This Week in San Diego Tech News - Sept 4, 2024

And welcome back to this Week in San Diego Tech week news with Mr. Fred Greer and myself, Neil Bloom. Hey, Fred, how you doing?

Hey, Neil. Doing pretty great. Good to be back talking about the biggest news in San Diego Tech.

Yes. Couldn't be doing it in a better time when feels like it's just getting busier and busier right now for us. We're recording this on a Wednesday after Labor Day and, you know, feels like it could be Friday or Monday at any given time for us. You and I are both running around the city either putting on our own events, going to other people's events, meeting new people who are new to town. So it's a busy time and we love doing it, that's for sure. Well, I'm Neil Bloom. I run Fresh Brewed Tech, the Tacos and Tech podcast and Interlock Capital, local investment firm at the earliest stages. And this is Mr. Fred Greer.

And I'm Fred Greer, senior reporter at San Diego Business Journal, also the founder of business of San Diego Substack, a newsletter that highlights, you know, CEOs and investors in San Diego. And excited to be back to share some of the biggest news this week.

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 keep accountants counting beans Contador Quentan frijoles found us trying to raise some kids Queso la vida San Diego school of rappy rapping fire tortillas round jalapenos in these modern times a craft beer and coffee my coding yoga posse fold the body origami we be surfing Coronado eating tacos el gordo the tacos stand in puesto lucha libre and sombrero Gotta shout out to coast angels by the ocean watch the sunset La Jolla shores Entrepreneurs trying to get funded When San Diego Startup Week is popping in the summ ocean side the Tijuana St. Be full of hustlers from couch surfing to penthouses right on the beach Tech leaders Tacos.

In Tech podcast where we interview tech leaders in the San Diego tech ecosystem. We also read the latest techniques on this Week in San Diego Tech News. Follow us and subscribe online to your favorite podcast network. And we love to do it. We always start out with some funding news. There's been some early stage and some late stage news. Teach2Me raised a $5 million round. Do you know the Teach Me team yet?

Yeah, one of my colleagues, Divistron did a great piece. I think they raised 5 million. Think it was seed finance. You had a chance to have to interview or talk to the founder. He's a pretty young guy. Founded multiple companies. What can you. Did you get more details on?

Yeah, I got to meet Nick o' Brien who just in the last week president and COO and co founder of this online education company. They're actually a marketplace for finding in person lessons. So they've started in sports and you know, it's kind of like take lessons kind of has this vibe to it which I have some news on as well. So it's kind of cool to see a new marketplace for learning new things and they're very focused on in person. I think they learned very quickly in their early validation days that online lessons, the people fall off, they don't pay attention, they get distracted and then they stop taking lessons from the coaches or instructors. So they've gone to an online marketplace for finding only in person lessons, which is pretty cool. They launched I think market by market and sport by sport. So they really only got a few sports right now and a few non sport areas. So you know, it's cool to see them growing here in San Diego, especially at marketplace in the lessons space. I mentioned takelessons, that is a legacy online marketplace for learning as well too that was acquired by Microsoft about three years ago. I think Stephen Cox sold the company for about 100 million at that time. And actually unfortunately the news on takelessons, two weeks ago Microsoft shut the company down. So while a long stalwart of San Diego, takelessons wise and had a good exit. You know, now apparently there's room and space for a new one to come through and maybe that could be Teach Me two. So wishing the Teach Me two team well and congrats on your recent funding raise on this next one. I think we ought to sound the alarm. We have a tech company going public. Events.com is going public through a SPAC. We constantly talk about the lack of public tech company in San Diego and pretty cool to see one see what happened here. Do you have the scoop here on events.com going public?

Yeah, the scoop I remember seeing at events.com they had an office right in La Jolla Cove. Yeah, they had a pretty successful SPAC. I think they raised like 314 million. Yeah, they have over 100 employees. They're a standing based company found in 2009. And you know, some companies that came that went public via SPAC in the past, you know, come to mind, are like manscaped. Too simple. And it's interesting, it's interesting to see that, you know, tech companies seem to take this route because SPAC is not a traditional way of going public. But to see that it's successful exit. We're raising capital via public markets. I think it's a good sign. I mean last year we didn't see any tech companies go public. So hopefully this will open the floodgates for more maybe seismic or Telium and other more mature companies. But Events.com is, yeah, they have a long history in San Diego and yeah, the CEO was Mitch Strower and so the Business Journal did a pretty good piece if you want to check that out.

