This Week in San Diego Tech News - Nov 14, 2023

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Hello. Welcome to this Week in San Diego Tech News. I'm your co host Neil Bloom with Fresh Brew Tech, Tacos and Tech and Interlock Capital. And this is my co host, Mr. Fred Greer. Hey Fred, how you doing?

Hey Neil. Happy Friday. Doing well. Glad to be back on the podcast again.

Glad to have you here as well. Happy Veterans Day. Thank you to all of our veterans who have served and made our lives safe and secure and better because of it. It's been a been a busy November. It always is. I feel like a lot of us are still coming down from Startup Week and even events that have happened after that. But times don't stop. We got some great funding news and some awards that were recently given out and some events that just recently happened and are coming up. So we will share all of that. But first our intros here. My name is Neil Bloom. Fresh Brew Tech is a tech newsletter about what's going on in the tech world. And the Tacos and tech podcast interviewing tech builders and in capital, a community focused early stage investment fund. And Fred, want to give your background.

And I'm Fred Greer. I'm a tech reporter here in San Diego covering San Diego startups, tech companies and venture capital industry. I run the newsletter called Business of San Diego Substack covering you know, the latest fundraisings and biggest tech stories. Happy to be here.

Well, let's jump right into some latest funding news. Company payroll integrations raised 20 million. Kind of coming out from obscurity a little bit here but doing, but having some big SaaS backgrounds. What do you know about their $20 million raise? I think you recently talked to them.

Yeah. So payroll integrations, they raised 20 million. I think that was a series A funding round. They're based in north county, founded by two co founders. One of them was the ex salesforce, the other one was a alumni of UC San Diego. So some San Diego ties here and they are creating a solution that helps business owners and companies manage their payroll and paying their employees. And it's speaking, speaking with the, the founders. It's really a slow growth story. They were bootstrapped for I think, I think nine or eight years. They were founded in 2016 and they work with some of the top HR companies in the world. So I think nine out of ten companies are the largest like HR companies. Like one of them is Manpower which is Senegal based. So really cool company and I'm definitely going to be looking, looking out for them now. They're on the radar and a few founders actually were circulating the news and Just it really was a good success story here in San Diego.

Yeah, definitely. It's pretty cool to see them. So this is their first raise. They're coming out of bootstrapped for years and now first raise, coming out with $20 million raised. Kind of took a while to get the business up and running. And now they're ready to supercharge it, which is a great story, kind of a very San Diego story, to be honest. Our companies, I feel like, are resilient because they go and focus on building a good business as opposed to just, you know, raising tons of capital and burning it, trying to figure out the business.

And that's what he said. He didn't want to raise too, too many funds. He said they're going to have a, you know, a reasonable growth. And this is for this funding, allow them to reach that scale. But they didn't purposely try not to over raise for this, for this round. Got it.

Well, speaking of bigger rounds, and we kind of previewed this before Shield AI completed their $200 million raise. I know we talked about it kind of. They announced that they're in the middle of raising. They had raised, they'd closed some of it and now they have closed the full 200 million. Series E. E or F. I think.

It was series F, series F4.

San Diego's largest private defense tech startup. I will say startup because actually General Atomic is probably our largest private defense tech company in San Diego. But they have been around 50 plus years. Shield AI is a software and hardware company focused on drones and autonomous software that runs the drones, including also autonomous software that now can actually manage and run like fighter jets, manned fighter jets, F16, 18 and others autonomously as well too. You put out a great article from the backstory of the three founders. What did you learn about the SHIELD AI guys?

Yeah, I was really inspired. You know, they raised this huge round. I wanted to understand, you know, the founding story, you know, how do they raise their first investments as well as, you know, are they going to IPO in the next few years? And I got answers to most of those questions. Thank you. To the PR firm or the communications professionals who help facilitate the interview. As you know, both the co founders are extremely busy. They've been featured in the New York Times as well as the information and other top media outlets. And so it's really cool to get the behind the scenes. But essentially, you know, in the piece we talk about, you know, Shield AI isn't the only unicorn tech startup. There was ServiceNow that was started here which is now valued at 120 billion. No longer a startup. Other tech unicorn companies are Drata, Seismic and Telium, which employ several hundred workers in the region. And this is a really a San Diego based story. One of the co founders, Ryan, I think Sin, or I don't know how to pronounce his last name. What was it?

