This Week in San Diego Tech News - October 6, 2024

Hello everyone.

Welcome back to this week in San Diego Tech news with Neil and Fred. Hey Fred, how you doing?

Hey Neil, Doing pretty great. How about yourself?

Doing great. We're already feels like already deep into October, yet it was like the 1st of October was just like yesterday. It's time is flying, that is for sure. Events are flying by a variety of news as well, but largely I think events are just like flying, flying by right now. And you and I, we're at one together finally and actually talked at it. Usually it's like one or the other. We're different events or we're at the same one. We don't get to see each other much. I know you were at the founders hike as well, which was fun actually. We'll report out that in a second too. But first let's do some intros. I'm Neil Bloom with Fresh Brew Tech and the Tacos and Tech podcast, a tech news and ecosystem building group as well as Interlock Capital, a San Diego based investment fund.

And I'm Fred Greer, startup journalist here in San Diego and also the founder of business of San Diego Substack. And it's highlighting venture capital news and startups in San Diego and excited to be back talking about the biggest news this week.

Yeah, and let's dive right into it.

Startups get the party. Startups get the party started.

You want tech and tacos, tacos you know we got tacos in tecuzon smash border green guacamole keeper countins counting beans contador quentan frijoles founders trying to raise some queso la vida San Diego school of rappy wrapping paella 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 standing 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 Week is popping in the summer Oceanside, the Tijuana esti 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. Come on.

Startups get the party. Startups get the party started. Startups get the party. Startups get the party it Startups get the party. Startups get the party 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 in tech, you know, we got it. Hey.

We'Ll do a quick look back at last week. Some events that you and I were at, including the Plug and Play San Diego showcase. This was really cool to be at to see Plug and Play, which is like a 15, 20 year now silicon Valley based incubator and investment firm. And really, you know, first time they kind of popped their head up in recent years in San Diego. What did you take away from the event? Take us through a little bit, what they, they were showcasing and then what, what you thought of it?

Yeah, at a high level it was at University, University Club, which is based in downtown. That was a great turnout. I think they had a pretty, you know, sold out event. About 70 folks were there. They brought together folks in the university, they brought startup founders, investors, members of the community and really just was shared, you know, their plans for engaging and working with the Sano community. The mayor of Chula Vista was actually the keynote speaker, kicked off the conversation and talked about some of the developments happening and how they're trying to position that area as the next hub for startup companies and really emphasize collaboration with Tijuana as well, which I thought was fascinating. He also had a panel conversation with members from sdsu, ucsd, jlabs and a notable defense tech company. I'm blanking on the name, but I mean my takeaway from it was it's just great to see established players like Plug and Play Ventures looking to invest in San Diego and I'm seeing a continued trend and it's just a call out to our ecosystem as, you know, one of the next startup hubs and really just thriving.

Yeah, I've been appreciative of getting to know the local guys from Plug and Play, Alex Tran and Stephen Faye, who really, I would say, have an ecosystem ethos in regard. They're not really just running around saying looking for deals. They are very much interested in connecting locally and they claim building a physical hub to, you know, incubate and invest in companies. And so we've been doing a lot of deal flow sharing and so we were able to share kind of news of a recent company that we both are invested in, Lend API, which is a Orange county based company that we, we actually introduced the founders to them during COVID and then they started a company with each other and now we're all investing together too, so it's a cool story. Cool to show kind of the ecosystem level there though. I will just for some history. 10 years ago actually there was some local players, Gabby Dow who was there that night, and a few others who actually brought Plug and Play down San Diego. Gabby told me the whole story that last week was pretty cool to hear. I just remember her starting an effort at year two of Startup Week where she was kind of representing Plug and Play, saying hey, we're, we're, you know, at least doing some gatherings and some movements and sharing deal flow with them. So it's cool to see it come full circle and hopefully take it to the next level here as well too. Also last week we did the San Diego founders hike on Friday, first Friday of each month. We kind of took two years. We kind of broke, broke the model in a certain regard. We finally took note, got notice by the rangers of state, California state parks and approached us and we're like hey, you're a rather big group and you know there's a permit and only 20 people on a trail at a time and we were like 60 or something. So you know, we've, we've, we've been put on notice that we've, we've, we've grown out of our venue. So I'm looking for our next spot which may be the San Diego or the Tor Pines Glider port and doing trail down to the beach and back up. There's another loop there working on that. If anyone has some recommendations, happy to take them but the, the show goes on on the founders hike. Look for it in the first week of November. I'll put out a link soon but let's dive into some news. We got plenty of news to talk about. Let's start off with the Q3 funding report that you just put out on your blog on the business of San Diego. Let's, let's dive into this. Fred.

