This Week in San Diego Tech News - December 11, 2024

Well, another week here with the Tacos and Tech podcast and my co host of this Week in San Diego Tech News, Fred Greer. Hey, Fred, how you doing?

Hey, Neil. Glad to be back. How are you doing?

I'm doing all right. We are deep in the holiday party thicket of the end of the year. Fun seeing everyone to celebrate and toast. Quite a year. I don't think we're ready to do our whole year in review yet, but we've got, we've got some good stuff coming up for you. Just end of year stuff. I know you've already been dripping out some good statistics on M and A, which we'll dive into here in a second.

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 counting, Counting beans Contador quentan frijoles 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 standing puesto lucha libre and sombrero Got a shout out to cost angels by the ocean watch the sunset La Jolla shores Entrepreneurs trying to get fund San Diego Startup week is popping in the summer Oceanside to Tijuana estico 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.

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.

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.

But just a quick overview of the podcast and who we are. I'm Neil Bloom, run Fresh Brew, Tech and Tacos and tech Podcast and Interlock Capital, a local investment capital firm. And this is Fred.

And I'm Fred Rear, longtime business journalist here in San Diego. I work with a number of startups and VC firms, helping tell their stories.

And a number of good stories were told last week at techstars San Diego Powered by San Diego State Demo Day I went to demo night, which is always a super fun event, especially after you've gotten to know the companies over a three month cohort. And so this is year two of the Techstars cohort. 12 companies have been physically embedded on the San Diego State campus. They started in September and this was really a chance for them to come out to the community and say, here's what we've been up to and here's what we're doing and here's where we're going. And it was a packed house. There was, I would say 4 or 500 usually at Snapdragon Stadium and standing room only, like there were no chairs available. There's probably a hundred of us just standing, which is a great sign. And they always, it's a show, I will say that for sure. Like you come and you come to watch, to be entertained in a sense. Like these are well practiced and polished pitches. And Every team has 10 minutes though, which still you have to, you know, maintain audience attention for 10 minutes at a time and then another 10 minutes, another 10 minutes through 12 of these. So kudos to all 12 companies because they did really, really well. People were definitely buzzing afterwards, running up to the teams to talk to them each at different tables. And I'm really excited to see who gets funded after that, which is pretty much what happens after demo day. Companies say, hey, here's what we did for three months. So now we're going to go do that for the next year. We're raising and you know, hopefully they'll close funding sometime in Q1. So we'll report back on how the cohort did there. I would go and find the list and I think the recordings will actually be live for anyone to watch before the end of the year, said the techstars team. So congratulations team. I know they're going to reopen applications. I think they'll be due by May, so applications might be open by like February, March time frame for the next cohort for next fall. So excited to see all that for sure. A great article by the Union Tribune came out looking at year over year GDP or gross domestic product of the San Diego county region. And it had some show stopping numbers, which was pretty cool. It pretty much compared San Diego as a county compared to other countries in the world and other states, which was pretty astounding. A $261 billion GDP in, by the way, in a state of California, which is the fifth largest economy in the world and San Diego Being one of the largest economies also as a county in the world as well too. Could you pull some numbers from this, Fred?

You know, like San Diego is number three in life sciences, which drives a lot of economic impact as well as defense industry and hospitality. So by no surprise, you know, but this is so, you know, hu news.

Yeah, huge news. The data they compared to. So when we had a 1.4% GDP rise compared to the year before, bigger than half that, which. And our GDP itself is bigger than half the states in the United States. So just the GDP of San Diego county is larger than half the states in the country, which is pretty massive. They talk about including also bigger than the country of Greece, bigger than the country of Hungary, Morocco and Ecuador. So, you know, we are a wrecking ball here in terms of, you know, what we produce. It's the fifth largest county in America. But I think we were for GDP wise, where did it say we are in the top 10 for GDP itself. So still pretty good for terms of what we're contributing towards. And that really, I think is what we talk about all the time, of where that money is coming from, significantly from innovation. So biotech and military and then a lot of services. There's a lot of significant large service sector gdp kind of jobs and revenue generated in this county being so big, you know, bigger than 3 million in that regard. So anyway, we'll put the link to the Tribune article here. Just more. Not much more to take from except that, you know, the eyes are on us and we've got a lot of opportunity and we can keep growing from here. It's just ours for the taking for sure. You had a great tweet, really, highlighting the whole year of M and A and biotech. I'd love to kind of turn it over. You to walk us through a little bit of that because we've been talking a lot about biotech fundings and M and A. We also talked about a lot of the layoffs as well too. So there's a whole biotech story to be told here. But take us through kind of the M and A piece that you've been tracking.