Singh.

Singh. He sold his first company 13 years ago to Qualcomm and he worked at Qualcomm for three years working on wireless charging. He then teamed up with his brother, a former Navy Seal, to start a new company for defense tech. They flew to San Francisco, pitched 30 investors, 29 of them said no. They raised $100,000 and that got them going. Their first two customers that they got were government military organizations that were based here in San Diego. And so it's really cool that they found success serving not only companies here in San Diego or military organizations in San Diego, but they are now expanding Beyond San Diego, US and internationally. They have 625 employees. They're going to be growing to 7, 750. IPO is not, you know, on the horizon in the near future, but it's something that might happen in the next three, four years after they can, you know, kind of improve their, their sales. They were very open on the revenue. The revenue as well as how much money they're spending on things like lobbying against Congress. And if you're interested in learning more about that, it's all in the piece.

Yeah, we link it here in the show notes but you can also always go to businessofsandiego.substack.com Nice rebrand there, Fred. I like it. And something that we look at as an investor, this is some pretty good founder market fit. Meaning you've got, yes, two brothers, but you've got one who has built software and hardware companies before. He actually sold his first Qualcomm, then did a second one, a consumer hardware that was a device that allowed you to lock things in boxes to keep yourself out of them or others. That's when I first saw him. He was going through EVO Nexus with that and then abandoned it for the defense tech shield AI. So you know, repeat serial founder, their brother who is literally the voice of the customer from the seals. Some pretty great founder market fit as we, as we talk about here. So super exciting to see them continue on and I know you'll be putting up more content with them as well soon. Another interesting company and kind of another very San Diego story is a $5 million raise by a biomaterials company called Algenesis. They are trying to replace plastics with bio bio parts meaning algae and plant based to replace plastics. Kind of taking the idea of biodegradable and backyard compostable biopolyurethane from plants and algae. So this is I believe their first race and they raised 5 million from first Bright Ventures as well as circulate capital. And there's really, you know, obviously focus on replacing anything that plastics are used for packaging in that regard and I'll give you a few examples. So you know they're used in footwear in the midsoles and insoles. The footwear is the new place that their products are being used I think because of the breathability and the waterproof and ability to kind of injection mold. So they're actually even used in phone cases and other things like that. So seems like you know, variety of consumer related packaged goods here. So San Diego by the way, really one of the biomaterials hubs. There's a huge lab at ucsd. I think it's the night lab, I think that's the right one that is heavily focused on using algae and other sea bio. Sea ocean materials to see what can be used in kind of everyday packaging and other areas. Companies that have spun out that have created surfboards from algae and sandals. So pretty great to see one little sub domain expertise here from a research research and into a packaging or a commercial ability here. So keep your eye out.

Yeah. And just add on to that there's another company, I think Genomatica, they also create sustainable materials instead of using plastic. I think they work with Lululemon as one of the biggest apparel manufacturers. Also another food company that uses plants is Plantable Foods. It's a little bit different but it's just, it's interesting that you know there's biotech, there's kind of these companies that are changing using plants to develop different products. So super cool trend that we're seeing here.