Yeah, no fingers crossed on more companies following their lead. But Mitch is a long time events tech builder. He was actually one of the co founders of active.com and we actually wrote a 10 piece story on the history of that because there was a few companies that kind of came together to create active.com for fresh brew Tech. And so this is kind of a repeat for him. He's kind of building the next great events platform and, and so yeah, check out that Business Journal article. Congrats to Mitch. And I know there's actually a bunch of local investors who have been in this company for a long time who are also standing to gain here too. So we do look forward to seeing the kind of recyclability capital that will come from this. Stay tuned and we'll keep you posted on how the SPAC listing goes. It is under the New York Stock Exchange under RSVP if you'd like to add it to your San Diego index that maybe some of you have. All right, let's round out the the funding news on some new Carta data that came out. Carta, who's been really putting out some great data quarterly now. And I know you're commenting a lot on it on LinkedIn on a few different people who've been posting. They posted a stage by stage. So precede seed Series A, Series B and the top 10 US metros of fundraises over the last. I think it's, it was a set period of time. It was a year from Q3 2023 to Q2 2024. And you know the good news for San Diego is that it's a top, it's in the top five for Series B and later funding coming in at about 1.985 billion. So almost 2 billion in funding for Series B and later. Great news, great news. Series a top eight at 458 million around that too. Let's take that in chunks. What was your kind of take on this here from seeing this, this news out on where San Diego stands here?

Yeah, I would just say, yeah, shout out to Carta. They have great, great data, real time data on what companies are raising and they have a certain period when they look at this. I believe this was what, 20, like early this year to up to now. And you know, San Diego was yeah, top five for series B funding. To me this says that companies that are more, you know, more established late stage are able to raise additional capital. But you know, not in the top 10 was early stage farming. That's pre seed and seed. And I think that's pretty close to the data that we're seeing from Connect and others, other databases. I'm not seeing a lot of major seed rounds. We had sidebar.com, they raised a pretty large 13 million seed round. But there really hasn't been a large amount of volume of companies raising at this pre seed and seed level. Maybe that's what you're seeing about capital, Neil. But then I'm seeing more established companies raise B, Series C financing, Series D. We have SHIELD AI in that category. So it's kind of across the board but it's kind of not great to see that from tech. There needs to be more funding in the precede stage and we're just not seeing it today.

Yeah, I think I have two takeaways from this one. Globally, like all venture capital, there's. So there's been this constant Trend Almost for 10 years now of companies staying private and therefore the later the company, the more capital that they need to stay private. Right. Cause there hasn't been this exit. So that's been a global trend. And that part makes sense, right, that our later stage companies require more capital. Right. Like Shield requires 500 million now to stay private. It can't do a $15 million raise. Right. So that part affects San Diego's numbers in that yes, our total VC dollar looks good, but. But it's less and less number of fundings. Right. So big number, less total fundings. So volume is down, which is also a global thing. But I think the part that jumped out to me here is that there were a number of cities. If you look at the top 10, most of the cities are in the top 10 for all of the rounds. Like San Francisco is number one from pre seed all the way to series B. Not surprising. New York, same number two from pre seed to series B. And then you start to see some bouncing around La Is, you know, number three for pre seed, but number five for seed. The problem is San Diego. Yeah, it's just completely dropping off. So while we have a lot of late stage fundings, we have less Series A and then we're not Even the top 10 for seed and pre seed, which means we won't eventually won't have, we won't be in the top 10 for series Bs as well too if we have less and less fundings at the earliest of stages, meaning we need to fill the top of the funnel. We need to really focus on getting as many early stage fundings happening so that the rest of the funnel is robust. And so that's my takeaway from this. It was, it was an alert to me that just said, look out. You know, like we shouldn't be just posting, hey, we're doing so great at getting this kind of funding, we should be breaking it down and saying, hey, we're good at late stage, but we really need to put the support and resources around making sure our early stage companies get the funding that they need. Otherwise there won't be an ecosystem to support later down the road. So, you know, not causing an alarm, but we should all take action, if you will, from that data. But thanks again Carta for sharing that. And the graphic by the way, is in the show notes here. So make sure you look at that graphic. It's pretty apparent once you see that there. Let's talk about some other later stage companies. Actually one of our, I think unicorns here in town. Sochi had some news about hitting a pretty big revenue milestone. You want to dive into this one, Fred?