Yeah, so this piece really kicked off because of our conversation last week. We kind of seen from looking at the data that there seems to be a pickup of M and A activity. When I looked at the numbers, I was really surprised that San Diego Biotech M and A surpassed surpass about 15 billion this year alone. So some of the top three acquisitions, Raisey Bio was acquired by Bristol Myers, 4.1 billion. That was the largest. Longboard Pharmaceuticals last month was acquired for 2.6 billion. And we had in Hibbert's Biosciences also acquired by 2.2 billion. This is not including probably six others. Embryx, Nero Poseida, Kate Therapeutics. The list goes on. Basically the takeaway from this headline was despite the volatile fundraising environment in 2023 and also this year across the board, we're seeing Big Pharma acquire and expand presence in San Diego. And this follows Boston and San Francisco. And a few people reached out to me. I've seen my post and kind of mentioned, hey, is, is M and A a good thing? Is this kind of a bad thing? Because M and A is kind of taking away companies that were historically, you know, growing. And you know, my feedback, my two cents was, you know, M and A is a good thing because, you know, it's generating wealth for not only founders but also some of the early employees. And then those founders and early employees go on to start their next thing. And then some of that emerging talent tends to stay in San Diego and join another company. And so it's that flywheel effect in our ecosystem which ultimately pushes it forward. And that's kind of my takeaway from, from the data, you know, it depends how you slice it, you know, but I think, you know, it's really huge to see that it's in the biotech community. I'd love to start seeing that for tech, but you know, it just really speaks to maturity of our life sciences scene locally.

Yeah, you had a great takeaway. I'm really glad you posted your takeaway publicly on Onx around that because it was really concise. I think a few other things to think about. One, these biotech companies, when they get acquired, they're actually still really small. Like they're sometimes under 100 people when they're getting acquired for a billion dollars. We're not talking about thousands of jobs per se that may quote, unquote, go away. And even that is, is uncertain. I would say in an M and A scenario, often the people are just as much. The IP is what they've been developing too. But like you mentioned, with a financial windfall, people have the ability and the freedom to go create new, new startups and they're going to do that in San Diego. Like there's, you know, we know that we're not losing the class, the founder class and the innovation class here, talent wise, because it's just a great spot to be. So all good things I would say from an M and A front that means the capital is recycling. The one thing we can continue to do better is put local money into those deals so that when the M and A big investments go in, they come back and flow back into San Diego as well too. I've looked at a number of deals over the last year where people are tracking numbers like you know, 5 billion in VC dollars invested into San Diego companies and like 5% of it is local money. So when those companies exit and let's say usually what happens is the founders are down to 20% or 10% equity, which means the rest of the company is owned by investors, which means a big windfall, 90% of the windfall, the capital is going to flow back out of the market, back out to the investors, which great for them because we don't have the local investment scene capitalized yet to go do it. That just is an opportunity for us to put more money into good companies that we see in our backyard. So all good things we'll keep reporting and you know, we'll keep all riding that wave. Speaking of, got some great fundings. Recent, recent, very recent fundings like hot off the press to friend Peter, CEO of Surglogs here. I think this article came out like 20 minutes before we recorded this that they raised a new round of funding. Fred, I think you said you wrote the original article when they raised their first round of funding here for surgelogs which is a like vertical SaaS or SAS platform to kind of manage surgical centers, right?

That's correct. Yeah. I was happy to see the news when it broke this morning. They're a Coronado based company, focus on kind of the health tech space. And yeah, this funding that they raised are going to allow them to continue to grow, you know, grow their team. The Business journal had a great piece so we'll go ahead and link that. But basically it's a 10.5 million. Actually no, they raised a 10.5, 10.5 million. Series A 2021. So now this is a series B funding that just closed this morning.

Yeah.

Congrats to Peter Sajak who I've known since before he started this. He and his dad have been LPs in a number of funds in town including they are LPs in social leverage fund and they've made a bunch of direct investments prior into a lot of local tech companies and his family is actually the founding family of ese cybersecurity company here in town. So deep roots in the local tech scene. And I remember when Peter started this, I would say Quote unquote, his garage in Coronado. It was fun to see. And then they moved over to Symphony Towers and I think they're now back in Coronado here. Great VCs on the cap table too, including 8VC, Open Ocean VC and CradoVentures who continue to power this. And good to see you know, a SaaS company but, but their customer base is health care, which I would say is two strong suits here in San Diego to be able to build a technology company and be right there alongside your customer and get to know the customer so well as well too. So congrats to the Surgelogs teams on your continued growth here. An early stage, earlier stage investment was just announced for Coach IQ. They just raised $1.3 million pre seed round. What do you know about this team here, Fred?