Absolutely. Yeah. No, we can go on. And then the list goes on and on. Especially as I have learned in the, in the kind of ag tech space of just seeing all the, you know, materials that either come from waste products being reused. So there's a company upcycle using algae waste, spirulina waste, spent beer grains and biosolids to create a new soil amendment. So yeah, I think there's something interesting there from kind of like where the bio world meets the cleantech world if you will, if you call it that kind of clean tech materials in that regard. So keep your eye out there for sure. Well, we had a cool event this week. The Fast 500 list by Deloitte came out. It's a tech focused listing of tech companies, the fastest 500 growth companies. And we had 13 companies in San Diego named. I happened to be at the event where they were announced. We partnered with Deloitte to do first like a CEO, CFO, private event to talk more late stage. How do we get into, how do we find the right financial talent for the right time of a company? Meaning you know, based on what are the right stages where you need outside or inside or part time or full time really true financial expertise help. I'm talking contract CFOs, full time CFOs, controllers and all the, you know, service groups that help support that. So that was a great group. And we actually rolled right and we did a panel on you know, how from some people who had seasons exits, you know, how do we do it better each time. We rolled right into that at Deloitte's Office into the Fast 500 announcements for the 13 companies and it was pretty cool to see. You know a lot of these companies are pretty late stage. It's a companies that we mention a lot here like Trust and Will Sochi Cloudbeds. You know, we've been talking about them for a while because they've been, they've been at it for a while and growing, continue to grow. And obviously the later you are typically you're growing either faster or you're just on a lot more people's radar. So it was cool to see the founders of those companies all coming together and being announced there. I'm trying to pull up the full list here. Do you have it in front of you Fred, or you want me to get to it?

You can pull it up but I just want to add that the Fast 500, you know, it's really highlighting these are the next Fortune 500 companies, the next decade. It's, it's really incredible the data they have on these companies so they're able to, to talk about their growth percentages. A lot of these companies are growing at a thousand plus percent and there's a number of San Diego companies on that list specifically in tech as well. And so people say San Diego is just a biotech hub. No, we also have tech and consumer that are growing extronically.

Yeah, so I mentioned some of them like Sochi and Trust and Will cloud beds cordial. You know, look at anyone who's raised a series D or later recently series C or D and you know you'll recognize a few of these including platform science on there as well too scientist.com and a few other biotech companies as well. So we'll link to the full list in the show notes. But congrats to all the teams there and thanks to Deloitte for hosting us for a fun event kind of wrapping up our recent news. My own fund, Interlock Capital, we've been at it three years. We started as a deal by deal kind of syndicate investment, meaning we would when we would find a company that we could properly assess, we would invest as a group. But just into that deal and only a year ago a group of people within in our Interlock Group said hey, I want to be in every deal. And we started our first fund and so we just raised a small amount first time and started deploying that and we've actually invested in 12 companies just in the last year alone and we're gearing up to do a last call to join Interlock. So we're doing a webinar next Tuesday, November 14th at 12pm Pacific to introduce everyone to our portfolio. So it's kind of rare that you get to invest in a fund I feel like, and you get to actually already know the companies you're investing in, about half of them I would imagine. And there's already three of them that are marked up like they've had feature follow on rounds. So they're actually higher performing. We already know the performance is up on some of our investments and you get to buy into that. So we'd welcome anyone with interest there, especially with an operator background to come check out the webinar and if you something of interest Santa Loc, we'd love to have you so link there in the show notes. You know, thanks for the shameless little plug there. Let's jump into some other events and happy to say, you know, events part in partnership with our our third amigo here sometimes Jonah Peake started his own newsletter called the Social Coyote, putting out a weekly newsletter on Beehive for what are the tech events to watch in San Diego. So we linked to his his full event listing. For the next one to two weeks there we'll read a few of them from it. But most recently last week there was the 7ctos0111 conference that went on that in fact Interlock Capital co hosted opening night at Snapdragon Stadium alongside SDSU's Mission Valley Innovation District. Thank you very much Hala and Kathy Poucher for hosting us at the beautiful stadium as well as Seva Solutions who helped bring us together for that. And Fred, it was good to see you there. Did you get to run into a whole bunch of technical CTOs at opening night?

Yeah, I talked to a lot of different folks, whether they're technical folks at startups, talked to a few bankers. It was really a lot of different people. Even some investors were there. I really enjoyed the Snapdragon tour that was was offered to the attendees as well as the conference that was held in downtown. I think at the Hard Rock. They brought some great speakers. I think three of those were from fast growing startups like personal AI for example. And you know I heard the feedback from the the conference was really valuable and I'll be doing a recap on that going out shortly next week so stay tuned for that.