Yeah, so at a high level, San Diego saw roughly 1.3 billion invested in Q3 2024. It was pretty dominated by late stage life science companies who raised multiple hundred million dollar rounds. At a high level, we had some top biotech deals. Candidate Therapeutics had the largest raise in the quarter, 370 million. Previously the founders sold their company raise the bio for like 4.1 billion. And so they were able to raise a pretty substantial round coming out of stealth for this next company. And they acquired actually some assets from a former company and they merged together. And so this is not really a, a pre seed or seed company. This is a pre clinical, clinical stage company. Element Biosciences also had a pretty large round in Biotech. They raised 277 million. And then we also saw some tech deals. We saw Kanji raised 50 million. Elias, that's a trucking tech company, 20 million. And then teachme.IO I believe raised 5 million in tech. And then we also saw some consumer deals. Athletic brewing had a 50 million big round and then Mod Retro, they didn't disclose their round but I heard through someone that they raised some funding. So yeah, we just looked at some of the biggest deals. I'm seeing a decline in consumer investments, also seeing a decline in software investments and then tech. Life Sciences is you know, obviously still seeing some funding but overall across the board I think 1.3 billion for Q3 is pretty on par with what we've seen in the previous years. It's fairly healthy and I, I wonder, you know, how that's going to turn out for the late, for the early stage companies. I'm not seeing the first time founders being funded. Neil, you probably can comment more what you've seen from the VC side but you know, late stage companies are able to raise a lot of capital, second time founders are able to raise a lot of capital. But these early stage, first time founders, they're having a hard time from what I'm seeing.

Yeah, it's true. From a VC's perspective it is still a bifurcated market at the earliest stages. Meaning you know, people with, who are serial who have an idea and are just doing first customer validation quick, are getting money quick at reasonable terms because either they've got a track record or, and, or they're very well capital connected to funders. Right. So they can quickly, you know, simultaneously be doing customer validation and building first product while talking to investors and saying hey, I'm doing it again, watch me. And you watch over a few weeks and they're doing it right. It's people who aren't capital connected and, or first time or just new to maybe a new industry or something that don't get the voice of the market. So they come out with their own term saying yeah, I think I, I read on some report or one other founder told me I should raise on these terms or one angel said yes on, on these random terms I made up but that doesn't necessarily represent what market rate is. And so it seems that you know, if you want to go raise at the early stages, you got to go talk to a lot of people who have real, real Time data on what there are compelling terms to go raise at and that not just like the valuation cap or the valuation, but also how much should you be raising right now? You may come out saying I have an idea and I'm going to go raise 2 million to $4 million on something and maybe market right now is saying, well maybe you should break that up into a 500k chunk, you know, at a lower but equal valuation and then go do a million after you get some validation and then another million. And so it really behooves everyone who's struggling to raise right now is just go talk to a lot of the market and hear what's getting funded. So and look at Crunchbase, look at the data as well as talk and verify that as well. I would say that when we talked about this on the last pod or maybe two pods ago, CAR Florida has some data out there showing, you know, like San Diego is really doing well in biotech and hardware for fundings and doing really well in our top five city in late stage fundings. But we're not Even a top 10 in precedency and it's showing. So the data's showing and I'm seeing that as I talk to founders as well too of just not having enough local capital connections to know what market rate is so we can do better. We're trying to promote here, trying to share and hopefully we can put on more events and just making sure that we're sharing with locals on how to get ahead here as well too. But thanks for putting together that data, Fred. I'm looking forward to doing kind of an end of year recap where we can really show, you know, here's what's going on for the whole community. I mean I think a billion plus per quarter now, three quarters in a row is really strong if we're going to end the year 4 billion up plus. Right. I think that's really strong. That's. That shows where we're at I think semi consistently now for a few years. If you take the 20, 21, 9 billion bubble out, be interesting to show. And maybe you and I have been working on some data around this comparing to macro. Right. Comparing global and some other cities and see how are we stacking up over time, year over year and quarter over quarter. So we'll share that data because we're obviously passionate about the trends in this space as well too. But let's dive into some other news here. You know, we actually have talked a lot, if you've noticed about battery tech there's a lot. I have noticed a significant amount of battery tech companies in San Diego and I think SDSU has noticed that as well too. So they are building an outpost out in Lithium Valley, which is out by the Salton Sea and it's starting to become Lithium Valley because they have found pockets of lithium worth being, worth being mined. And I think they've got a full campus set up there now. Fred, is that true?

