here. We have a story here about Teradata and Amazon. So if you know Teradata, you probably have heard of the brand, but you probably didn't know they actually were based in San Diego. They actually moved their headquarters from Ohio to Rancho Bernardo area a number of years ago. And they are specifically a software cloud technology company. I believe they're a public company and they just announced a big partnership with Amazon, specific focus on generative AI. Fred, you dive into this a little bit deeper.

Yeah, I didn't get a chance to read the Teradata Amazon article. I do know that Teradata is one of the larger employers locally and Amazon also has a growing presence in San Diego. It's great to see their focus on gen AI. I mean obviously it's a top of mind hot topic in 2024 and I think it will continue to be an investment going into 2025. Even Qualcomm is going all in on AI. So I'm not surprised to see this partnership.

Yeah, so it's a big partnership specifically between AWS and Teradata's analytics platform. And so it's just a further integration, specifically accessing more generative AI tools, specifically like functional models that Amazon has. So Amazon is actually not talked about as often as you know, the Geminis and Llamas and chatgpts. But you gotta imagine they're building some massive models there too. Since most of almost every company is sitting on AWS technology. Their platform is called Bedrock and so their models connect and have kind of connection to Meta Stability, Mistral AI as well too. So kind of more of partnerships, spinning of webs between technology companies and better access to everyone's different models here. So good to see in that regard to you know, blue chip companies spinning up a partnership there together specifically in general AI on more of the aerospace front, which you know, has got quite a bit of background in GKN Aerospace announced an opening of a brand new facility which I know actually our friend Dave Imelda from JLL has been working on for a long time, specifically repurposing a facility which I think used to be like a golf, a golf club, right. That is now a multi building property for an aerospace company to spin up operations. You know a bit more about this one, Fred?

Yeah, the Business Journal did a great piece and they interviewed one of the CEOs of GK and Aerospace. He said they're aiming to grow their business, I think 50% versus today. You know, they're looking to grow their top, top of the line revenue. And this expansion is to make sure they stay at the forefront of the of the business. Their aerospace, they have about a thousand employees. They were founded in 1953. So one of the older companies in San Diego and they're based in El Cajon. So it's great to see this expansion. We also have some other news of relocations. You know, here we also talk about, you know, what companies are moving around in San Diego. Hero, I think, I think Heron Therapeutics, the UN Tribune did a great piece. You know, it's unfortunate to see that we're losing some big pharma, but Hero Therapeutics is moving their headquarters to North Carolina. And so in addition to Cape JK and Aerospace expanding in this new facility, we're also Seeing other companies relocate and Hero Therapeutics is another company that we're losing, unfortunately, that's bummer.