Yeah, some great speakers including Arjun Bonso. It sorry about that hiccup there. As I was mentioning, arjun bonsol, serial AI founder, gave a talk from log 10. So awesome to see year seven of 0111 conference by seven ctos and we were yeah we were excited to be a part of that as well with Interlock Capital. Another event that just happened that has been going on for a long time, nearly 10 years is the San Diego Tech Coffee. It has spurred a bunch of different geo based, sometimes weekly meetups. I've been mana I remember as much as 10 years ago going to the downtown one that used to happen in One Broadway and it's back this week. Paul Pui, founder and CEO of Edge was nice enough to host it at his location. So look for the downtown Tech Coffee as well as others in Believe Del Mar and even further north maybe like Rancho Bernardo. So and then I think there's even one kind of a little east along the eight too. So keep an eye out. We'll link here as well the San Diego Tech Coffee meetups that happened as well as this North County Tech mixer put on by Hussein Yousafi started a monthly Encinitas Leucadia area monthly meetup I think at the Leucadian which has been cool to see. So getting getting some more north county vibes from a lot of not just founders but tech people. And let's go into some events that are coming up here. You want to talk us through the Home Lab event coming up at UCSD next week.

Yes. So there's a home Home Lab event happening which is biotech based Focus where they're it's accelerator programs, a new biotech accelerator program led by ex biotech founders. One of the guys is Julio Anumano and he was the founder and CEO of Lab Fellows. Of Lab Fellows. So it's pretty great story of what they're they're doing. They're trying to bring together the life science community to create new biotech startups. A lot of the most successful startups in San Diego that are in life sciences start in the lab. They are founded by researchers and are funded by UCSD and it's spun out into companies. And so this is kind of an event to bring together folks to learn more about the biotech accelerator program. So that's happening November 16th and the link will be in the show notes.

Awesome. Yeah, it's been pretty cool to watch Lab Fellows iterate as they started kind of as like a co working space for Lab and now have been really tapped to be bio incubator managers but also investors as well too. Kind of helping even schools like UCSD not just incubate but also invest in the right companies there. So congrats to Julio and team. Another event happened next week I know that you're a part of San Diego Tech Hub is putting on their monthly mixer and in Carlsbad on November 14th San Diego Angel Conference which is a six month long process. So right now they're between now and the end of the of the calendar year they're focused on helping kind of education for startup founders. So they're doing pitch deconstruction on the 14th. Applications I believe to be in Sano Angel Conference are due by December and then come January they switched to really training new angel investors through the diligence process and all culminating in an April event that should be great where they hand out you know, hundreds of thousands of checks that are actual investments. A few of the things happening standard tech for good end of year mixer. Also the November 14, November 15 Sanito Regional EDC is putting on a kind of a talk on the future of talent, both bringing together employers and the higher EDS that are training our future talent pools for sure. CTO Talk San Diego are doing a talk on the their monthly Talk on the 16th which is always fun with our Arcus Nexus crew there coming up from Tijuana and I believe the next speaker is Krin Vanderaat which is awesome. He is a deeply experienced CTO so he will have a lot to talk through at next week at the CTO talks and SDX Hacker Club doing hacker club number six Sunday November 19th and Real Talk with diverse founders navigating the ecosystem is coming up in the week of Thanksgiving. So just to give you a few things a few out there. You can always check out the socialcoyote beehive.com linked here in the show notes a lot going on, Fred.

I'm excited.

Yeah, people I think people are going to go right through Thanksgiving working, working hard because you know there's a lot to do and people are finding value in the connecting that's for sure. We're seeing more and more of people asking not just for general networking but more expertise curated, you know meet the people that you're trying to that you need to know now which is great to see. Well that's our show this week. Thank you for joining us. We try to put this out weekly so keep an eye on the tacos and tech podcast for this week. Incenny of tech news, I'm again your co host Neil Bloom, Fresh Brew Tech and in all capital and Fred Greer from the business of San Diego Substack blog. Fred, thanks so much.

Thanks Neil. Always a pleasure.

Cheers.

Cheers.