Yeah, Union Tribune had a great piece. They, they kind of go through the whole news. I mean you also talked to Mike Freeman, you had lunch with him and you know, he's done a pretty good job of writing about what's, what's happening at the Union Tribune, but he's now at stsu and you know, I'm curious, you know, how he's, he's doing. But yeah, the news was SSDSU is betting $80 million and they bet that they can be a key player in the lithium industry. We have a lot of battery tech companies in San Diego. We've talked about it previously on the podcast sdsu. I'd just say that they have really diversified their university from a research perspective, from an innovation perspective. I'm keeping my eyes on them. I think they're, they're really making some smart, smart moves and this is a big bet that I think will pay off.

Yeah, I agree on the innovation ecosystem there. We are really making a lot of investments whether it's from techstars and taking over San Diego angel conference, building that Mission Valley campus that will have an innovation campus focus. They actually have built out a Tijuana based campus and are doing big partnerships with other Tijuana based universities. And now you see this kind of industry, more focus or technology focus, investment for professors and labs to be right at the source of where the lithium is, which we obviously in California and you know, really United States is trying to take the lead on E, on EVs or electrification of everything. And you know, to a certain regard it is a matter of national security that we diversify our electric electrification and be able to manifest our own destiny in total verticalization the way that Tesla is doing. So it's pretty cool to see us this, you doing this. I'm looking forward to going out there and actually seeing it. So I'm working my way out to go see the facility, maybe take a group of clean tech, battery tech founders out, be kind of cool. We do have a clean tech get together that we've been doing in Carlsbad and then just a shout out to Jason at clean Tech. Let's actually get a bus together with SDC and go. Let's go show up. So that's kind of a rallying call there. But yeah, keep it eye on what is happening out in Lithium Valley for sure. And we'll keep reporting on it as well too. Just a quick Mike Freeman check in. Yes, him and I got together last week. It was awesome to see him. He is working on really helping SDSU connect globally, including right across the border. So he's doing a lot of varied communications work with the SDSU kind of global presence, if you will. So he was really interested to hear what's happening from the startup ecosystem perspective on both sides of the border which we've talked about, what seeing manufacturing come to right to the border with our engineering firms here. So yeah, more to come there and I think we'll be sharing some, some other stories that you and I are reporting on back with him at SDSU so that they could become a little bit of a player in that border story as well too. Let's talk about another story that you and I Both promoted around LinkedIn's Top 50 Startups list that just came out. Usually comes out. Yeah, I feel like it's always right around this time of year, beginning of fall, they come up with their own ranking of top 50 startups who are growing. I think feel like not every year San Diego's on it. You know, there's some big names who have been on before like OpenAI and you know, Stripe and SpaceX. And to have had two companies here named on it is pretty cool. So why don't you share those news with us, Fred?