Yeah, so I'm actually meeting with the founding team today so I'll have some more details on our next pod. However, you know these are created, this is a created company by UCS alums. They're in North County. Dance on creating technology that helps, you know, sports teams like high school, I think universities maybe with their coaching business and all in one platform. I need to get more details on exactly what they do. But you know, I think the takeaway here is, you know, tech funding and it's definitely picking up from the surge logs to Coach iq. You know, there wasn't as many headlines in the single week of tech fundings that are, that are happening and I'm seeing that happen more at that pre seed seed level than, than I have seen, you know, earlier this year. So it's a great trend that I'm seeing. I don't know you have a takeaway there but yeah, it's great to see that tech funding is slowly starting to pick up.

Yeah, I would agree. I would say Most of the three quarter Q1, two Q3 I probably did more hardware investments and Q4 did, I've done, we have done three software investments and so that's one trait. And then earlier stage as well too. We are seeing more, a bunch more who have funded in Q4 who haven't announced yet as well too. So either you know, they'll get that out before the end of the year or they'll come out in January and do it. Or maybe people are just done announcing funding and they're just raise the funds and get back to work and keep their heads down. That's okay too, right? Just because you raised doesn't mean you need to go tell the world about it. I understand if it is a distraction because usually with big funding comes a lot of like inbound for blank with a lot of service provider inbound and a lot of other investor inbound saying ah we missed out. Let it put us on your next round list as well too. So lots of of reasons to promote and if you'd like to share your recent funding let me or Fred know we would happy we'd be happy to promote it here for sure. We're kind of celebrating everyone who's doing well here. Last story on the funding side is a longtime tech company here Neuron who let's say maybe it's more rumor mill on doing a new round of funding but what did you pick up here on how Neuron's doing Fred?

Yeah so this software company is Taiwanese. They are creating AI chips and yeah they have a presence pretty big presence in San Diego. I think they had about 30 employees not which not a huge presence but for AI chip making they're probably one of the few players in the space. Yeah they're Bloomberg caught wind of this in October hasn't this is not official but there's a rumor that they're in process of raising about 300 million in the latest funding round which would value the company at about 1 billion. So with this new funding they probably will be scaling up not only their local office but also probably some R D. Also Bloomberg went to details about them opening that R D lab in Saudi Arabia. So it's interesting. Yeah something we're going to keep keep an eye of AI is obviously top of mind 2024 and I think it will continue to be a trend and next year and yeah I'm seeing a lot more money a lot more companies are are being able to raise hundreds of millions of funding in the AI space because investor appetite is there and even crypto is picking up a little bit too. Yeah. So yeah we'll continue to bring up these scoops and insides as we get more details.

I will say Neuron I'm pretty sure I've always called them a San Diego company. I didn't I I've always thought they've been headquartered here so I'm being to see where they really are based if you say they're Taiwanese based but I've always known them as HQ over in UTC area I think they're on that same row over by like where Apple is and and now Lytics and other sellers as well too. Interesting companies who are in there prior around like Qualcomm Ventures, Sequoia Capital, Foxconn the big chip manufacturer for Apple in China. So we'll be interesting to see if this series B is coming together or this late next stage. Looks like it'll be a Series C round coming together on kind of future chip technology. But yeah, we'll keep you posted. Like we mentioned, a lot of Holly is happening right now. For the full list of events happening through the end of the year, go to the Social Coyote. I believe I will finally attend my first North County Tech mixer next week on the 17th. First round of drinks are on me. I think I've already signed up to sponsor it and look forward to seeing you all there. We'll link that event there in the show notes. And then early right away, early 2025 CES is happening and a bunch of us from San Diego are coming out and we'll have kind of a San Diego showcase alongside C Comp, which is San Diego north county based hardware, hardware design and manufacturing firm. So if you were coming out to ces, write us a note and let's all gather together there which would be great to see. And then JP Morgan bio happens and Techcon SoCal. So it'll be a busy January. It's always busy. We talk about ebbs and flows busy. Let's just get over it's just always busy. And if you're looking to get connected and networked, follow me and Fred and we're sharing those news. Fred's substack, the Business of San Diego and my substack Fresh Brew Tech. So I'm sure we'll put out another pod before end of year. Maybe do another full end of year funding like Number by the numbers. But thanks for tuning in this week and we'll talk to you all soon. Thanks Fred.

Always a pleasure Neil. See you next time.

Likewise. Cheers.

Get the party started.

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 of craft beer and coffee My coding yoga posse fold the body origami we be surfing Coronado eating tacos El Gordo the taco stand in puesto lucha libre and sombrero Gotta shout out to cost Angels by the ocean watch the sunset La Jolla shows entrepreneurs trying to get funded When San Diego Startup Week is popping in the summer Oceanside to Tijuana St. 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. Hashtag SD TechOS with your host, Neil Bloom. Come on.

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