See, I mean you see them going to the Research Triangle, which is a huge biotech area, so not necessarily surprising to where they're going. It's just a bummer to see an executive team actually move. You know, we kind of say it a lot, who's going to leave San Diego personally. Right. And to see it, you know, I want a good question. Just understand what, why and maybe it's because of access to a customer or something like that. But you know, bummer to see them lose. We obviously wish them well. Hopefully some, maybe some employees don't move with them and stay and stay with some go to some other San Diego companies that are hiring because of the their new rounds that they're raising as well too. But yes, we want to report on everything that's happening here, that's for sure. Those are the news that we got especially here on, you know, Thursday or Friday right after New Year's, depending upon when this is going out. There's definitely already events happening standing a founders hike first Friday of each month. It's gearing up for its first hike Friday morning, 6:30am at the glider ports. We, we did 12 hikes in 12 months last year which was awesome. Had hundreds of people come together. I'm looking forward to doing another year of that and I'm sure I'll see you out there at some point too. Fred. Yeah, next week is CES already. It starts I think Sunday or Monday. I'm actually potentially flying out for Tuesday's events. Gonna be doing some stuff with C Comp, which they're doing a bunch of hard tech IoT and consumer electronics events. So I'll be there I think Tuesday, coming home Wednesday. So if you're around, let me know. That'll be my first CES. I'm going to try a fly out of Jet SuiteX out of Carlsbad just because I like that flight so much. But next week CES and hopefully we'll see some San Diego's there too. The week after is already JP Morgan Healthcare Conference, 13th to the 16th. I'm sure a ton of you are going to that. And then right at the end of that week is TechCon SoCal January 17th and 18th. We just put out a tacos and tech episode with the founder of techcon Faisal. So go listen to that. Hear about his beginnings, why he's so interested in connecting Silicon Valley and San Diego. And I'm sure you've been seeing on LinkedIn. A ton of the speakers getting announced. We're just about to announce all the actual panels. We just, Faisal and I and a bunch of the organizers worked the last week actually putting all the panels together, which is a lot of work. A ton of deep tech talks. I think I'm moderating a talk on the future of food. There's a. A bunch of fintech talks too about crypto and bank tech and prop tech, which will be really good. It's a ton of autonomous vehicles, Lancy and Air. We've got a ton of military speak into that. The Defense and Innovation unit will be out there in full force talking. And then a ton of investors are coming to town from SF, LA, NY, both like all over bio. Deep tech, you know, I know Morpheus Ventures is coming out from la. Howard is coming out to speak. There's gonna be a ton of talks on investing in AI right now. You know, I know Menlo Ventures is coming and Social Leverage is speaking. So it's gonna be a lot of talks. Definitely look for that. I'll drop even a discount code I have in the show notes. So we'll see you all there. Also wanna give a last shout out, I think on a few episodes ago we, we did a call for swag. If you have swag. We, Fred and I are always out in the community. We're walking billboards, we'd love to show it off. And Trust and Will hooked me up with a really nice new jacket. So thanks to Cody and Daniel and the team that sent me some new swag. I don't think I've rocked my V bean swag yet, but also got some new Vandy Bean hat and sweatshirts that I love as well. Shout out to Teal and the team there, but we gotta get Fred some, some ice here as well too. So send your boy Fred some swag as well and we'd love to see it. We're so stoked for a whole year of man elevating the ecosystem, connecting us and continuous on our journey to greatness here. Fred, you got any last words here for us?

I'll just say thank you for supporting us. You know, it's. We can't do this without the community and it's great to see, you know, just a positive reception to the podcast, the content we're putting out, seeing people at events. So thank you for supporting the podcast and yeah, follow us on our socials on LinkedIn and Twitter and substack and yeah, see you out there, Neil. Looking Forward to the founders hike tomorrow as well as you know the ces, JP Morgan, techcom. There's something for everyone. Tech, life, science, consumer. Get out there. 2025 will be a great year.

Yes, it will be. Absolutely. And excited to see you out there as well. And you too, Fred. Thanks again. We'll see y' all soon. Cheers.

Startups get the party Startups get the party started Startups get the party Startups get the party started.

You want tech and tacos? Tacos in tech you know we got tacos in tech is on smash border green guacamole keeper countins counting beans Contador quentan frijoles found us trying to raise some queso la vida San Diego school of rappy rapping Paya tortoise round jalapenos in these modern times a craft beer and coffee my coding yoga posse fold the body or a we be surfing coronado eating tacos el gordo the tacos standing puesto lucha libre and sombrero Got a shout out to cost angels by the ocean watch the sunset la hoya shores Entrepreneurs trying to get funded when San Diego Startup Week is popping in the summer Oceanside to Tijuana estate be full of hustlers from couch surfing to penthouses right on the beach Tech leaders who believe stars are within reach we interview and founders who be shooting for the Moon SD TechOS with your host.

Neil Bloom Startups get the party Startups get the party started Startups get the party Startups get the party started Startups get the party Startups get the party started started.

You want tech and tacos, Tacos and tech you know we got it hey.

Startups get the party Startups get the party started Startups get the party Startups get the party started Startups get the party Startups get the party started.

You want tech and tacos, Tacos and tech you know we got it hey.

Sam.