Yeah, at a high level there's two companies I mentioned, Gretel AI. I think they, they claim they're a synthetic platform or for like generative AI. They're one of the hotter AI companies. They say they're based in San Francisco, but I think one of the co founders lives in San Diego. And then Equip Health, they are a digital health startup tackling eating disorders. So both of these companies make the list this year. And yeah, to your point, I think LinkedIn has great data on who's hiring, who's increasing their headcount and so it's great to see some representation from San Diego tech companies.

Yeah, Gradle AI. Cool story about them. So they're kind of creating synthetic data for companies to utilize to train their models, which is all the rage. You need pipelines and pipelines and lakes of data to train your LLMs and everything else. And so Gretl AI is building that kind of synthetic data creation tool. Yeah. The co founder Alex Watson, I got to know him at his previous company Harvest AI which was a cybersecurity tech company that ultimately got acquired by Amazon or aws. And so I believe the team actually got physically moved up to Seattle I think. And so he I believe made his way up and then came back down and started his next company Gretel. So shout out to Alex and team on doing the next company here as well as Equip AI cool company here on the digital health space. Focus on eating disorders. So you know I'm sure many of you have seen a lot of different telebehavioral health platforms. This has a very specific focus on eating disorders and I believe they both are UCSD alum or there's some UCSD connection and UCSD has a big eating disorder clinic which is where I believe co founder Aaron came from. And CEO Christina and her met through that connection. Do you know more of that story of their founding story?

Yeah, they have a connection to UCSD's research lab around eating disorders and so they came together to create a solution to tackle that population and they've, they've done a fantastic job backed by general catalysts and a raised over 20 million in capital. They're, they're cool company.

Yeah. Great to see them doing well. They've got some local high, high profile angels including Alex Morgan, soccer player for the Wave as well as obviously some big, big capital names like General Atlantic as well too. So great to see them named. Let's jump over to Defense tech news, a very San Diego thing. I caught a story by Brad Graves, the defense tech writer of the business journal, really talking about how Kratos is continuing to grow. They just announced a new contract with the Air Force on a new set of drones that they're making and obviously that affected their stock price. They're a public company. I thought I'd dig into a little bit of details about them because they actually are, they I feel like aren't mentioned too often yet. They actually have been around quite a while. I found, you know the batch have been around since the early 90s as a telecommunications hardware company. So they were building out you know like racks and data centers and everything that telecom would need to expand at the kind of early boom of the Internet. And in two early 2000s they re. So they went from what was their first name, it was called the, the Wireless facilities inc. Or WFI. And early 2000s they went through a big shift and Going from telecom to defense and government services. So big, big change there. Obviously maybe more customer base focused of building the same hardware but selling in the government. And then they just went through a just complete product changeover and started building everything you can think of in kind of defense tech, whether it's from drones engines for missiles and for drones, cyber security and data packages focused on obviously defense and national security. And started making some acquisitions in the space to kind of buy their way in to having some product lines. Their big I think breakout in defense tech was when they built this autonomous plane called the XQ58 Valkyrie. This was really a, a big change in terms of the kind of versatile aircraft for drones when you had at a time big drones being made by General Tomic and Northrop Grumman. This was a much smaller drone, way more flexible, more capable, but in the same city as like the two biggest drones on the market were out. So super interesting to kind of watch. You know, I would say big defense tech if you will, public at least and growing and doing well and so worth keeping an eye on from talent. But also how they are a player in this space, in an industry, in a city where defense honestly is like our top two by GDP as a business. They say one in five jobs in San Diego is defense related. So we're going to keep talking about it. And you have a cool follow up to this of startups finding defense industry as a customer. Why don't you take us through that?