Yeah. So Sochi is kind of a marketing tech company. They were founded in 2012 by a thief, Corey, who, you know, had a lot of different jobs before founding his company. He was an attorney, he worked at a lab in ucsd. He also had a couple businesses of his own. And you know, he started this company with the idea of helping large multinational brands manage their social media platforms. A lot of times they have multiple social media pages and, you know, different target demographics that they need to market to. So they created a one stop solution to help brands, you know, reach their customers. You know, when I talked to him, he said they were started in an accelerator program, Evo Nexus. When they first started, the first customer came in and they had to ask all the other companies that were incubated in that same program to take off their signs. And so it looked like their company was really big at the time, but in reality they only had three people today, 12 years later, they now have almost 700 employees. They have over 700 customers, global companies that are working with them and they just crossed 100 million in annual ARR. And so it's pretty great to see the success story in San Diego. In my opinion, Corey is one of the most successful technology entrepreneurs in San Diego, founded in the last 10 years.

Yeah, it's so cool to see. We were in, I was in Evo Nexus during that time period. He came in I think three months or six months after I was in there. And I totally remember that. I totally remember the three of them played ping pong with them like, you know, regularly, daily. And I totally remember the things we had to do to help each other out as companies all in the same space. And you know, that's what you do as a startup founder. You hustle and you close the deals and you grow any way possible. And it's great to see them hit this big 100 million error milestone for sure. So congrats Afif, aloh and the whole team there. Great to see you doing it here in San Diego and keep going forth. I know you're nowhere done at this point for sure. But hey, just to call out if you want to go public, I think you should do it. So anyway. All right, let's talk some new products that are being launched that kind of the big biotech area. Dexcom announced a new direct to consumer product for the type 2 diabetes space. They are a glucose monitor that you wear full time on you that gives you real time glucose monitoring. And this is kind of the first product explicitly developed for the type 2 diabetes space. Fred, you know a bit more about this one?

Yeah, I would just say Dexcom is a leader in the glue closed monitor space and so it's great to see them continue to innovate and push the needle. I mean they did do some layoffs earlier this year, which we talked about. And you know, it's, I think for them to stay competitive they have to continue to put, you know, release new devices and new products similar to Qualcomm or stay competitive. So it's good to see that they have some, you know, momentum with this new, this new device.

Yeah, I think one piece that's also big for them. One piece that's also big for them is how it's being sold. So this is kind of the first time the fda, I believe cleared an over the counter product. So traditionally for any of their products you had to get it prescribed by your doctor and now you can actually you know, go up to a pharmacy and get their device and it will get covered by your insurance. So that's a good sign in that regard because so many people don't know what's going on with their body. And, you know, obesity is just kind of a growing, unfortunate area of healthcare. And this hopefully should bring a product that gives people data, that gives them actionable insights to go and do something about their health plan. So congrats on Dexcom in doing that. It's huge. And honestly, just for the San Diego diabetes tech community, which is really strong, the talent pool is so strong here. To be able to show an alternative path to market, like over the counter, like this is great for the whole healthcare industry. And I hope more San Diego companies gain because of that, because of breaking through that FDA designation. Let's jump over to a Quidel story. Another company that has kind of been hurt because it went, you know, so deep into the COVID diagnostics having a, you know, differentiate itself and diversify into other diagnostics. They put out a new product here and you've got the scoop on this one as well too.

Yeah. So, I mean, high level, quite l. They were, you know, they're American manufacturer of diagnostic healthcare products. Obviously during COVID they were the first company to create, you know, the COVID 19 oxygen test. And they, you know, were able to scale up a lot because of that, but then they had to scale back. Once coveted, you know, kind of passed through, they. They actually had a, you know, decline in stock. I think it's over. Down over 40 year to date. But yeah, they have some good news. Finally. They have a new product that got fd FDA clearance. Essentially. It's, it's, it's. I don't know the whole details. I'm actually going to be speaking to the leadership team later this week. But essentially it's, it's a new product that they're releasing that they got update clearance for. I believe it's one of the first that they have. I'm actually not too sure on the details yet, so I have to do some more homework on this.

No, all good. Still. It's just getting a 510k clearance is a big deal in this regard. It's an easier path than getting a drug cleared. But still, to be able to get a new diagnostic would be great to see. So Quidel lives another day in that regard, which is great. And hopefully another diagnostic that gives us more data about ourselves as well too. Let's jump over to the last story here. Another big tech Story more on viasat side they just hired a brand new CFO coming from Delta Airlines. Actually one of their big customers is coming over to lead strategy and finance Reviosat, which is a company that is also in the diversification mode. Kind of like Qualcomm as well too. It's been huge in kind of government communications and then just started getting into, you know, communications for other vehicles like airplanes and boats and trying to get direct to consumer as well too. Kind of going straight head to head with Starlink. So this is interesting news here. What's kind of your take from this hire Fred?