Yeah. So the U.S. defense, the U.S. department of Defense awarded 12 companies, you know, millions of dollars to partner on a bio industrial manufacturing program. Three companies out of the 12 were San Diego based and essentially the government is helping these companies build a manufacturing facility and partnership and I think there's some tax incentives and a lot of advantages, but basically they research what companies they could work with and you know, create solutions to help related to DoD tasks. I've talked to two companies that were awarded Celebrity and Allogenesis. They are both kind of working with the DoD to determine a site outside of California. And you know, these are biotech focused companies that are creating, are using materials to create, you know, solutions across different industries. Another one that I saw that I ordered was one one Go. They're actually based in Switzerland and have expanded to San Diego, have a small site here and they also were awarded too. So it's just great to see that the DoD is collaborating with the innovation scene in San Diego and beyond. I think they're realizing there's a lot of opportunity that they haven't tapped into yet to partner with smaller startups to, you know, be innovative and more creative. So it's a cool story.

Yeah, I mean the defense industry is like one of the largest employers in the country. Right. They've got a million plus soldiers plus way more, you know, private, what do they call them, civilians who work for the dod. So they're a, they're a country in its own regard, you know. And to think of them as a customer base is huge. Which actually local venture capital, Harpoon Ventures, that is a bit of their angle, right. Is if you have dual use, you're selling commercially and want to settle the government. Well, they have quite the government as a partner, as a customer that they'd love to help introduce you to and therefore you see it in other places like the companies you just mentioned. But I also have been seeing it at Scripps Oceanography, Start Blue, Start our Blue, where you've got these seemingly bio or ocean science related startups that may be about growing coral reef climate change wise, but the Navy's the most interested because they believe this will help with erosion and you know, their bases which are largely at sea. So it's really interesting to just think about all the different avenues that our own local defense is as a potential customer in that regard. And that should probably lead us to another story here that Scripps Institute of Oceanography just announced winning a $10 million grant to specifically focus on studying the effects of marine animals adaptation to climate change. And so largest grant won by professor of marine biology Martin Trisguris, who had a good story here being interviewed in the business journal. You want to take us through a little bit of some of the specifics.

Here, Fred, I don't have the scoop on the Scripps Oceanography. I would just say that they have done a lot of great work to engage the startup community like the Blue accelerator program. They actually spoke on a panel at the Plug and Play Ventures Group and they're really trying to encourage these scientists and researchers to start companies related to ocean and tap into the ecosystem that we have locally. The university spends a lot of money to, you know, collect information and data and companies are starting to create solutions and startups around that. So I would just say Scripps is kind of one of the early pioneers in that, in that blue tech space.

Yeah, I mean 100 plus years as an oceanography institute, I think it was start in the 20s. It's had a role in everything can think of science wise here, planetary on Earth. I happen to have Run into as a penguin expert when I was in Antarctica a few years ago was like, how did two San Diegans find their way here? Well, you know, he's had, he's the world renowned penguin expert and he is at the cutting edge space where penguins are seeing change and adaptation in a changing world. So yeah, it's really interesting to see. Great to see more funding come in that way. And we'll keep reporting on innovations that come from that and that will do it for our news. We've got some events coming up. Like we say it's a busy, busy fall leading up right through Thanksgiving. Few events on our radar this week. I think you got one on your radar here on October 10th. And as always, check the social coyote linked here in the show notes to find out kind of day to day events that are happening.

Yeah, we'll link it in the show notes. The first one on the list is Bits and Bio hosted by a local entrepreneur, biotech entrepreneur Nick Edwards. I think it's hosted on Thursday, October 10th. It's going to be near Scripps Research actually and they're bringing together, you know, networking folks in life sciences and biotech. So it's a pretty cool event. And also Naturally San Diego is hosting their fall fling also the same day, October 10th. So you gotta pick and choose which one to go to there. Naturally San Diego does a great job of bringing people into CPG and consumer product goods. So yeah, they do a great job.