Yeah, for this hire I think, you know they're really trying to beef up their leadership team. They've obviously have struggled over the last few years with new competition with SpaceX, but they're one of the largest employers in San Diego. Bias that. And yeah, they have a pretty diverse business line and they create satellites, they have a telecom farm and others. So it's great to see that they have some new hires. So yeah, we like to talk about tech news, life science news, but also some of the movements happening in the leadership of some of our large companies in San Diego. So keep an eye out.

100%. Yeah, Viasat being a Carlsbad company I think been around since the late 80s. The actual, the original founder and CEO Mark Denberg actually came back to being CEO within the last year I believe just to kind of rewrite the ship if you will a little bit. Yeah, they've had some troubles in the past. Most recently one of their satellites, which is a multi billion dollar satellite, didn't fully get to orbit or I think it's one of its antenna rays didn't open. Something actually that was it more or solar panels. And then they actually sold off part of their defense business to L3Harris in the last year as well too. So you know, just a big employer, big technology provider and big booster to the region. Honestly, like they really are just like a Qualcomm in terms of how they give to the community as well too. They've been very involved in Evo Nexus actually, which is how I first got to know them and so we hope their continued progress only grows from here. So thanks for tuning into the news. We've got a few events that we like to highlight here, especially ones that Fred and I are going to either be, be at or putting on ourselves. The full listing of events we always pull from our friends at the Social Coyote and then a few coming up this Friday is my San Diego Founders Hike. First Friday of each month I try to do it 6:30 in the morning at Torrey Pine State beach at the south lot bathrooms where we meet. We've got. You've got. I know you've been working with the SDX team. Tell us about this SDX AI event coming up.

Yeah, it's great to see the AI scene continue to thrive. They have a startup showcase happening on September 10th. It's going to be at Qualcomm's headquarters and they're partnering with two LA based organizations. I think the AI is AI organization, nonprofit slash AI VC firm. And so they're really going to be highlighting AI startups in San Diego's community and then also at Qualcomm. September 16th is Evo Nexus Day Demo Day. This is one of the most anticipated startup events, happens, you know, once a year and also at Qualcomm. So I think it's great to see that there's a big tech company that's, you know, providing space for these types of events. I mean from my experience a lot of companies are able to meet investors and raise capital. And so if you are an AI, if you're building a tech company, check out those two events. AI Start Showcase by SDX and Evo Access Demo day happening on September 16th.

Awesome. Yeah, some other events just throughout the month. We've got Devin Day to Night and CTO talks at Seismic. I'm actually just about to go do a tour of this seismic office which I think they've only been at for about a year. This new spot over near the Delmar area, just kind of a down the street from where they were before. Which will be great to have in. Got the Carlsbad Tech gathering at Shipcom later in the month as well as Connect Innovation Day, Top Tech Awards and then the Plug and Play showcase in early October. Lots going on. Fred and I are going to be busy out there, hopefully actually seeing each other, which doesn't happen too often. But this is the time that Fred and I get to connect too. So you get to hear us sharing and connecting over the things that we love to talk about as well. As always, thank you all for tuning in. Thank you for sharing this and thank you for subscribing to both of our substacks to make sure that the reach is broader and we're growing it so that everyone in San Diego and outside San Diego knows what's going on here, that there is a hub, there is a scene and a lot going on to grow it by building good companies. So subscribe to Fred Substack at the businessofsandiego substack. And this, this one that you're listening to here is put out on fresh brew tech substack. Fred, thanks so much as always. Appreciate it and I'll see you out there.

Always a pleasure, Neil. See you out there.

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 and tech is on smash border green guacamole keep accountants counting beans Contador quentan frijole founders trying to raise some queso la vida San Diego school of rappy rapping fire tortillas round jalapenos in these modern times of craft beer and coffee My coding yoga posse fold the body origami we be surfing coronado eating tacos el gordo the tacos stand in puesto lucha libre and sombrero gotta shout out to cost angels by the ocean watch the sunset La Jolla shores Entrepreneurs trying to get funded When San Diego startup we popping in the summer oceanside the Tijuana estee 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. Hashtag SD TechOS with your host, Neil Bloom. Come on.

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 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 deck, you know we got it, Hey.