And I think you and I are splitting our time. You're going to the Bits and Bio, I'm going to Naturally San Diego making sure it's well covered. But yeah, the Naturally San Diego annual Fossling is usually up in Encinitas at Coastal Roots Farm. And it's, it's a great, great group of people. The group has grown really well, 5, 600 members now of all entrepreneurs building in the natural product space, which isn't just food, isn't just materials, it's like all over anything about sustainability, but really with a consumer minded focus. So come on out, that's of your interest. Got Stocktoberfest coming back to Coronado October 20th through the 22nd. And we just released an interview with the founder of Stocktoberfest and Stocktwits, Howard Lindsay. So go listen to that if you haven't heard it yet. Was a fun conversation with him. And then standard Startup Week is, is underway. Month less than a month out, the 21st to the 25th, five days in a row really just afternoon to evening. So it's not taking up the whole day. It's just kind of, you know, work half day or work a day, you know, 75% of a day and then come out. I think the events each day is a different geographic location. Carlsbad day one, Tijuana day two. I know it goes through sdsu, UCSD and then Qualcomm campus. We'll second circle back on the Qualcomm announcement which was made about the keynote there and maybe Fred, if you want to give that scoop, I'll let you if you saw it. But day one, Carlsbad Day I'm helping organize kind of a pre event coffee meetup. So if you are around in the early afternoon on the 21st, come out and hang out with the Life in Action crew which is the city of Carlsbad's kind of innovation startup community group that we've been hosting monthly events. We kind of doing like a two to four o'clock coffee hangout before all the talks begin. Which you know, from a Carlsbad perspective they're really showcasing Carlsbad's strengths from consumer and life science and clean tech. And so I'm really excited about the last two events of that day where we've got two different serial founders. One of the founder of Bird Rock Coffee is going to be talking about kind of his rise in growth alongside Mike Glanz who is talking about building a coffee, a national coffee roll up brand and the two of them are going to be talking about, you know, starting from 0 versus going from 10 to the to 100 kind of that roll up experience. And then Fashionphile founder Sarah is given the keynote at the end of that day. So it should be a really fun first day. But you want to, should we do it now here? The Cheryl keynote on Friday announcement.

Let's do it.

So the news that Cheryl Goodman, Vice chairman of San Diego Startup Week put out a press release that they have landed Irwin Jacobs, the founder of Qualcomm as kind of the end of the week keynote. It's going to be an awesome, awesome way to cap the week where it's all at Qualcomm and the founder of Qualcomm's coming back to really tell his story and tell actually what he's working on now. He still is in his 90s and he's still putting in the time and energy. What do you got here on Fred Fred, talk about this.

I would just give a shout out to the leadership team at Startup San Diego, Lisa Barnhouse, Sarah Goodman and others who work so Hard to make sure there's luminaries and top speakers at these startup events each year. I remember last year there was viewer Vray clothing founder Joe Kubla who shared his journey. I'm really excited for this year's lineup with the, you know, Qualcomm founder Irwin Jacobs. It's just great to, you know, engage people who have started, you know, transform transformative and generational companies in San Diego, remain connected, inspire the next generation of entrepreneurs. And I'm looking forward to this year. So if you haven't got your ticket yet, we'll link that below in the show notes. But we encourage you to get involved and check it out. It should be another great year of showcasing the who's who in the SERP ecosystem. Awesome.

Yeah, we're excited. We'll talk more about it. We might even probably do some interviews leading up to it to promote it as well too, just because we're so, so, so interested in promoting, making sure people find out the events to get on the radar to come out to this. So we will see you all over the next few weeks. Thanks for tuning in. Thanks for promoting the show of that we put our love and energy into to make sure that you've got the latest news and events that are happening so that you can get connected and we can keep growing the San Diego ecosystem. I'm Neil Bloom. Thanks so much and Fred, thanks for being on with me.

And I'm Fred Greer. See you next time.

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 keeper Captains counting beans Contador Quentan Frijoles found us trying to raise some queso la vida San Diego school of rappy rapping fire tortillas round jalapenos in these modern times a craft beer and coffee my coating yoga posse fold the body or a glass we be surfing Coronado eating tacos el gordo the tacos standing 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 Week is popping in the summer Oceanside to Tijuana SD be full of hustlers from couch surfing to penthouses right on the beach Text 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?

Startup get the buck?

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. Hey.

Sam.